Understanding Customs Clearance
Talk to us about your customs clearance needs
What is customs clearance?
Customs clearance involves the review and approval of import or export shipments by the Customs Office. Generally, this process comprises four main stages
​
1. Submission of customs documentation for examination by a Customs Officer.
2. Evaluation of the submitted customs paperwork.
3. Determination and calculation of applicable duties and taxes.
4. Settlement of duties and taxes.
​
It's crucial for documentation to be precise and comprehensive. The necessary customs paperwork varies depending on the destination but typically includes the waybill and commercial invoice. Additional documents that might be required include the certificate of origin, specific government certifications, packing list, pro forma invoice, bill of lading, certificate of conformity, export license, certificate of insurance, letter of credit, import license, customs bond, and bill of entry.
​
In cases of inaccuracies or incompleteness in the paperwork, the customs broker must intervene to rectify the issue to avoid potential fines or penalties.
Common problems in Customs clearance
Customs clearance can be a complex process, and several common problems can arise during it:
​
-
Incorrect Documentation: Incomplete or inaccurate documentation is a major issue. Missing or incorrect paperwork can lead to delays or even rejection of the shipment.
​
-
Customs Valuation: Determining the accurate value of goods for customs purposes can be challenging, especially for unique or complex items. Disagreements over valuation can lead to delays or additional fees.
​
-
Tariff Classification: Properly classifying goods according to the Harmonized System (HS) codes is crucial for determining applicable duties and taxes. Misclassification can result in overpayment or underpayment of duties.
​
-
Regulatory Compliance: Compliance with various import/export regulations, such as licensing requirements, trade restrictions, and safety standards, is essential. Failure to comply can result in penalties or seizure of goods.
​
-
Restricted or Prohibited Items: Certain goods are subject to restrictions or outright prohibitions for import/export. Shipping such items without proper authorization can lead to confiscation and legal consequences.
​
-
Customs Inspections: Random inspections or suspicions about the contents of a shipment can lead to delays in clearance. Properly preparing for inspections and providing necessary information can help expedite the process.
​
-
Delays and Backlogs: High volumes of shipments, seasonal peaks, or unforeseen events (e.g., strikes, natural disasters) can cause delays in customs clearance. Planning ahead and working closely with customs authorities can help mitigate these issues.
​
-
Language and Cultural Barriers: Dealing with customs procedures in foreign countries may present language and cultural challenges, especially for international shipments. Utilizing translation services or working with knowledgeable customs brokers can help navigate these barriers.
​
-
Tariffs and Trade Disputes: Changes in tariffs due to trade disputes or shifts in government policies can impact customs clearance procedures and costs. Staying informed about changes in trade regulations is essential for managing these challenges.
​
-
Technology Issues: Dependence on electronic systems for submitting documentation and processing customs declarations can sometimes lead to technical glitches or system failures, causing delays in clearance.
​
Addressing these common problems requires careful attention to detail, proactive communication with customs authorities, and often the assistance of experienced customs brokers or logistics professionals.
Customs definitions
Customs Declaration: A formal statement made to customs authorities providing information about the imported or exported goods, including their description, value, origin, and other relevant details.
​
Importer of Record (IOR): The individual or entity responsible for ensuring that imported goods comply with all customs regulations and for paying any applicable duties and taxes.
​
Exporter of Record (EOR): The individual or entity responsible for ensuring that exported goods comply with all customs regulations and for providing accurate documentation to customs authorities.
​
Bill of Lading (B/L): A document issued by a carrier to acknowledge receipt of goods for shipment, containing details such as the type, quantity, and destination of the goods.
​
Certificate of Origin (CO): A document certifying the origin of the goods, typically issued by a chamber of commerce or other authorized body, which may be required to qualify for preferential tariff treatment under certain trade agreements.
​
Duty: A tax imposed by customs authorities on imported or exported goods, usually calculated as a percentage of the goods' declared value.
​
Tariff Classification: The process of assigning a specific tariff code or Harmonized System (HS) code to goods based on their characteristics and intended use, which determines the applicable duties and taxes.
​
​
Excise Duty: A tax imposed on specific goods, such as alcohol, tobacco, and fuel, either at the time of importation or at the point of domestic production or sale.
​
Port of Entry: A designated location where goods enter a country, typically a seaport, airport, or land border crossing, where customs clearance procedures are conducted.
​
Customs Tariff: A schedule of duties and taxes applied to imported or exported goods, usually organized by product categories and tariff codes.
​
Temporary Import/Export: The temporary entry or exit of goods into or from the country for a specific purpose, such as repair, exhibition, or demonstration, with the intention of re-exporting them within a specified timeframe.
​
Transit Shipment: Goods passing through South Africa en route to another destination, often under customs supervision, without being subjected to import duties or taxes.
​
Clearing Agent/Broker: An individual or company authorized to act on behalf of importers or exporters in clearing goods through customs, handling documentation, and liaising with customs authorities.
Value Added Tax (VAT): A consumption tax levied on the value added to goods or services at each stage of production or distribution, including imports, in South Africa.
​
Understanding these terms can help facilitate smooth customs clearance processes for importers, exporters, and other stakeholders involved in international trade in South Africa.
Harmonised System (HS) Classification
The Harmonised Commodity Description and Coding System, commonly known as the 'Harmonised System' or 'HS', is a versatile global classification system for commodities created by the World Customs Organization
​
​
​
The HS is adopted by over 200 countries and economies as the foundation for their customs tariffs. Virtually all goods traded globally must undergo classification within HS-based tariff structures during customs clearance procedures, as well as for various other purposes, at both their point of origin and destination.
AK Consulting's HS Classification solution assists companies in establishing and upholding precise, regulatory-compliant, and streamlined classifications of their products in a comprehensive and strategic approach. Leveraging advanced technology, the solution automates the classification process, ensuring efficiency and accuracy.
