Bill of Entry : Definition, Importance, and Process

Imported goods undergo various legal procedures upon arrival in the importing country. Among these, the Bill of Entry stands out as a crucial document filed by importers or customs clearance agents. It holds significant importance in the international trading market.

From business registration to shipping and tax matters, thorough documentation and appropriate licenses facilitate the smooth export of goods and ensure seamless transactions. The specific export documents required often vary based on the origin and destination countries, as well as the nature of the products being exported.

To ensure proper taxation and examination of export goods, Customs Offices enforce a specific set of procedures. These procedures typically involve a thorough examination, assessment, and evaluation of the goods. Each consignment is accompanied by a set of official documents containing comprehensive details, with the Bill of Entry being particularly essential for accurate inspection of imported products

What is the Bill of Entry?

The Bill of Entry (BOE) is a vital legal document submitted by importers or customs clearing agents upon the arrival of imported goods, marking a crucial step in the customs clearance process. It is mandated by the Customs Department of the originating country.

BOEs are typically issued by two main entities :

1. Importing agencies procuring goods from foreign nations.
2. Entities trading commodities within a country after acquiring goods from Special Economic Zones (SEZs).

This document is instrumental for both bond clearance and home usage scenarios. Importers can only claim Input Tax Credit (ITC) on goods after the BOE has been issued. It's worth noting that BOEs are issued by firms engaged in importing goods from abroad and those selling goods domestically after sourcing from SEZs.

The format of a BOE is straightforward, containing crucial details such as port code and license number, importer's particulars (name, address, Importer Exporter Code - IEC), details regarding the goods' origin and consignment, port of shipment, vessel details, and more.

Following the filing of the BOE, customs officers conduct examinations on the goods. Subsequently, the importer is required to settle taxes including GST, IGST, and customs duty for goods clearance. While the importer can claim compensation cess for GST and IGST, this does not apply to customs duty.

The BOE also details the taxes paid by the importer, including IGST, GST, and customs duty in India. Additionally, it features sections for signatures from both the importer and customs agent, ensuring validation and verification of the document.

Why is Filing a Bill of Entry Important?

The Bill of Entry (BOE) is instrumental in ensuring the legality of imported goods and determining the requisite taxes. Importantly, filing a BOE is necessary for importers to claim Input Tax Credit for IGST and Compensation cess incurred during importation.

Here are the key benefits of a Bill of Entry :

1. Facilitates importers in providing essential consignment details to customs authorities.
2. Serves as an authentication document, affirming the legality of imported goods and averting illegal imports.
3. Aids customs authorities in cross-referencing documents submitted by exporters during export or shipping.
4. Enables customs offices to levy appropriate taxes, thereby curbing fraudulent activities.
5. Contributes to the overall economic welfare of the nation by ensuring fair trade practices and revenue generation.

Types of Bill of Entry

There are three primary types of bills of entry, each chosen based on the nature of the import and the intended use of the goods :

Bill of Entry for Home Consumption

1. Utilized when imported goods are intended for consumption within the importing country, whether for personal or business use.

2. After filing, the goods are cleared for home consumption, enabling the importer to claim Input Tax Credit (ITC) for GST paid.

Bill of Entry for Warehousing (Bond Bill of Entry)

1. Opted for when the importer prefers not to pay import duties immediately.

2. Goods are stored in a designated warehouse until import duties are settled, providing flexibility for deferred payment.

Bill of Entry for Ex-Bond Goods

1. Applied when the importer decides to release goods from the warehouse after initially opting for warehousing.

2. This bill is filed to clear warehoused goods for home consumption, effectively transitioning them from bonded to free circulation status.

Customs offices categorize bills of entry into these three distinct types based on the purpose and nature of the imported commodities.

Documents Required for a Bill of Entry

The documents required for a Bill of Entry vary depending on the specific circumstances of the importation, including the nature of the goods, their origin, and any applicable regulations. However, some common documents typically needed for filing a Bill of Entry include :

Commercial Invoice : A detailed invoice issued by the exporter, containing information about the goods, their value, quantity, and other relevant details.

Packing List : A document specifying the contents of each package or container, including descriptions, quantities, and weights.

Bill of Lading or Airway Bill : This document serves as a contract of carriage between the exporter and the carrier, detailing the shipment's route, terms of delivery, and other pertinent information.

Importer Exporter Code (IEC) : A unique code issued by the relevant authorities in the importing country, identifying the importer and allowing for customs clearance.

Certificate of Origin : This document certifies the origin of the goods and may be required to determine eligibility for preferential trade agreements or tariff benefits.

Insurance Certificate : If applicable, proof of insurance coverage for the goods during transit.

Purchase Order or Letter of Credit : Documentation indicating the terms of sale and payment between the importer and exporter.

Import License or Permit : In some cases, specific goods may require an import license or permit issued by the relevant government authorities.

Any Other Relevant Certificates or Documents : Depending on the nature of the goods, additional certificates, licenses, or documents may be necessary to comply with regulatory requirements or ensure product quality and safety.

Importers need to consult with customs authorities or freight forwarders to ensure they have all the necessary documents and information for filing a Bill of Entry accurately and efficiently.

How to Fill a Bill of Entry?

Below are the steps to smoothly import goods from overseas using a bill of entry :

Step 1 : Preliminary Details

1. Coordinate with the Customs House Agent (CHA) or importer to ascertain the shipment mode.

2. Determine if the goods arrive via air freight, sea, or courier, as different modes entail different customs offices.

3. Ensure you have the necessary sales invoice, insurance documents, valuation, and goods classification ready.

Step 2 : Selection of Customs Commissionerate

Determine the mode of shipment, which dictates the handling authority.

1. For air freight, engage with the ACC Import Commissionerate.

2. For courier shipments, the responsibility lies with the New Courier Terminal ACC Export Commissionerate (NCT).

Step 3 : Electronic Filing via ICEGATE Portal

Next, the Bill of Entry (BOE) is typically filed electronically by a customs broker or Clearing House Agent (CHA) via the ICEGATE portal's Electronic Data Interchange (EDI) service centers.

1. File the Bill of Entry electronically using the Indian Customs EDI System.

2. Access or download the Bill of Entry format from the official customs website.

Step 4 : Submission of Required Information

1. Complete the BOE form with the requisite details and submit it to generate a Unique Bill of Entry Number.

2. This entire customs clearance process is conducted digitally, streamlining operations.

Step 5 : Payment of Custom Duties

1. Fulfill obligations such as Integrated Goods and Services Tax (IGST) and Compensation Cess.

2. Warehousing allows for deferred duty payment upon goods receipt.

Step 6 : Customs Examination

1. Customs issues an Out of Charge (OOC) declaration upon successful examination that involves inspection of goods and scrutiny of all details and payments.

2. It provides clearance for further proceedings.

Step 7 : Declaration and Signatures

1. The BOE includes sections for declaration and signatures from both the Customs House Agent and the importer.

2. Validation requires signatures from both parties.

Step 8 : Status Monitoring and Tracking

1. Continuously monitor the Bill of Entry's status through the customs department's tracking system.

What is the difference between a bill of lading and bill of entry?

The key differences between the Bill of Entry and the Bill of Lading are as follows.

Bill of Entry (BoE) :

1. Prepared either by the importer directly or by Customs clearance agencies hired by the importer.

2. Provides crucial details about the imported goods, importer information, valuation, and applicable duties.

3. Relies on accompanying documents such as the Bill of Lading, Commercial Invoice, and other relevant paperwork.

4. Serves as a vital document for customs clearance procedures and facilitates the assessment and taxation of imported goods.

Bill of Lading (BoL) :

1. Issued by the shipping line or carrier responsible for transporting the goods.

2. Comprehensively outlines the consignment and shipment particulars, including details about the cargo, origin, destination, and terms of transport.

3. Plays a pivotal role in tracking the goods throughout their journey from the point of origin to the final destination.

4. Essential for confirming the receipt of goods by the consignee and facilitating the transfer of ownership during transit.

In summary, while the Bill of Entry focuses on the importation process, detailing the goods and facilitating customs clearance, the Bill of Lading primarily pertains to the transportation aspect, providing comprehensive information about the shipment and enabling tracking and acknowledgment of receipt along the supply chain. Both documents are integral components of international trade, each serving distinct yet complementary functions in facilitating the smooth movement and regulatory compliance of goods across borders.

Conclusion

Understanding the Bill of Entry (BoE) is essential for navigating the intricate landscape of international trade. This crucial document facilitates the smooth flow of goods across borders, ensuring compliance with customs regulations and enabling accurate assessment and taxation. By providing comprehensive details about imported goods and serving as a validation of their legality, the BoE plays a vital role in safeguarding fair trade practices and promoting economic welfare.

As importers navigate the complexities of customs clearance, the BoE serves as a cornerstone, enabling seamless transactions and contributing to the efficiency and integrity of global supply chains.