Complete Customs Clearance Process in India for Sea and Air Consignments

Introduction

Customs clearance is a critical step in international trade, ensuring that goods imported or exported comply with Indian laws. Whether you're importing raw materials for manufacturing or exporting finished goods, understanding the customs process is essential to avoid delays, penalties, and extra costs.

In India, customs clearance involves multiple steps, documentation, and regulatory compliance under the Customs Act, 1962 and various trade agreements. This guide will walk you through the entire process for both sea and air consignments, helping businesses and individuals streamline their import and export operations.

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Step-by-Step Customs Clearance Process in India

Customs clearance is broadly categorized into two types:

1. Import Clearance (for incoming goods)
2. Export Clearance (for outgoing goods)

Each has specific requirements, but they follow a similar step-by-step process.

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1. Customs Clearance Process for Sea Cargo (Import & Export)

A. Import Customs Clearance (Sea Cargo)

When goods arrive at an Indian port via sea, they must pass through customs clearance before being released to the importer.

Step 1: Arrival of Cargo and IGM Filing

• The shipping line or freight forwarder files the Import General Manifest (IGM) with Indian Customs before the ship arrives.
• The IGM contains details of the cargo, consignee, and port of discharge.

Step 2: Bill of Entry (BoE) Filing

• Importers or their Customs House Agents (CHA) file the Bill of Entry (BoE) electronically through the Indian Customs EDI System (ICES).
• The BoE serves as a declaration of imported goods and determines applicable duties and taxes.

Step 3: Customs Examination & Assessment

• Customs officials assess the BoE and verify details such as classification, valuation, and import duty applicability.
• Goods may be flagged for physical examination if required.

Step 4: Payment of Import Duties & Taxes

• Importers pay applicable Customs Duty, IGST (Integrated GST), and other levies as per the Customs Tariff Act.

Step 5: Out of Charge (OOC) Order & Cargo Release

• Once customs duties are paid and no discrepancies are found, customs issues an Out of Charge (OOC) order, allowing cargo release.
• The importer then arranges transportation and warehouse storage.

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B. Export Customs Clearance (Sea Cargo)

Export clearance ensures goods leaving India comply with trade regulations and foreign exchange norms.

Step 1: Shipping Bill Filing

• Exporters or CHAs file a Shipping Bill via ICEGATE (Indian Customs EDI Gateway).
• Key shipping bill types:
  • Free Shipping Bill (for duty-free goods)
  • Drawback Shipping Bill (for claiming duty drawback benefits)
  • DEEC/Advance License Shipping Bill (for duty exemption benefits)

Step 2: Goods Examination & Let Export Order (LEO)

• Customs verifies the HSN classification, export duty applicability, and licensing requirements.
• Goods may be physically examined before approval.
• Upon approval, customs issues a Let Export Order (LEO).

Step 3: Loading & Export Manifest Filing

• After LEO, the shipping line files the Export General Manifest (EGM).
• The cargo is then loaded onto the vessel, completing the export customs clearance process.

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2. Customs Clearance Process for Air Cargo (Import & Export)

A. Import Customs Clearance (Air Cargo)

Air cargo follows a faster customs clearance process than sea shipments.

Step 1: Arrival of Goods & IGM Filing

• Airlines submit an Import General Manifest (IGM) to customs.
• Goods are stored at the Air Cargo Complex (ACC) until clearance.

Step 2: Bill of Entry Filing & Assessment

• Importers/CHAs file the Bill of Entry via ICEGATE.
• Customs officials assess the declaration for valuation, duties, and compliance.

Step 3: Customs Duty Payment

• Importers pay applicable duties, IGST, and fees.

Step 4: Out of Charge (OOC) & Cargo Release

• Customs grants OOC clearance, and the importer can take delivery from the custodian (airline or cargo complex authority).

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B. Export Customs Clearance (Air Cargo)

Air exports follow a streamlined process to ensure faster clearance.

Step 1: Shipping Bill Filing

• Exporters file a Shipping Bill electronically before cargo arrives at the airport.

Step 2: Cargo Acceptance & Security Check

• Airlines conduct a security check before accepting cargo.

Step 3: Customs Verification & LEO Issuance

• Customs assesses the declaration and may conduct a physical inspection.
• Once approved, a Let Export Order (LEO) is issued.

Step 4: EGM Filing & Cargo Loading

• Airlines file an Export General Manifest (EGM) before flight departure.
• Cargo is loaded onto the aircraft for international transit.

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Key Documents Required for Customs Clearance

Import Documents

✅ Bill of Entry (BoE)
✅ Invoice & Packing List
✅ Bill of Lading (for sea cargo) / Airway Bill (for air cargo)
✅ Importer Exporter Code (IEC)
✅ Insurance Certificate
✅ Letter of Credit (if applicable)
✅ Import License (if required)

Export Documents

✅ Shipping Bill
✅ Invoice & Packing List
✅ Bill of Lading / Airway Bill
✅ IEC Code
✅ Export License (if applicable)
✅ Certificate of Origin
✅ Letter of Credit (if applicable)

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Common Challenges & How to Overcome Them

1. Customs Delays Due to Incorrect Documentation

✅ Solution: Double-check all paperwork before submission.

2. Higher Duties Due to Incorrect Classification

✅ Solution: Consult a CHA or customs consultant for correct HSN classification.

3. Cargo Detention Due to Non-Payment of Duties

✅ Solution: Ensure duty payments are made in advance to avoid penalties.

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Do’s & Don’ts in Customs Clearance

✅ Do’s

✔ File customs declarations accurately to avoid delays.
✔ Maintain proper documentation to prevent disputes.
✔ Use licensed CHAs for smooth clearance.
✔ Track shipments through ICEGATE and carrier portals.

❌ Don’ts

❌ Don’t undervalue cargo to evade duties—it may lead to penalties.
❌ Don’t ignore changes in customs policies—stay updated on regulations.
❌ Don’t delay duty payments—this can result in cargo detention.

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Frequently Asked Questions (FAQs)

1. How long does customs clearance take in India?

• Air cargo: 24–48 hours
• Sea cargo: 3–5 days (faster for priority shipments)

2. Can I clear customs myself, or do I need a CHA?

You can clear customs yourself, but using a CHA (Customs House Agent) ensures smoother processing.

3. What happens if my cargo is flagged for examination?

Customs will conduct a physical check—this may delay clearance by 1–3 days.

4. Can customs clearance be expedited?

Yes, with proper documentation, priority processing, and pre-clearance approvals.

5. Are there penalties for incorrect declarations?

Yes, incorrect or false declarations may attract fines and legal action under the Customs Act.

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Conclusion

Understanding India’s customs clearance process is essential for smooth and efficient international trade. Whether importing or exporting via sea or air, proper documentation, compliance, and preparation can help avoid delays and penalties.

Stay updated on customs regulations to ensure seamless clearance! Need expert insights? Follow CMA Knowledge for more finance and trade updates!