Everything you need to know about Customs Clearance
Updated: Apr 16, 2021
Customs clearance is legally clearing your goods (personal or commercial) through customs when you shipping goods internationally. In the U.S. such agency is called U.S. Customs and Border Protection. The U.S Customs is a government organization that is responsible for overseeing all goods import and export from the U.S. to detect and prevent terrorists and their weapons from entering the U.S. and make sure that all goods are complying with U.S. rules and regulations. Their other major role of the agency is to collect import tariffs on those goods.
According to U.S. Census Bureau, the total value of goods imported into the U.S. is at $2.81 trillion dollars in the year 2020. The top 5 countries that imported goods into the U.S. are China, Mexico, Canada, Japan, and Germany.
Customs Clearance Procedures
Personal or commercial goods arriving into the U.S. by air, land, and sea are subject to import laws, duty taxes, and fees. If your shipment ship via ocean, ISF filing is required by CBP 24 hours before vessel departure from the last foreign port. Late ISF filing may result in a $5,000 penalty assessed by customs.
A CBP form 7501 will need to submit to customs that provides all the information needed for clearance. This is a form that shows the value and description of the goods that will be shipped into the U.S. It is usually completed electronically. The form is used to calculate the amount of tax and duty owed, based on the factors including:
Type and quantity of the goods that are being transported.
The way they're being imported.
The value of the goods.
Any license is required to import the goods.
By submitting the entry or CBP form 7501, CBP will check if the goods are restricted items and whether they need further inspection. They inspect the goods to make sure if the goods are admissible and comply with the government rules before the goods can be imported into the U.S. The importer can clear the goods themselves but most businesses hire someone - such as a customs broker - to deal with customs for them which known as a Licensed Customs Broker. Customs declaration is complicated so we do recommend you get someone to deal with customs for you. Contact us: email@example.com
What is the difference between air, ocean, and land clearance?
Air shipment – requires AMS filing by the carrier upon arrival. Missing AMS filing may result in a penalty to the carrier and delay on the shipment.
Ocean shipment – requires AMS and ISF filing. Same as air shipment, AMS needs to file by carrier but importer will need to file ISF for ocean shipment.
Land shipment – this means crossing the border from Canada or Mexico into the U.S. Such clearance will require PAPS filing. CBP will waive a one-time exemption per importer if the goods are for personal use.
Who can file customs clearance?
Importer of record can file customs entry to the port of entry. Importer of record can be the owner, buyer, or consignee of the goods, who has a financial interest in the goods or licensed customs broker hired by owner, buyer, or consignee.
Who is responsible to pay customs duty?
Depending on the trading term that the buyer and seller agreed on when the buyer orders their goods. Below is the incoterm to help you understand the terms.
Who is involved in the process?
Filer – Importer of record, responsible for import clearance and tariff duty.
Inspector – CBP and other government agencies such as FDA, USDA, EPA, FWS and etc. (PGA involvement depend on what product is imported) will inspect the shipment to make sure that all goods comply with U.S. rules and regulations.
Carrier – Airline, vessel, and trucking that transports the shipment to the USA. They are responsible to notify CBP of what goods are about to import into the USA for U.S. security purposes.
Warehouse – Once goods arrived in the USA, they will move to carrier designated warehouse. The warehouse will hold the shipment until all freight payment, warehouse fees, and clearance has been done. And depending on the trading terms to determine who will be responsible to pick up the cargo.
What goods need customs clearance?
All the goods are subject to CBP inspection upon arrival in the USA. and almost all the goods need clearance when entering into the USA. We recommend checking the admissibility of your goods before traveling.
Goods exempted for customs clearance
According to CBP, returning resident is eligible for the $200 duty-free personal exemption or $800 if returning from U.S. insular possession every 30 days. There are some goods that can be exempted from clearance. Below is the list of goods that are exempted from filing customs entry.
Tobacco products - returning residents can calm personal use exemption no more than 200 cigarettes and 100 cigars. The quantity amount can still be imported for personal use but will require paying tariff duty to CBP.
Alcoholic beverages – returning residents can calm 1 liter of liquor and the remaining will subject to tariff duty as well.
Personal effects and Household effects – returning residents or migration can calm personal use to waive duty. Such as furniture, kitchenware, tools, CD, books and etc.
Mailing goods - Goods shipped by common carriers such as UPS, USPS, DHL and etc. can be cleared duty-free if the goods are under $800 per shipment every 30 days and the common carrier will clear customs for you. Such a process also called section 321 or Type 86 entry.
What problem you may encounter when filing customs clearance?
Problems with clearance can be a very stressful process and sometimes may result in delays and extra costs on the goods. Here we will talk about the list of problems you may encounter when filing clearance.
Missing documents – Make sure you have all the documents in English and easy to read from the seller and shipper. Such as Commercial invoices, packing lists, and shipping documents.
Incorrect classification – When filing customs clearance, you need to identify the Harmonized Tariff Schedule code for each item that you are importing. We recommended you hire a licensed customs broker or check with a CBP import specialist.
Shipping dangerous goods – Make sure the goods comply with USA rules and regulations and packed safely. If CBP determines that the goods pose a threat to the U.S. general or environment, this may result in returning or destruction of the goods.
Customs Exam – CBP system will automatically or manually select goods that may have a potential threat to the public or environment.
Missing AMS or ISF filing – When you shipping your goods via ocean, CBP requires ISF filing by the importer and AMS filing for both air and ocean goods by the carrier. Missing filing of either party may result in rejection and penalty of the goods.
AD/CVD compliance – Make sure your goods are not flag from Anti-Dumping and Countervailing duties. AD/CVD is imposed by the U.S. Department of commerce when the goods are below market value or government aid from the manufacturing country.
Other Government Agencies compliance – Make sure importing goods comply to other government agencies such as Animal and Plant Health Inspection Service (APHIS), Bureau of Alcohol, Tobacco, and Firearm (AFT), Federal Drug Administration (FDA), Environmental Protection Agency (EPA), Department of Transportation (DOT), Fish and Wildlife Service (FWS) and etc.
Labeling and packaging – This is a very common issue with FDA regulation on foods and food products.
How to avoid customs clearance delay
Customs clearance delay can be frustrating and costly. Proper clearance can avoid CBP examination, penalty, and delays.
Provide complete shipper and consignee information
The detailed description of shipping documents.
Provide the correct quantity and value of your goods.
Provide requested documents to CBP in a timely manner.
Filing ISF on time.
Filing entry on time.
Customs clearance documents
Customs clearance is required when import goods into the U.S. Here is the most common paperwork that you need to get through customs.
Commercial invoice - this paperwork provided by the seller when you purchase the order.
Bill of lading - this is the shipping document provider by the shipper when they arrange the transportation.
Power of attorney - this paperwork allows licensed customs brokers to clear the goods on the importer's behalf.
Importer's ID - this proves the identity of the importer.
CBP 5106 form - this form is required if you are a new importer. Licensed customs brokers will set up the importer into the customs database to start transmitting entry.
Other documents - other government agencies may require additional certification or information such as EPA and DOT declaration form for vehicles importing into the U.S. FDA registration for food-related products and etc.
How long does customs clearance take?
If shipment arrived at the port, most shipments can be cleared in 1-2 hours. If a shipment is held by customs for inspection and depends on what kind of inspection, clearance will take 1-3 days and for the intensive exam, the entry will take 1-2 weeks or longer.
What happens after customs clearance completed?
Every shipment has two major parts importers need to deal with. One is freight payment, depending on the shipping term, either importer or seller need to clear all the shipping cost and provide billing of lading release or turnover release as proof of payment. The second is customs clearance, once entry submitted to customs, CBP will review the entry and post customs release if the entry is sufficient to release the goods. Once obtain the release for freight and customs, your shipment will be ready for pick up.
What are customs clearance fees?
Customs clearance - Flat admin fee
Inspection fees by other government agencies such as FDA USDA, and etc.
Bond fees if your shipment requires an ISF bond or Single entry bond.
Single entry bond or continuous bond serves as a financial guarantee that all the information provided to CBP are accurate and guarantee that importer would pay customs duty on time. If not, CBP will request the bond company for duty payment that the importer has not been pay.
Single Entry bond applies to one entry only whereas continuous bond applies to all importer's entry for the full calendar year starting from the effective date.
What kind of Customs Broker do you need?
For import clearance, shipments are often very time-sensitive, slow response is fatal to your shipment. Imagine you have shipment arrived at the port, the warehouse only give you a certain day of free time to clear your goods afterward they will start charging storage and you can't get in touch with your broker. A customs broker that responds to your email or phone fast is critical for your shipment.
Contact us below for free consultation: Fast Customs Clearance