What Is Custom Clearance Meaning? Types, Process And Best Practices

Ngoc Lee
What Is Custom Clearance Meaning? Types, Process And Best Practices
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Are you considering importing goods into a country and want to know more about custom clearance? Perhaps you are a commercial or private importer, a freight forwarder, or an attorney representing clients involved in cross-border imports.

Regardless of your situation, understanding custom clearance can be critical for anyone shipping goods across international borders. In this blog post, we will discuss what is meant by custom clearance and the different steps involved in the process.

We'll look at what is custom clearance meaning, including its main types, its process, and some best practices that you can apply. Read on to find out more!

What is custom clearance meaning?

What Is Custom Clearance Meaning?

The process of submitting items to customs officials while entering or departing a nation is known as customs clearance. Items that are imported and exported, along with personal possessions and commercial cargo, are all required for customs clearance.

Customs clearance ensures that all appropriate import fees and taxes are paid and that items conform with all applicable requirements. Companies or individuals must give precise information about the cargo such as its origin, value, destination, and what’s inside, in order to clear customs.

Supporting documents, including invoices or lading bills, may also be needed by individuals or businesses. Customs officers might release the package for distribution once it has been cleared by them.

Now that you understand what is custom clearance meaning, let’s discover the main types of custom clearance.

Types Of Custom Clearance

There are three main types of customs clearance: international, import, and export customs clearance. Let’s go into the details of each custom clearance type now.

Types of custom clearance

International Custom Clearance

The procedure for obtaining permits and paying duties on products that are entering or leaving a country is known as international customs clearance.

It's essential for both importers and exporters to understand customs regulations and tariffs in order to clear their goods through international borders effectively.

International customs clearance can be done by individuals, but it is more frequently done by businesses that make use of the services of a customs broker.

Customs brokers are professionals who specialize in assisting importers and exporters navigate the complex world of customs clearance. They are well-versed in various countries' regulations and can assist with documentation, classification, and duty calculations.

Export Custom Clearance

This procedure would encompass the services performed by a certain country in order to export items to a different country. An exporter or a company house must secure several authorizations before exporting items.

Export custom clearance process includes the following steps:

  • Declaration of goods: The exporter submits an export declaration to customs, providing details about the goods being shipped.
  • Verification of documents: Customs officials review and verify the provided documentation, including any necessary permits or certificates.
  • Payment of fees: The exporter pays any applicable fees, such as export taxes or inspection fees.
  • Customs approval: Once all necessary documents have been reviewed and fees paid, customs approves the export declaration.
  • Release of goods: The goods are released for shipment to their destination country.

Export custom clearance services must be tailored to the needs of the country. During the entire procedure of exporting commodities and products, the following must be done:

  • Product packaging requirements: When items are exported outside of the country, they must conform to packing standards. There are several packaging standards that other nations have adopted. Custom Clearance Services would also entail adhering to packaging regulations.
  • Transport of goods: Important business law words such as FOB and CIF are used in commercial transactions. According to the foregoing standards, the seller or buyer must provide insurance, a commercial receipt, and a bill of lading. However, the mode of transport would be determined by the service chosen.
  • Delivery and unloading ports: This will involve fees for the port of shipment and unloading.
  • Goods inspection: When the products arrive at their destination, they will be kept for examination.

Import Custom Clearance

Import custom clearance is the process of obtaining customs clearance for items that are being brought into a country from abroad. This procedure ensures that all necessary fees and taxes have been paid and that the goods comply with any applicable regulations.

Import custom clearance process includes the following steps:

  • Submission of documents: The importer submits all necessary documents, such as the commercial invoice, bill of lading, and import permits to the customs authorities.
  • Customs examination: Customs officials inspect the shipment to verify its contents and value. This may involve physical inspection or x-ray scans.
  • Assessment of duties and taxes: Customs officials calculate the duties and taxes to be paid based on the declared value of the goods.
  • Payment of fees: The importer pays all applicable fees and taxes to customs. This can be done either directly or through a customs broker.
  • Release of goods: Once all necessary payments have been made, customs will release the goods for distribution within the country.

Importers must provide detailed information about the imported goods, such as their origin, value, and contents. They may also need to obtain import permits or adhere to specific requirements for certain goods, such as food or pharmaceuticals.

Import custom clearance also involves paying any applicable duties and taxes, which can vary depending on the type of goods and the country of origin.

Import customs clearance

Customs Clearance Process

The customs clearance process may vary slightly depending on the country and type of shipment, but generally follows these steps:

Documents inspection

A customs officer will go over your documentation to verify it is proper and complete. The following are the most typical clearance documentation:

  • Insurance proof
  • Invoice
  • Spending at the port
  • A shopping list
  • Origin certificate
  • Transportation documents such as air waybill, through bill of lading, inland bill of lading, and lading ocean bill.
  • Certificate of pre-shipment inspection
  • Transport bill
Document inspection

Tax and duty payment

After the cargo has been examined and all necessary import documents have been submitted, you must pay any taxes or duties payable on the products before Customs can release them for distribution. The total amount owed is determined by a number of criteria, such as the type of products being imported, their claimed value, and the specific customs legislation.

For example, if you are in charge of paying taxes and duties, like your cargo is delivered duty unpaid, or DDU, you must arrange for payment with your country’s customs department before the items can be delivered.

However, if your cargo is DDP (Delivery Duty Paid), which means the tax and duty are already included in the price of the products, you will not be required to make any further payments. In any case, it is critical to understand the prospective expenses of importing items so you can budget correctly and prevent paying an extra penalty.

Shipment release

The products will be free after the Customs inspects and assesses them. The procedure varies based on the type of imported products, but it usually entails paying any customs charges or taxes that are owed. After completing the release documentation, the importer can take control of the items and transport them to their final locations.

In some circumstances, commodities may be released conditionally, which means they must fulfill certain criteria before being taken off-site. Toxic substances, for instance, may need to be properly labeled and packed before being released from customs.

Finally, the customs clearance procedure ensures that all imported commodities comply with all relevant requirements before entering the domestic market.

Customs Clarance: Best Practices

To ensure a smooth customs clearance process, it is important to follow best practices such as:

  • Ensure accurate documentation: Any inaccuracies in the documentation provided for customs clearance can result in delays and additional fees. Make sure all information is correct and up to date.
  • Stay informed about regulations: Customs regulations are subject to change, so it's important to stay up to date on any changes that may affect your shipments.
  • Work with a customs broker: A customs broker can help navigate the complex world of customs clearance and ensure all necessary steps are taken for a smooth process.
  • Be prepared for inspections: Customs officials may conduct physical inspections or x-ray scans of your shipment, so it's important to properly package and label goods to facilitate this process.
  • Understand duty and tax rates: Duties and taxes can vary significantly depending on the type of goods and country of origin, so it's important to understand these costs before shipping.
  • Comply with all regulations: Failure to comply with customs regulations can result in penalties or even seizure of goods. It's crucial to follow all rules and requirements for a successful customs clearance process.
Comply-with-all regulations.jpg
Comply with all regulations

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Customs clearance is an essential part of international trade, ensuring that goods can legally enter and exit countries.

By understanding custom clearance meaning, and process, following best practices, and working with professionals such as customs brokers, importers and exporters can streamline their operations and avoid potential delays or penalties.

At EFEX, we have a team of experienced customs brokers who can assist with all aspects of customs clearance to ensure your shipments arrive at their destination smoothly and on time. Contact us today to learn more about our services and how we can help with your next international shipment.

Ngoc LeeNgoc Lee is an Content Creator Manager at EFEX. She wields her long-term expertise in Logistics and Supply Chain, harnessing her top-notch writing and research skills to bring incredibly valuable content. Whether you're a small startup or a well-established enterprise, Ngoc Lee is here to equip you with the essential knowledge of e-commerce, fulfillment, and all things business-related.