Exporting From India Series: Complying with Customs Procedures

Compliance with customs procedures is a critical step in the export process, ensuring that goods are legally cleared for international shipment. The process involves submitting the necessary documentation, obtaining approvals, and adhering to regulations laid out by the Indian Customs Department. Proper customs compliance avoids delays, penalties, or the rejection of shipments, while also ensuring smooth transit to the importing country.

Here is a detailed guide on complying with customs procedures for exporting goods.

1. Filing the Shipping Bill Through the Indian Customs Electronic Gateway (ICEGATE)

What is a Shipping Bill?

The Shipping Bill is a key document required for customs clearance in India. It contains details of the shipment, such as the exporter’s information, product description, quantity, value, and destination. This document is a prerequisite for obtaining export clearance.

What is ICEGATE?

The Indian Customs Electronic Gateway (ICEGATE) is the official online portal for Indian Customs, enabling exporters to electronically file their shipping bills and other customs-related documents.

Steps to File the Shipping Bill

1. Register on ICEGATE

   • Visit the ICEGATE website (https://www.icegate.gov.in).
   • Register as a user by providing your Import Export Code (IEC), PAN number, and other business details.

2. Prepare the Shipping Bill

   • Gather all required information for the shipping bill, including:
     • Description of goods.
     • Quantity and unit value.
     • FOB (Free on Board) value of the shipment.
     • Export promotion scheme details, if applicable (e.g., RODTEP).

3. Upload Documents
   Submit the following documents along with the shipping bill:

   • Commercial Invoice.
   • Packing List.
   • Export Contract or Purchase Order.
   • Certificate of Origin (if required).

4. Submit the Shipping Bill

   • Use the ICEGATE platform to submit the shipping bill electronically.
   • Choose the appropriate export type, such as:
     • Free Shipping Bill: For goods not eligible for export incentives.
     • Drawback Shipping Bill: For goods eligible for duty drawbacks.
     • Scheme Shipping Bill: For exports under schemes like RODTEP or EPCG.

5. Receive Shipping Bill Number
   After successful submission, the system generates a unique Shipping Bill Number. This is required for further customs processing.

2. Obtaining the Let Export Order (LEO) from Customs Authorities

What is the Let Export Order (LEO)?

The Let Export Order (LEO) is a customs clearance approval that signifies your goods are ready for export. Without the LEO, the shipment cannot leave Indian borders.

Steps to Obtain LEO

1. Customs Examination

   • After submitting the shipping bill, customs officials may inspect the goods to verify:
     • Accuracy of the information provided in the shipping bill.
     • Adherence to export regulations and product compliance.
     • Quality and quantity of the goods being shipped.
   • If no discrepancies are found, the examination is approved.

2. Verification of Documentation

   • Customs authorities cross-check the shipping bill with other submitted documents, such as:
     • Packing List.
     • Commercial Invoice.
     • Certificates (e.g., Certificate of Origin).

3. Approval of Shipping Bill

   • Once the goods and documents are cleared, customs authorities issue the LEO electronically through ICEGATE.
   • Exporters are notified of the LEO via email or on the ICEGATE portal.

4. Handing Over to Shipping Line

   • After obtaining the LEO, the goods are handed over to the shipping line or airline for international transportation.
   • The shipping line provides a Bill of Lading or Airway Bill as proof of shipment.

3. Verifying the Harmonized System (HS) Code of Your Product

What is the HS Code?

The Harmonized System (HS) Code is an internationally recognized numerical classification system for traded goods. Each product type is assigned a unique HS code, which determines:

• Applicable customs duties and tariffs.
• Eligibility for export incentives.
• Compliance with international trade regulations.

Importance of Correct HS Code

• Avoid Penalties: Incorrect HS codes can result in fines, shipment delays, or rejection at customs.
• Claim Export Benefits: Many export incentives, such as RODTEP or Duty Drawback, are tied to specific HS codes.
• Facilitate Customs Clearance: Accurate HS codes ensure smooth processing of shipping bills and reduce the likelihood of disputes.

How to Verify the HS Code

1. Use the ICEGATE Tariff Search Tool

   • Visit the ICEGATE portal or the CBIC (Central Board of Indirect Taxes and Customs) website.
   • Search for your product’s HS code based on its description or trade name.

2. Consult Export Promotion Councils (EPCs)

   • EPCs often assist exporters in determining the correct HS codes for their products.

3. Seek Professional Advice

   • If unsure, consult a customs broker or logistics partner to validate the HS code.

4. Double-Check Importing Country Requirements

   • Ensure the HS code matches the classification used by the importing country, as discrepancies can cause issues during import clearance.

4. Key Documents Required for Customs Compliance

Here is a summary of the essential documents needed for customs clearance:

Document	Purpose
Shipping Bill	Key document for customs clearance, submitted via ICEGATE.
Commercial Invoice	Details the value and terms of the export transaction.
Packing List	Specifies the packaging details, including weight, dimensions, and contents.
Bill of Lading/Airway Bill	Proof of shipment, issued by the shipping or airline company.
Certificate of Origin	Certifies the product's origin, often required for tariff benefits.
Export Declaration	Declaration to customs that goods comply with export regulations.

5. Tips for Smooth Customs Compliance

1. Ensure Accuracy: Double-check all documents for consistency and accuracy, particularly product descriptions, quantities, and values.
2. Hire a Customs Broker: For large or complex shipments, hiring a licensed customs broker can streamline the process.
3. Stay Updated on Regulations: Regularly review updates from the DGFT and CBIC to ensure compliance with changing rules.
4. Maintain Proper Records: Retain copies of all documents for future reference or audits.

Conclusion

Complying with customs procedures is essential for the successful export of goods. Filing the shipping bill through ICEGATE, obtaining the Let Export Order (LEO), and verifying the correct HS code are critical steps that ensure compliance with regulations and smooth processing of shipments. By adhering to these guidelines and maintaining accurate documentation, exporters can avoid delays, reduce costs, and establish a reputation for reliability in international trade.