A little bit of Background

The logistics and supply chain sector is laden with industry-related terms that can be confusing to outsiders. There are thousands of terms and acronyms in addition to its industry-related jargon. Typically it takes years to study up and become fluent in all the industry related terms. 

NWNS understands this and offers its customers a friendly jargon- free communication about the potential requirements. At the same time we are hoping to set the expectations correctly and that we can prevent our customers from unpleasant surprises such as the notorious “higher than expected costs” for services that were not quoted for. 

Some critical and important basic terminology can be found here.

The difference between Exporter, Consignee and the Importer of Record / Declarant

When trying to navigate the complex legislation involved with the customs process, it’s helpful to understand the differences between three very important roles involved in an import transaction:

The Exporter
The exporter is the body (person or company) that is authorised by customs and government authorities to export goods from one country into another. The exporter may or may not be the actual seller of the goods, but an entity acting on their behalf.

The Consignee
Once the goods are cleared through customs, the consignee is the party who takes ownership of them. In a straightforward import/export transaction, the consignee is usually the party paying import duties and taxes. The consignee can be a private individual consumer (ordering goods from an overseas business), or it can be another business. 

If a business has imported its own goods it is both the importer and the consignee.

The Importer of Record (IoR) / declarant

Customs compliance requires a third important role, known as the Importer of Record or declarant. An Importer of Record (IoR) is an individual or legal entity that is responsible for ensuring that goods are imported in accordance with the local customs legislation of a given destination. An IoR is responsible for the completion of all the required documentation to meet import requirements, in addition to paying duties and taxes.

Who can act as the importer of record / declarant?

Typically, to act as an Importer of Record, the company must have a registered entity within the country they want to import into. The requirements for who can act as the importer of record differ between countries. In many cases, the consignee (or owner of the goods at the time of import) may act in this role. Sometimes, particularly in less straightforward transactions, it’s necessary to appoint an agent or broker or some other legal entity in the destination country, to act as the importer of record on their behalf.

Goods Stuck in Customs

The reason Customs have rejected an import is often not clear. One thing, however, is certain: having a shipment held up in a complex Customs situation can cause severe disruption to your customers’ buying experience, damaging your reputation and incurring extra costs and lost revenue.

What possibly can be the reason why a shipment is held or seized by Custom, and what can you do about it?

Over time NWNS has build-up significant experience (learning by doing) and we have identified the following potential reasons for “a problem”

Number One Problem – missing import documentation

If the goods being imported fall under a controlled ECCN number, or the in-country import process requires document submission and pre-approval prior to the goods being shipped, then it’s very important this is done. If any of these documents are missing, Customs will either immediately reject the consignment and ask it to be sent back to source or hold the shipment for a set period of time to allow the Shipper to submit the documents. Storage charges will be charged during this period. It is incredibly important to check the import requirement of the country you are importing to avoid this serious situation.

Number Two Problem – The Consignee refuses to be listed as the Importer

If the consignee refuses to be the importer, the kit will be rejected and held by customs. The consignee may refuse to act as the importer because they do not want to be involved in the process (“taxable record”), or they may not understand the process. Depending on the country, if consignee refuses to act as the importer the kit will either be sent back to the shipper or Customs will seize the shipment and re-sell it to put the funds towards the import costs.
Appointing an importer of record can help to avoid confusion about who actually has ownership of the goods when a transaction involves suppliers, distributors and end-users. The IoR becomes the temporary owner of the goods until the goods have been accepted by a distribution centre.

All other problems are trivial and can be easily resolved:

Commercial Invoice (CI) is missing information

It’s important that the paperwork that ships with the consignment contains everything Customs departments need to know about the goods. A CI should contain the following:

• • Shipper name, full address, telephone number and contact name;
  • Full Consignee name and address, telephone number and contact name; 
  • Part Code(s), Description of Goods, and Quantities
  • (Correct) value of the goods, ensuring you note the currency;
  • Weights (in kg), dimensions (cm) per package and package quantities for the shipment
  • Shipping IncoTerms – DDP etc;
  • ECCN and HTS codes: Full ECCN including sub ECCN if applicable and full HTS code which should contain 10 digits;
  • Product(s) Country of Origin
  • Any Export and/or Import numbers if required

Without this key information, Customs won’t be clear on what you are trying to Import and will therefore automatically stop the shipment. 

HTS Code or ECCN Numbers are incorrect

The ECCN (Export Control Classification Number) and HS Code (Harmonised Commodity Description and Coding System) are key to helping Customs decipher the categories that the goods fall under. The ECCN number exists to help identify dual use items for export control. The HS Code is a classification system which enables participating countries to deem what type of goods are, and how they should be taxed. 

Codes can be found here: https://www.findhs.codes/

Valuation of the Consignment

It is important that goods are not purposefully undervalued. 

There are more (or less) physical packages than described on the Commercial Invoice

Customs officials will always check the number of physical packages compared with the information on the Commercial Invoice – if there is an inconsistency between the two, they will seize the shipment and request clarification from the Shipper as to why there is a differential. At the very least, they will hold the goods until they are satisfied, or they may return the entire shipment. It’s important if this happens that it is explained how this error occurred.