Customs clearance: A complete guide When Importing Goods from China
1. What is customs clearance?
2. What are HS Codes, and How Do You Determine Them?
3. China HS Classification Code
4. Who is responsible for customs clearance?
5. What is a Customs Broker?
6. How does customs clearance work?
7. How long does customs clearance take?
8. What is the customs clearance process?
9. Customs clearance agent services
10. What are customs clearance documents?
11. Where can I find a customs broker in China?
12. Customs clearance FAQs
What is customs clearance?
Customs clearance is a process where it involves the act of taking the goods from the customs authorities after paying the specified charges to facilitate the movement of goods inside the country (if it is an import) or outside of a country (in exports). It also means a document issued by the customs department to the shipper, which indicates that all the charges have been paid and are ready to proceed further in the import or export.
In short, Customs clearance means either a document indicating that the shipper has paid all the charges or a process involving taking the goods from the customs authority.
- Export customs clearance
Customs clearance is one of the major activities involved in the export process. In export, it means a procedure where the shipper has to clear all the dues related to the export process before cargo exporting. The custom charges depend on many factors such as the value of the goods, type of the goods, etc.
The customs clearance of export cargo is an easy process if all the documents are correct and the value is declared correctly; otherwise, it can become a primary reason for delayed shipments.
- Import customs clearance
Customs clearance of import cargo or import custom clearance means the process in which the shipper clears all the duties imposed by the customs authorities. Once the charges have been paid, the importer is allowed to move the goods inside the country.
Cargo customs clearance, parcel customs clearance, and shipment customs clearance are the common phrases we can hear in any import and export business, and more or less everything is the same.
What are HS Codes, and How Do You Determine Them?
If you are in international trade, it is pretty common to hear HS code. HS code ( Harmonized System) or HSN (Harmonized System of Nomenclature) is also known as Harmonized Commodity Description and Coding System. This system is accepted universally in classifying all the traded goods worldwide.
The primary aim of the HS code is to help the customs authorities identify the goods and determine the right amount of taxes and duties on them. Each product is assigned a unique numerical code in the HS system to identify the product; this code is called the HS code.
The HS code contains a minimum of six digits, and it can go up to ten digits in China. In both importing and exporting, the shippers must mention the HS code on all the shipping documents, including commercial invoices, shipping bills, and packing lists. If you are an importer or exporter, it is your responsibility to determine the correct HS code of your product and mention it in the legal documents. If you mention incorrect HS code, it will lead to unnecessary delays and problems in the customs clearing process.
HS Code Structure
- It has a minimum of six digits.
- HS code has 5000 goods groups.
- The groups have 99 chapters.
- These 99 chapters have 21 sections.
- The sections are arranged in logical and legal structure.
More than 200 countries use the HS code, and over 98% of the goods in international trade are classified under this code. You can determine the HS code with the help of the Free Trade Agreement Portal; it is governed by the Department of Foreign Affairs and Trade or DFAT. If you mention the correct HS code, you will pay the suitable customs duty, and the incorrect usage leads to holding back shipment at the ports.
China HS Classification Code
China started using the HS code in 1992, and till 2018 the length of the code was ten digits. Now it is using 13 digits HS code. The section and chapters and the method of determining the HS code remain the same in all the countries since it is a universally accepted coding system.
Incoterms customs clearance
Incoterms is a short form used for International Commercial Terms. The International Chamber of Commerce publishes these terms. It regulates the commercial transactions between the parties in terms of responsibilities, risks, costs, and tasks associated with the delivery and transportation of the products.
DAP incoterms customs clearance
DAP or Delivery At Place means that the vendor delivers the goods to a place agreed before by both seller and buyer. The location of delivery can be anywhere as per the mutual agreement. In the documents, the place of delivery should be mentioned correctly. In DAP customs clearance, the buyer needs to take care of the customs clearance process.
FCA incoterms customs clearance
Free Carrier or under FCA incoterms, the seller is responsible for loading the cargo at an agreed location in the exporter’s country. The importer is liable to bear all the costs and risks in this method. The responsibility of learning the customs charges rests with the buyer. He needs to take care of customs duties in both exporters and his nation—the duties of the seller end at the place of delivery.
EXW customs clearance
EXW incoterms mean Ex Works. If the trade is made under EXW terms, the obligations from the seller are very minimum. In this arrangement, the seller is responsible for delivering the goods to a specified place. After that, all the shipping charges and other risks and tasks remain with the buyer. Since the obligations of the seller are limited, the customs clearance also remains under the buyer. However, upon the request seller can facilitate these tasks but at the risk and cost of the buyer.
FOB customs clearance
FOB stands for Free On Board or Freight on Board. And this term applies only to inland waterways and sea transport that means it is not applicable for air, rail, and road transportation. Under these trade terms, the liabilities and risk distribution are done by dividing the responsibilities between the seller and buyer in context to the place of destination and origin. In FOB, the seller is responsible for clearing the customs to the delivery port from the place of origin.
CIF customs clearance
CIF stands for Cost, Insurance, and Freight. This incoterm cannot be used on road, rail, and air transportation. Under this term, all the expenses are borne by the seller, from delivery of goods to bearing the carriage and insurance charges. In CIF, it is the duty of the seller to clear the customs from the shipping country. The buyer is responsible for clearing the goods from the importing country’s customs authority. Hence buyer is accountable for import duties and fees.
DDP customs clearance
DDP or Delivered Duty Paid incoterm means the seller delivers the product when the products are placed at the disposal of the receiver. Under this method, the seller takes care of all the charges and risks involved in delivering the goods from one place to another. He is also responsible for paying the duties for both export & import. That means the seller is responsible for clearing the customs in both places.
DDU customs clearance
DDU stands for Delivery Duty Unpaid. As the name says, under this term, the buyer will be notified once the goods arrive, and he has to take care of all the customs charges and customs clearing process.
Who is responsible for customs clearance?
Customs clearing is a vital process in import and export trade. Hence, the responsibility of cleaning the customs lies with the exporter and importer equally. Both parties must work together to provide the necessary documents to the customs authorities to clear the goods from customs.
However, this responsibility depends on the trade agreement and incoterms they have in place. Similarly, the duties can be moved to freight forwarders, customs clearing agents, brokers, or clearing companies. You can find different persons or companies carrying out these actions, and below is the familiar names you could hear in the clearing process.
Export clearing agent
These people are often referred to as export customs brokers or forwarding agents. They will coordinate with buyers, sellers, and customs authorities to carry out the process smoothly.
Import clearing agent
Like the customs export clearing agents, the import clearing agents excel at all the processes related to the import clearing process. They help clear the goods from the customs authorities ASAP.
Customs clearance broker
The customs clearance brokers are familiar with both export customs clearance and import customs clearance and thus help the exporters and importers clear the goods from the customs authorities. They charge some percentage as their remuneration.
Freight forwarder customs clearance
Freight forwarding agents or freight forwarding companies will help arrange all the necessary things to transport the goods from exports to customers. They also can help the importers and exporters in handling the clearing process,
Customs clearance agent
The customs clearing agent helps the people to carry out the customs clearing process smoothly. They usually work as individuals and charge a certain percentage for the service rendered.
Customs clearance company
Customs clearance companies have many professionals who contain deep knowledge in the import and export customs clearing process and help the seller and buyers to clear the customs smoothly. These companies are more reliable since they can send different professionals if one agent cannot complete the process.
The self-customs clearance refers to the process where the buyer or seller himself takes care of all the proceedings related to customs clearing without the help of any agents, brokers, or companies.
What is a Customs Broker?
The customs broker or customs house brokerage is a person or group of people who help the importers or exporters in clearing the customs. The work them is similar to a customs clearance agent. The customs broker can be hired or affiliated by businesses, freight forwarders, importers, exporters, shipping lines, customs brokerage firms, etc.
The difference between Freight Forwarders and Customs Brokers?
- Freight forwarders act as an intermediate between business and the shipping company. On the other hand, a customs broker is an intermediate between the exporter/importer and the customs authorities.
- The services of a freight forwarder involve many aspects that mean they can provide other services than just freight forwarding. The services of a customs broker are particular, and they do not provide services other than helping the importer/exporter in clearing the customs.
- Usually, customs broker focuses only on the imports. Freight forwarders deal with many importers and exporters globally.
- Many times, a freight forwarder can include the services of a customs broker. On the other hand, a customs broker will never perform the services of a freight forwarder.
How does customs clearance work?
The customs clearance work is related to preparing and submitting the documents from respective parties and facilitating the clearance of goods from the customs authorities.
What is the customs clearance process?
The Customs clearance process involves preparing and submitting all the required documents to facilitate the import and export business. This process helps to move the goods inside or outside of the country based on the nature of the trade (import/export). The custom clearing companies, brokers, or agents represent clients during customs assessments, customs examination, payments of customs duties, and co-take the goods from the customs authorities after the customs clearance along with the certificate/documents issued by the customs authorities.
To understand the clearance process in detail, you must go through the customs clearance process flow chart. In the below section, we are providing the complete customs processing step by step.
1. Paperwork Verification
In the first step, you must submit all the necessary documents to the customs department.
2. Customs Officer Checks
The customs officials match the documents provided by you with the shipment. If they are correct, the following steps become smooth.
3. Payments, Taxes, Duties
The customs officials determine the applicable taxes as per the details provided in the documents. The exact payable duties depend on the value and type of the goods. If there are any pending duties and taxes, the authorities will request you to pay the outstanding. This must be done before releasing the shipment.
4. Release of Shipment
Once all the outstanding taxes and duties are paid, the customs authorities will release the shipment. After this, the importer or exporters can take the goods inside or outside of the country.
The initiated customs clearance process
This refers to passing the goods through customs to facilitate the goods to go outside or inside the country.
Pending customs clearance
Sometimes the goods will be held at the customs due to accurate or faulty documents. Taking the necessary actions will help in clearing the shipments.
Completed customs clearance process
This refers to the stage where all the duties are paid, and the shipment is ready to release from the customs.
Fast customs clearance
To clear the customs fastest, you should ensure all the documents are correct and duties are paid in full. This is where customs clearing professionals come into play.
US customs clearance process
The customs clearance in the US typically takes less than a day if all the documents are correct.
EU customs clearance
Like any other country, you can also expect a quick customs clearance in EU countries if the documents are correct. It typically takes a few minutes to one day.
Canadian customs clearance
If all the documents are correct, you can expect the custom clearance between 12 to 48 hours, depending on the traffic.
China customs clearance
The customs clearance process in China takes between one to two days if all the documents are correct. This time also depends on the season and traffic.
Korean customs clearance
Typically, you can expect the customs clearance to be completed within a day if all the documents are correct.
How long does customs clearance take?
The customs clearance timing can differ in different countries. In general, you can expect customs clearance to be completed from a few minutes to four days. This timing is applicable only if the documents are correct.
What is the customs clearance fee?
The customs clearing fee is the payment you need to pay to the customs authorities to move the goods from one country to another.
Customs clearance Taxes and Tariffs
Value Added Tax or VAT is a part of the customs fee, and it depends on the products you are importing or exporting. The rate also differs depending on whether it is imported or exported.
The excise taxes are levied on the goods that come into the customs. The tax rates depend on the type of goods you are importing or exporting.
Custom valuation is the process where customs authorities determine the value of goods imported or exported. Based on this monetary value, the customs fees will be levied.
Who pays custom clearance?
To clear the goods from customs, the buyer or seller must pay specified customs duties. Different parties pay these charges as per the arrangements. If you hire customs clearance agent services,the agent will pay the fee and then charge you. In the same way, as per the incoterms, wither the buyer nor the seller has to pay the customs duties.
Customs clearance agent services
1. Express customs clearance
UPS customs clearance
UPS initially started as a messenger company, and now it is undertaking the carriage and customs clearance services. It is the most admired and recognized brand in the United States. UPS provides quick and professional customs clearance services.
DHL customs clearance
DHL Parcel is a German-based logistics company, and it provides carrier and customs clearance services both in internal and international places. It is the largest logistic company in the world. This company offers one of the fastest shipping and customs clearance services.
FedEx customs clearance
FedEx provides express logistics services to over 220 countries, and it also offers express customs clearance services. These three are the best express customs clearance services you can opt for.
2. Sea freight Customs clearance
Cargo customs clearance
Many companies and forwarding agents offer cargo customs clearance; this is related to sea freight customs clearance.
Local customs clearance
This refers to performing the customs clearing procedures at the local operator’s office without visiting the customs offices.
Destination customs clearance
This refers to the process where the clearing agent performs and clears the goods from the port where the goods have been delivered.
3. Air freight customs clearance
If you choose air transportation to deliver the goods, you need to take the services of air freight customs clearance agents.
4. Amazon customs clearance
Amazon will help you clear the customs for many types of goods, and they will charge you some fee for the service rendered.
5. Customs clearance in china
If you are importing the products from China, you must know basic Chinese customs clearance. Here the importer should provide China Customs Declaration Form to the customs authorities to complete the customs clearance process.
- Registration code (CR)
The CR number refers to a ten-digit customs registration number that is mandatory if you import products into China.
- China custom tracking
Once you entrust the customs clearing duties to any agent or company, you can track the status using their tracking service online.
What are customs clearance documents?
The customs clearance process can become a hectic task if you do not know the mandatory customs clearance documentation to provide. So, let us look at them one by one.
Documents required for export customs clearance
The contract is the documentation coating all the trade-related terms and conditions. It should contain the name and address of the buyer and seller and other details such as incoterms, the product details, etc.
2. Commercial Invoice
The commercial invoice is the proof for the purchase of goods from the seller. This document shows the product, quantity, date of the purchase. These details are necessary to determine the value of the products.
3. Packing List
The seller provides the packing list with the commercial invoice. It should give the details related to the traded goods, including the number and goods type, volume, value, weight, Qty, etc.
4. Import and export licenses
The customs authorities need the import and export licenses to approve the export and import of the goods.
5. Inspection certificates
The products being exported should pass the product inspection tests. The customs authorities ask for the inspection certificate. The authorized inspecting agent or company should issue the certificate.
6. Bill of Lading
The transporting partner issues this document. BL certifies that goods have been loaded and it is ready to transport. The original copies of BL are necessary for customs clearing.
7. Letter of Credit
The letter credit is a document that confirms the assurance from the exporter’s bank to remit the money to the seller. All the letters of credit should be handled under the guidelines of the International Chamber of Commerce.
8. Warehouse Receipt
It is a document used in the market to guarantee the quantity and quality of the goods being warehoused in an approved facility.
9. Certificate of Origin
The certificate of Origin is another important document needed in the import and export business. This document shows the country from where the product originated. This will help the customs authorities to impose the duties accordingly.
10. Insurance Certificate
Insurances are the best tool to avoid the financial losses that may occur. However, in recent days insurance is not an instrument of your choice document. Every importer has to have a valid insurance policy to complete the international trade, and the copies of insurance must be provided to the customs authorities.
Where can I find a customs broker in China?
You can find the customs clearing brokers in China using the below sources.
This is the most preferred and most used method to find customs brokers. If you type china customs clearing brokers or agents, you can find many service providers.
Trade shows are the best way to find freight forwarders, clearing agents, manufacturers, etc. Hence, if you visit Chinese trade shows, you can get in touch with customs brokers.
Using the yellow pages, you can find the best customs clearance agent in China.
Hntersourcing is the best place to get all the services related to import or export trade. Here you can find the customs clearing services too. This company has many professionals who are knowledgeable and experienced in performing all tasks involved in customs clearing.
Customs clearance FAQs
1. When do I need to organize customs clearance?
In most cases, customs clearance is mandatory whenever you move commercial products from one country to another through any means of transport. However, there are some exceptions in some countries. You can transport goods without customs clearance; sometimes, small shipments can be exempted from customs clearance. For example, in the United States, if the value of your goods is less than eight hundred dollars, the customs clearance is exempted. So, the customs clearance and its exemptions and rules are country-specific, and hence you must research the country you are operating in.
2. Can I organize the customs clearance myself?
Yes, there are no rules in many countries that you must hire a broker or agent to clear the customs for imports. However, working with a licensed agent or broker is recommended since they will possess the knowledge to carry out the customs clearing process without any hiccups. If you hire an experienced agent to perform these activities, you can avoid delay, confusion, costs, and mistakes.
3. How can I check the status of the customs clearance process?
If you hire a freight forwarder or custom clearing agent, they will keep you updated on customs clearance status. The brokers, agents, and freight forwarders will have an online tracker to check customs clearance status. They will let you know immediately if there are any delays or holdups in the customs clearance.
4. How much is customs clearance in South Africa?
In South Africa, the customs clearance charge is R50,10 for all the incoming goods and R25,85 for all the postal items. However, the charges will vary from time to time.
5. How much does customs clearance cost the UK?
In the UK, the customs fees are calculated based on goods type and the declared values of the same. Some custom clearing companies charge £29 for all UK airports or sea customs clearing.
6. How long does customs clearance take in India?
In recent days, the customs clearing process has become very swift in India. Hence, you can get the customs process cleared from 12 minutes to 12 hours. However, the speed depends on the customs clearing agent and brokers.
7. How long is customs clearance in the UK?
Just like any other country, in the UK also, you can expect a quick customs clearance if all the documents are ok. Usually, it will take from a few minutes to a day. If there are any missing or incorrect documents/details, it could become more days and even a few weeks.
8. What causes customs clearance delays?
The common causes for customs clearance delays are unavailability or incorrect document details. If any required document is missing, the goods will be held at the port until the correct documentation is submitted. The other factors that could cause delayed custom clearance are the inefficiency of the cleaning/freight forwarding agents.
Customs clearance in China is one of the most straightforward processes if you have all the documents ready and experienced professionals support you. You can also perform the customs clearing process; however, sometimes, it becomes tricky if you are not familiar with the local practices. We hope the details we provided in this article are enough to perform the customs clearance procedure, and if you want a tension-free and smooth process, we also offer the solution.
Thus far, we have understood customs clearance in China and the key terms and things involved. The proper knowledge in this regard will help in completing all the processes without any hiccups. You must be aware of what is HS code is, the different types of incoterms, which are required to pay the customs charges in various arrangements, what documents are needed to clear the customs. If you want to be free from all these tensions and tasks, the best way is to hire some reliable customs clearing agent such as huntersourcing.
If you are looking to spend less on customs clearance costs and get high-quality services, we recommend you to look no beyond Huntersourcing. We provide end-to-end services related to international trades, and the customer service is also excellent, and thousands of happy clients worldwide are the proof of our services.
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