Import Procedures
General Provisions
Goods are imported or exported via land, air or sea, and arrive in the form of post parcel or baggage with passengers. Procedures applied during this process differ according to the mode of import or export.
Computerization of Customs Work :-Customs work in majority of the seaports and airports are computerized. Official documents such as Import General Manifest (IGM) and Bill of Entry are electronically filed.
Entry :- Entry made in a Bill of Entry, Shipping Bill or Bill of Export. It can refer to 1) a declaration sent along with the goods being imported or exported. The declaration consists of description, quantity and price of the goods. 2) Entry to be made in case of goods that are to be exported. 3) Entry to be made in case of goods that are to be imported but do not have any label or description accompanying the goods.
Amendment to Documents :- The importer/exporter are obligated to submit official documents, such as Bill of Entry, Import Manifest, Export Manifest, to the customs officials. In certain cases these documents have to be amended, but only if the customs authorities permit amendments. Changes are brought about when there is a clerical error in the document, a change in classification, or a change in loading/unloading plan of vessel etc.
Customs Station :- Goods that have been imported can be unloaded only at certain places. Similarly, goods can be exported only from specified places. Until imported or exported goods get customs clearance they are stored in a Customs Station. Thus, Customs Station could include customs port, customs airport, land customs station and inland container depot.
Import Procedures
Import Procedures are to be followed both by the importer and the individual in charge of conveyance.
Person In Charge of Conveyance :- This individual must submit Import Manifest and Export Manifest, and ensure that the transport comes via approved routes and lands at approved locations. His other responsibilities include ensuring that goods are unloaded only after a written order and official permission. The person in charge must also make sure that the conveyance doesn't leave without permission of Customs officials. He can be punished if he provides a false declaration or when there occurs a shortage of goods in conveyance.
Procedures to be followed by carrier of goods :- The carrier of goods or person in charge must follow certain procedures.
Arrival at customs port/airport only :- It is the responsibility of the person in charge of a vessel or aircraft entering Indian Territory to land or call the customs port or customs airport only. In case of unforseen circumstances like accident or weather change the vessel or airport can land at another place, after notifying the nearest police station or customs official. When goods are being transported via land, the vehicle should come by approved routes to land customs station
Import Manifest/Report :- The person in charge must submit Import Manifest/Report, also known as IGM. In terms of a vessel or an aircraft it is called import manifest, while in case of a vehicle it is called import report. Import Manifest must be submitted before the vessel or aircraft arrives. Whereas, the import report must be submitted within 12 hours of the vehicle's arrival at the customs station. In case the manifest/report is submitted within the stipulated time frame the person in charge will have to pay a penalty of 50,000.
Grant of Entry Inwards by Customs Officer :- A customs official grants 'entry inwards' to a vessel which makes unloading of cargo possible. This entry inwards is granted only when a shipping berth available and a vessel is granted berthing accommodation.
Carrier responsible for shortages during unloading :- In case of short landed goods the carrier will have to pay penalty upto twice the amount of duty payable on such short landed goods.
Procedures to be followed by Importer :- The importer must follow certain procedures for import by road/ship/air.
Bill of Entry :- An official document that every importer must submit. 4 copies of this document must be submitted- original and a copy for customs, another copy for the importer and the final copy for the bank making remittances. Three types of Bill of Entry are found. Two are used for customs clearance and the third is used for clearance from the warehouse.
Bill of Entry for Home Consumption :- Home Consumption refers to using the imported goods within India. This is used when imported goods are to be cleared after payment of full duty. It is printed on white paper and thus is also known as White Bill of Entry.
Bill of Entry for Warehousing :- This is used when imported goods are stored in a warehouse under a bond without paying duty. When the importer requires the goods it will be cleared from the warehouse after payment of duty. Thus, this document enables the importer to delay paying customs duty until he requires the goods. This is printed on yellow paper and thus is also known as Yellow Bill of Entry. Bond is executed in order to transfer goods into the warehouse without paying duty. Thus this Bill of Entry is also known as Into Bond Bill of Entry.
Bill of Entry for Ex-Bond Clearance :- This is required when the imported goods are cleared from the warehouse after paying duty. Declaration by importer is not required as the goods are classified and its value is assessed while being cleared from customs port. This is printed on green paper and is thus known as Green Bill of Entry.
Mention of BIN on Bill of Entry :- BIN refers to Business Identification Number given to importers as well as exporters. It is a 15 digit number based on one's PAN of Income Tax. It must be mentioned on the Bill of Entry
Filing of Bill of Entry :- The Customs House Agent (CHA) is responsible for filing of Bill of Entry on behalf of the importer.
Documents to be submitted by Importer :- An importer must submit the following documents- Invoice, Packing list, Bill of Lading, GATT declaration form, Importers/CHAs declaration duly signed, Import License, Letter of Credit/Bank Draft, Insurance memo or insurance policy, Industrial License, Certificate of country of origin, Technical literature, Test report in case of chemicals, Advance License, Split up value of spare parts, components and machinery and No commission declaration. Submitting these documents will enable the importer to check the goods, determine value and classification of goods and also check that import is legally permitted.
Electronic submission under EDI system :- Customs work has been computerized in majority of the ports and airports. In such places Bill of Entry is not required as the EDI system is available. The importer must submit declaration in electronic format. A signed paper copy of this declaration should also be submitted. The Bill of Entry number will be generated by the system and can be seen on the printed check list. Original documents have to be submitted on reaching the stage of examination.
Assessing Duty and Clearance :- The documents that the importer submits are to be checked by the customs officials. Only after the documents are assessed and deemed proper by the customs authorities are the goods cleared.
Noting of Bill of Entry :- The Bill of Entry that the importer or CHA submits is cross-checked with documents like invoice, bill of lading and the Import Manifest submitted by the person in charge. The authorities check if the description in both these documents tally. Also, if all the required documents are not attached, the Bill of Entry will not be accepted.
The act of ‘Noting’ refers to taking on record by the customs official and the date of Noting is vital for determining rate of customs duty. The serial number is given in the imports section. If the airport/port has an EDI system, noting is done by the system itself.
Prior Entry of Bill of Entry :- Once the goods are unloaded, these must be cleared within 3 days. In case the goods are not removed, the port/airport will charge demurrage. Thus, the importer should finish all the required procedures before the goods arrive. The importer can submit the Bill of Entry 30 days before the expected date of arrival of the vessel. If so duty will be payable at the rate applicable on the date on which Entry Inward is granted to the vessel and not on the date the Bill of Entry was presented. However, rate of exchange will be as prevalent on the date the Bill of Entry was presented.
Assessing Customs Duty :- Goods are cleared only after the Bill of Entry is submitted. The Bill of Entry has the date stamp of receipt after which it is sent to the appraising department.
Appraisal of Goods :- The appraiser has the responsibility to classify goods and determine value of those goods for the purpose of customs duty. The appraiser must also find out the rate of duty payable as per any notification of exemption and must also ensure that the goods are not imported by breaking any rules or regulations. The appraiser has the authority to ask for submission of further documents. If he feels that the goods must be appraised, he will call for an examination order. In such a case the Bill of Entry must be presented to the appraising staff, who examine the goods in presence of importer’s representative.
Valuation of Goods :- The importer is obligated to make the full value of the goods known. If the assessing officer has doubts about the true value of the imported goods, he can ask the importer to submit further documents and details. If the doubt persists and the value declared by the importer is rejected, then the assessing officer can determine the value of the goods based on value of similar goods. However, the assessing officer must not reject the value declared by the importer just to raise the assessable value of the goods.
Approval of Assessment :- The assessment must be approved by the Assistant Commissioner if the value of the goods is more than rupees one lakh. The appraiser can approve valuation if the case is under fast track clearance for imports. Once the valuation is approved, the rate of duty is typed by a pin-point typewriter. The assessing officer must sign the Bill of Entry.
EDI Assessment :- The EDI system electronically transfers cargo declaration to the assessing officer. Processing is done on the screen and the system does all the calculations. In case the assessing officer has a doubt, his query is printed at service centre and the importer replies to this query through service center. Documents are inspected once the EDI assessment is complete. After assessment, a copy of the Bill of Entry is printed at service center. Once the customs officer gives the ‘Out of Charge’ order the final Bill of Entry is printed.
Paying Customs Duty :- Once duty is assessed, the importer must pay the necessary duty. Importers and CHAs normally keep a current account with the customs department and the duty can be debited to this account or be paid via cash/DD. After duty is paid, goods can be taken from the authorities but only after examination. If the goods have not been examined, these must be given for examination in import shed. After the shed appraiser issues the ‘Out of Charge’ order the goods can be taken.
First and Second System of Assessment :- There are two system of assessment. First appraisement system is implemented if the appraiser is unable to assess the goods on the basis of the documents submitted and wants to conduct an inspection. The goods are examined and then assessed. The importer can also request for this procedure if he is unable to submit all the required details about the goods. This request must be made while filing the Bill of Entry. The importer must mention the reason for this request. Once the request is recorded on the Bill of Entry it is returned to the importer. It is then presented before the import shed for examination. The shed appraiser examines the goods and reports his findings. In the EDI system the examination report is given in the computer. After this the goods are assessed to duty by the appraiser. This system is also used in the following cases- goods are to be examined for classification, goods are re-imported, goods are damaged and abatement has been claimed, goods are abandoned and application for remission of duty has been made or when goods are provisionally assessed.
In the Second Appraisement System goods are done on the basis of documents and then goods are examined, which is not necessary. Goods are examined on the basis of risk assessment or specific intelligence report.
Examining Goods :- Examiners conduct physical and quantitative checking. Certain packages are opened and examined in the customs examination yard. The examination report is prepared by the examiner.
Accelerated Clearance of Imports and Exports Scheme (ACS) :- According to this scheme, the importer can himself determine classification of goods. The computer will calculate duty based on the importer’s declaration. Physical examination will be done on a computer based system. Audit of imported documents will be done by post-clearance audit.
This scheme is open to status holders under EXIM policy, Government PSUs and other importers who have been importing for a minimum period of two years and have file a minimum of 25 Bills of Entry in the previous year.
In case of exports, the scheme is open to status holders under EXIM policy, EOU/STP/EHTP units whose goods have been sealed in the presence of customs or excise officials, Central and State Government PSUs, exporters/manufacturers who have been exporting for a minimu period of two years and have filed a minimum of 25 Shipping Bills in the previous year, and bulk exporters. Importers and exporters who want to avail this scheme have to apply to the Commissioner.
Provisional Assessment :- Provisional assessments can be conducted in the following cases- when the customs official is sure of the importer’s inability to submit all the required documents, to conduct chemical or other tests of the goods, even after the importer submits all the required documents, the customs officer can call for further enquiry.
In case of a provisional assessment, the importer must provide guarantee as asked by the customs official for payment of difference if any. The goods are cleared after paying duty that has been provisionally assessed and after providing guarantee. After final assessment the difference is paid by the importer. If after provisional assessment the goods are warehoused, then the customs official can ask the importer to provide a bond for twice the difference in duty, if the finally assessed duty is higher. This bond is known as Provisional Duty Bond.
Checking duty drawback/license documents :- Documents in respect of Duty Entitlement Pass Book (DEPB, duty drawback, advance license etc will be examined.
Execution of bond and payment of duty :- After assessment of duty, the Bill of Entry is returned to the importer. The Bill of Entry must be submitted to the system for calculation and pinpointing of duty. In case of execution of bond, this will be done in the bond section.
Payment of duty :- Duty payment is not required when the good are moved to a warehouse. When goods are for home consumption duty must be paid. CHA or the importer can make the payment. Regular importers have Provisional Duty accounts with customs duty. Duty is paid via cash or the P.D. account. If the importer doesn’t have a P.D. account he can pay by cash using TR-6 challan. Duty must be paid within 5 days (excluding holidays) of return of the Bill of Entry to the importer.
Interest for late payment :- In case of late payment of duty, the importer must pay interest anywhere between 10% to 36% as may be notified by the Central Government.
Disposal if goods are not cleared within 30 days- After unloading, the goods must be cleared within 30 days or else the goods will be sold after notifying the importer. Customs officials can and often do grant extensions. However, hazardous goods, perishable items and animals can be sold even before 30 days.
Out of Customs Charge Order :- After the goods are inspected and it is ensured that the import has not violated any rules and that the customs duty has been paid, the customs authorities will issue ‘Out of Customs Charge’ order. After issuance of this order the goods can be cleared from the customs area.
Demurrage if goods are not cleared :- If goods are cleared from the port/airport within 3 days, the importer will have to pay heavy demurrage.
Importing software through data communication :- Importing software through data communication/ tele-communication is allowed. For such imports proper accounts must be maintained in books. The unit that wants to import software through data communication must notify the Development Commissioner of EOU/Director of STP of its annual requirements. After the software is imported, a detailed and written report should be sent to the Development Commissioner of EOU/Director of STP within 48 hours along with Bill of Entry certificate from Development Commissioner of EOU/Director of STP. After this the ‘out of charge’ order will be issued. The documents are routed through bank.
Relevant Date for Rate and Valuation of Customs Duty :- Tariff valuation and rate of duty applicable to imported goods shall be the valuation and rate in force at one of these dates- if the goods are for home consumption, then the date on which the Bill of Entry is submitted, if the goods are moved to a warehouse, the date when Bill of Entry for home consumption is presented for clearance from the warehouse and in other cases the date of payment of duty.
Concept of Territorial Waters is not Relevant :- The concept of date of entering into territorial waters is not applicable in determining rate of customs duty.
