Importing Goods Into India for the First Time: Bill of Entry, Customs Duty and Clearance

Importing goods into India involves more than placing an order with an overseas supplier. Before the goods can leave the port or airport, they have to be declared to customs, classified, assessed for duty and, for many products, checked against other regulations. Getting it right the first time avoids demurrage charges and delays. This guide walks through the process for a first-time importer.

Before You Import

• Get an Import Export Code (IEC) from the DGFT. Customs won't clear goods without one, except in limited cases.
• Register on ICEGATE, the customs portal, if you'll file documents yourself. Most importers use a licensed customs broker, who files on their behalf.
• Check the import policy for your product. Most goods are freely importable, but some are restricted, need a licence, or are prohibited.
• Check product-specific requirements, such as BIS certification for notified products, FSSAI clearance for food, Legal Metrology declarations for packaged goods, and plant or animal quarantine for agricultural products.

Classification

Every product is classified under a code in the customs tariff, based on the internationally used HS system. The classification decides the rate of duty, any import restrictions and the other approvals needed. Getting it wrong can mean paying the wrong duty, and penalties later. If you're unsure, a customs broker can help, and an advance ruling is available for some cases.

The Bill of Entry

The bill of entry is the main declaration to customs. It's filed electronically, through ICEGATE, with:

• The commercial invoice and packing list.
• The bill of lading or airway bill.
• The certificate of origin, if you're claiming a lower duty under a trade agreement.
• Licences, certificates or approvals needed for the product.
• Insurance and freight details, which are part of the value for duty.

File the bill of entry in advance of the goods' arrival. The law now expects early filing, and late filing can attract charges.

How Duty Is Worked Out

Customs duty is calculated on the assessable value, which is broadly the transaction value of the goods plus freight and insurance to the Indian port. The main components are:

• Basic customs duty, at the rate for the product's classification.
• Social welfare surcharge, calculated on the basic customs duty.
• IGST, on the value plus customs duties, which a GST-registered importer can usually claim as input tax credit.
• Compensation cess, for some products.
• Anti-dumping or safeguard duties, for certain products from certain countries.

Lower rates may apply under India's free trade agreements if the goods meet the rules of origin and you have the right certificate.

Assessment and Clearance

1. The bill of entry is processed through customs' risk management system. Many consignments are cleared on the basis of the importer's declaration, without detailed checks.
2. Some are selected for assessment by an officer, examination of the goods, or both.
3. You pay the duty online.
4. Once everything is in order, customs grants "out of charge", and the goods can be taken out of the port or airport.

After Clearance

• Keep all import documents, as customs can audit them later.
• Claim the IGST paid on import as input tax credit in your GST returns.
• Pay the overseas supplier through your bank, which will report the payment under FEMA. Payments for imports are generally due within the time allowed by RBI rules.

Common Mistakes

• Importing before checking whether the product needs BIS, FSSAI or other approvals.
• Wrong classification or undervaluation.
• Late filing of the bill of entry, leading to charges and demurrage.
• Not claiming the IGST as input tax credit.

Getting Help

Think Filing gets importers set up with IEC and the right registrations, checks product requirements, and works with customs brokers on classification and clearance.

Sources

• Customs Act, 1962, and the Customs Tariff Act, 1975.
• Foreign Trade Policy and the ITC (HS) import policy.