September 27, 2022

What Is Customs Clearance?

Before shipping an item internationally, you need to clear it through customs first. We've put together a comprehensive guide to the customs clearance procedure so you know exactly what needs to happen and when so you can manage your international shipment with ease.

What is Customs Clearance?

Customs clearance is a mandatory step in allowing imported items to enter a specific nation. A number of taxes must be paid before moving merchandise into a particular state. The process normally includes submitting paperwork and paying fees.

It covers all transactions from the point at which they begin until they end. For example, importing involves clearing through borders, paying taxes, marking products as imported, and so on.

There are three types of customs clearance processes: pre-clearance, transit and post-clearance. Preclearance is done prior to entering a country. Transit customs clearance happens during the passage of goods through a port of exit. Post-clearance occurs once the goods arrive at the final destination.

  1. Pre-clearance

This type of customs clearance is done when you're leaving your home country for another one. It's usually done by an international airport or seaport. You can expect to pay more if you choose this option.

You may also need to clear through other countries along the way. If that's the case, you'll have to pay additional fees.

  1. Transit

This type of clearance takes place while goods are passing through a border. This means you don't have to clear through any other countries. However, you will still need to pay import duties and taxes.

  1. Post-Clearance

The last form of customs clearance is done after goods arrive at their final destination. This is typically done by a local government office.

The most common forms of customs clearance include:

  • Import duty (also known as tax) - This is the amount of money charged to bring certain goods into a country.
  • Export duty - This is the amount charged to send goods out of a country.
  • Value added tax (VAT) - This is a sales tax levied on imports and exports.
  • Goods & Services Tax (GST) - This is a consumption tax applied to many goods and services.
  • Custom Duty - This is the amount required to be paid upon entry into a country.

How long does customs clearance process take?

Generally, the import procedure is completed within the same day, however, the exporting procedure can take longer. While exported goods may not be inspected, they are often subject to technical controls. Depending on the type of goods being shipped, the importing procedure can take anywhere between 1 and 3 days. In general, the importing procedure at EU and US custom offices takes an approximate amount of 2-3 days.

What are custom clearance fees?

A custom’s clearance charge is compulsory to complete custom’s procedure and clearance of imported goods. It is paid to custom’s agent for filling it on your behalf. International trader must pay other duties and taxes during custom’s clearing.

What are the different customs duties and taxes for customs declaration?

  • Customs duty is a tax that is levied on imported goods. The amount of duty depends upon the value of the goods, the type of goods being imported, whether it is an import or export, etc.
  • VAT must be paid separately when importing items into certain countries.
  • Customs clearance charges arise from the operations of the port or the warehousing fees. They are charged to the importer according the Incoterms rules.

When are goods marked customs cleared?

In general goods are cleared from customs when the documents required for shipping have been checked and approved by customs officer and all taxes and duties have been paid and the goods have left the customs zone. Most imported goods and services are subject to a "custom's approved treatment or use". This means that the importer is not allowed to sell, give away or destroy the goods before they have been inspected and declared as being in compliance with import laws.

What happens if I don't clear my goods at customs?

If you fail to clear your goods through customs, you will be charged an additional fee. The amount depends on the value of the goods and whether or not there has been any damage. You may also face fines and penalties.

How do I get my goods cleared at customs?

There are two ways to get your goods cleared at customs:

  1. By using a customs broker
  2. By doing it yourself

If you choose to go the first route, you can hire a customs broker who will handle everything for you. Customs broker are licensed by authorities such as CBP to act on behalf of you. A customs broker will not only help you to determine the correct HS code but will also provide you with the necessary documentation and make sure that your goods are cleared at customs. In return, he charges a commission which varies depending on the type of goods you're importing.

If you decide to go the second route, you'll need to prepare the necessary documentation yourself. It's important to note that the documentation must be prepared correctly and accurately. Any errors could result in delays or even rejection of your application.

What documentation is needed for customs clearance?

Customs clearance starts when your customs broker gives the necessary documentation to customs officials. Usually, commercial invoices, packing lists, and bills of lading are enough to complete an export declaration and allow the goods into the country. However, importing is a lot more complicated than exporting, and the required paperwork is usually far more extensive. These include:

Commercial Invoices - An invoice is a legal document that shows what was purchased and how much money should be refunded back to the customer. Customs requires this information so that they can determine if the item is eligible for duty free entry.

Packing Lists - A packing list is a list of items that were shipped together. It includes the name of the company sending the shipment, the date sent, and the destination.

Bill of Lading - A bill of lading is a document that details where the goods are going and how they are being transported. It includes the name and address of the shipper and the consignee (the person receiving the shipment).

Import Certificates - Import certificates show that certain products meet specific requirements set forth by law. For example, food and medical devices must be certified as safe before entering the United States.

Import Declaration Forms - Import declaration forms are used to declare the contents of a container. They include the name and address of both the sender and recipient, the quantity of each product, and the description of each product.

Export Declarations - Export declarations are similar to import declarations except that they are used when exporting goods out of the U.S.

Certificate of Origin - Certificate of origin is required for all shipments originating from countries outside the European Union. This document certifies that the goods have been produced within the borders of the country of origin.

Checkout our comprehensive guide on documents required for international trade.

How to avoid clearance delays?

The following tips will help you avoid delays during customs clearance:

  1. Start the process early - Start the process as soon as possible after the ship arrives at the port of departure, but no later than one week prior to the expected delivery date. The earlier you start, the less time there is for problems to arise. For companies that perform multiple shipments simultaneously, obtaining a shipment tracking system is the best solution for these processes to operate efficiently. At Cargoflip, we support tracking 85% of all global container traffic. Learn more about us here.
  2. Have everything ready - Make sure you have all necessary documents and information ready when you go to the customs office. This includes invoices, bills of lading, packing lists, certificates of origin, etc. Check out our documentation feature to learn more about how digitising and pre-filling documents can help you avoid unnecessary costs and delays.