Coupon Accepted Successfully!


Steps in import of goods

Step 1: Presenting a bill of entry to the Superintendent or Appraiser

The importer must make an entry in respect of imported goods by presenting a bill of entry (in the prescribed form) to the Superintendent of Customs and Central Excise or the Appraiser. Certain customs stations have an Electronic Data Interchange (EDI) interface  – as compared to manual clearance which is available during working hours, this facility is available on a 24 x 7 basis. Imports through such stations require only a cargo declaration to be filed, as the bill of entry is electronically generated in the computer system. In non-EDI enabled customs stations, a physical form bill of entry is filed for clearance of imported goods.


What is a bill of entry?

Bill of Entry is a certificate delivered to the customs authorities by an importer, giving specified particulars of imported goods and the place of import. As per the Bill of Entry (Forms) Regulations 1976, a physical bill of entry can be of 3 types, and each type will have a different colour, as follows:


● For Home Consumption - When imported goods are used for home consumption upon payment of full duty


For Warehousing - When the importer does not require the imported goods immediately and intends to store them in a warehouse.


 For Clearance from the Warehouse – Goods that are warehoused can be released for home consumption after payment of duty by the importer. A bill of entry (called an ‘ex-bond’ bill of entry) must be filed for this purpose.

The importer must also make a declaration as to the truth of the contents of the bill of entry and produce an invoice (if any) to the proper officer. Supporting documents, such as the signed invoice (for the imported goods), bill of Lading / airway bill, import license, industrial license, or a letter of credit (where applicable) are also required to be submitted.


Note: In certain ports and airports, customs authorities have established an electronic system for clearance of imported goods. In such ports, a formal bill of entry in physical form is not required to be filed. Instead, a cargo declaration is filed in practice.

After the Bill of Entry is submitted, an entry is made by the customs authorities. This process is called 'noting'
(recall that in case of exports, the bill of entry is substituted by a ‘shipping bill’).


Step 2: Self-assessment and verification

Prior to 2011, customs authorities were required to perform an appraisal of the goods and other related  tasks to assess whether the goods can be validly imported, identification  of the appropriate heading for the imported goods under the Customs Tariff Act, 1975 (for determination of the rate of import duty) and for determination of applicable exemptions. This
appraisal could be either on the basis of documents submitted by the importer or physical examination of the goods.


Next, a valuation of the goods was conducted by customs authorities. Although an importer was required to declare the value of goods in his declaration, customs authorities could conduct an independent valuation to determine the final rate of duty.


However, the above procedures have been modified by the Finance Act in 2011 - now, a ‘self-assessment’ procedure has been established. Import duty is now paid on the basis of self-assessment by the importer himself, who files the Bill of Entry in the electronic form.


Thus, it is now the responsibility of the importer to ensure that he declares the correct classification for the imported goods, applicable rate of duty, value, any exemption notifications claimed etc. in respect of the imported goods while presenting Bill of Entry or Shipping Bill.


Import documents which are filed on the basis of self-assessment may be verified by customs authorities. Verification is undertaken at the customs house, based on intimation by an automatic Risk Management System installed by the customs department. However, certain categories of importers (who are qualified under a program called the Accredited Client Programme), may opt for verification on their premises (called On-Site Post Clearance Audit (OSPCA)).


Step 3: Execution of necessary bonds/ guarantees (applicable to imports of goods by businesses which are exporters and hence entitled to benefits under export promotion schemes)

(We will discuss export promotion schemes in a subsequent chapter)


Exporters are also given entitlements to import goods based as per various export promotion schemes (e.g. Software Technology Parks Scheme, EOU Scheme, Biotechnology Parks Scheme, etc. – these schemes usually offer additional benefits as compared to the incentives that are available to ordinary exporters who are not part of such schemes). Many of these export promotion schemes prescribe certain conditions that must be fulfilled by the exporter. Fulfilment of these conditions is not necessarily checked by the customs department – typically, various bonds and declarations are obtained from the exporter stating that these conditions are satisfied.


When goods are imported by exporters who are entitled to benefits under various export promotion schemes, the importer is required to execute bonds with customs authorities for fulfilment of the conditions of notifications under the export promotion scheme. Breach of those conditions makes the importer liable to pay the import duty.


Step 4: Payment of duty

After assessment of duty, customs duty must be paid. Import duty must be paid within five days (excluding holidays) from the date on which the bill of entry is returned to him for payment of duty, else he will have to pay interest at a rate fixed by the Central Government (ranging between 10 - 36% per year).


Step 5: Examination of goods


Usually, a selective examination of goods is conducted by the customs authorities for verification of the correctness of the details in the bill of entry. This is undertaken on a sample basis and is normally done after applicable customs duty has been paid (known as Second Check Appraisement). In certain cases, the examination may be undertaken prior to payment of duty (called First Check Appraisement), which is done either upon the specific request of the importer, or as per the discretion of the Customs Appraiser/ Assistant Commissioner.


If, after undertaking the above steps, the proper officer is satisfied that the goods are not prohibited goods and the importer has paid the applicable import duty (and any other charges payable under the Customs Act), he will issue an order permitting clearance of the goods, called the ‘Out of Customs Charge’ (in case of import) (recall that in case of export it is called a ‘Let Export’ order). Delivery can be taken once the order for clearance is obtained.


In case of imports,until clearance for home consumption, warehousing or trans-shipment (that is, transfer to another customs location in India), imported goods which are unloaded in the customs area must remain in the custody of a person approved by the Commissioner of Customs. (See Section 47 of the Customs Act)

What happens if goods are not cleared, warehoused or trans-shipped after unloading?
A businessman importing goods must ensure that he takes clearance of his goods or provides for their warehousing within a prescribed time limit under the law, else the goods may be sold. As per Section 48 of the Customs Act, if imported goods are not cleared for home consumption, warehoused or transhipped (i.e. sent to another customs location in India) within 30 days from the date of unloading (or an extended date allowed by the customs officer), they may be sold with the permission of the proper officer.
Note: Animals, perishable goods and hazardous goods can be sold at any time with the permission of the proper officer. Arms and ammunition may be sold as per the directions of the Central Government.





Goods that are imported but not immediately intended to be used for in the domestic market or for export may be warehoused. Such goods are stored in warehouses which are attached to a customs site, and are called bonded warehouses.


Bonded warehouses may be owned by public sector entities, such as Central Warehousing Corporation or State Warehousing Corporation, or they may be operated by a private operator who has a license to operate a warehouse. Warehousing is also of strategic importance to an importer - import duty is not required to be paid at the time of warehousing a product.


There may be various reasons for the importer not requiring clearance of goods – market prices of goods in the market may be lower, importer may not have sufficient funds to pay import duty, etc. However, an importer who intends to warehouse imported goods must enter into a double duty bond - that is, a bond for an amount equal to twice the amount of total duty. He will also have to pay applicable warehousing charges.


From a cash flow perspective, in certain situations it may be advantageous for the importer to have imported goods warehoused. This would be especially true for items that have very high customs duties applicable to them and which are not immediately required by the importer for the business.


NoteWarehousing does not imply mere storage of goods when they are not required in the domestic market. Manufacturing or other processes can also be carried out in a warehouse, with the permission of the Assistant Commissioner or Deputy Commissioner of Customs. The customs officer may impose conditions for carrying out such operations.

Customs regulations impose a time limit on the maximum period for which goods may be warehoused, depending on the type of goods, which is as follows:


 Goods (which are not intended for export oriented undertakings) can be warehoused for one year;

 Capital goods (see box below for learning more about capital goods) intended for use in any 100% export oriented undertaking can be warehoused for five years;

 Other goods intended for use in 100% export oriented undertaking can be warehoused for three years.

Warehoused goods are under the control of the proper officer (of the Customs Department), and cannot be removed from the warehouse without his permission.

Warehousing of goods intended for export

Goods may be stored in a registered warehouse for the purpose of export as well. Only certain types of exporters are eligible for export warehousing under Indian law - exporters who have been granted a special status known as Star Export House status, foreign departmental stores of repute and automobile manufacturers who have signed an MOU with the DGFT.

Clearance of warehoused goods

Removal of products from a warehouse (termed clearance) whether for home consumption or for export is possible after certain procedures are followed. Warehoused goods can be cleared for home consumption after presenting a bill of entry for home consumption (called an “ex-bond bill of entry”) and payment of applicable import duty on the goods, warehouse rent, interest, and other charges applicable under law


Clearance for export may be obtained by presenting a shipping bill or bill of export in respect of the goods has been presented and after payment of applicable export duty, warehouse rent, interest and other applicable charges under law.


Businesses require certain inputs (whether in the form of goods or services) to produce their output. This output could be a product or a service. An input could be in the form of raw material or semi-finished product which is processed, or it could be a machine or an article used for production of the good/ service, e.g. for a technology company in the service sector, its in-house server will be considered a capital good. Tax law and customs regulations treat raw materials (i.e. inputs) and capital goods differently, although technical definition may differ depending on the individual statute. In special circumstances, law relaxes the import duty or other taxes payable on capital goods.





vi) Consequences of violation of rules or policies pertaining to foreign trade

Every exporter or importer must comply with the FTDRA, any rules or orders made by a customs authority or an officer, and the terms of any authorization granted to him (“Customs Provision”). 

Violation of a Customs Provision attracts a penalty of INR 10,000 or five times the value of the goods or services or technology involved in the violation, whichever is higher. Penalties are imposed by the Director General of Foreign Trade or any other officer authorized by the Central Government. There is also scope for settlement where an entity admits to the contravention upon notice, in accordance with the provisions of FTDRA.

In cases of a clear violation, opting for settlement may be advisable as there are chances of a lower penalty being imposed. Where there is no clear or apparent violation of a Customs Provision, an entity may opt to contest the notice if the amount involved is high.
(See Sections 11, 13, FTDRA)



Test Your Skills Now!
Take a Quiz now
Reviewer Name