This article is written by Bhumika Dandona from School of Law, Sushant University, Gurgaon. This article deals with all the aspects associated with a career as a custom house agent.
Table of Contents
The practice of sending and obtaining goods from across the borders has been prevalent since ancient times. It was a free practice back in the day. But over a period, several countries began to keep a check and impose taxes on such activities for two reasons:
- To prevent illegal and unsafe transactions.
- To generate income.
The earned income then went into the all-around development of countries. Management of these processes required supervision, suitable persons and an appropriate environment. So it is how the concept of a custom house and consequently that of a custom house agent came into being.
Concept of a custom house
A custom house is a government building that incorporates offices of officials who oversee the functions associated with the import and export of goods and entry and departure of conveyances, including levying taxes known as custom duties on those goods and conveyances and inspecting them.
In the early years, governments built these houses at seaports for collecting customs and clearing vessels of all dues as trade by sea was a frequent practice back then. Nowadays, custom houses are set up at mainly airports because the transfer of goods and conveyances from one place to another through airways has become common, due to their quickness and efficiency.
A custom house acts as a checkpoint through which goods and conveyances are subject to careful scrutinization before their transfer. It maintains all records about the export and import of goods and entry and departure of conveyances at a customs station. All these accounts are regularly detailed, itemized and updated. All the shipments require a clearance certificate from the custom-house before their distribution and sale.
Who is a custom house agent?
A Custom House Agent or a CHA, as defined under Regulation-2(c) of the Custom House Agents Licensing Regulations, 2004, refers to a person authorized under these regulations to operate as an agent for all the transactions for the business of import and export of goods or entry and departure of conveyances at a particular custom port or station.
Work of the custom house agent
A custom house agent performs the following functions:
- Regulation-18 requires CHA to maintain up-to-date and detailed records of transactions related to import and export, tracking each stage of all the shipments.
- They also act as a customs broker, arranging all the necessary documentation on behalf of importers and exporters concerning the service they require.
- CHA provides logistic support(warehouse management and distribution etc.) to the clients, ensuring hassle-free movement of goods or conveyances.
- They make the bills of entry and shipping bills which are essential for clearance of goods or conveyances.
- CHA must check the goods or conveyances physically before allowing them to leave or enter the country.
- CHA acts as an advisor to their clients. Regulation-14(d) requires CHA to provide the clients with correct legal information and advise them to follow all the provisions mentioned in the Regulations and the Customs Act, 1962. If the client violates any of these provisions, CHA must report the same to the authorities. Apart from that, they also advise their clients in trade services.
Career of the agent
As mentioned earlier, a custom house agent is an authority for any business transactions involving the import and export of goods and conveyances at the customs station or port.
Since this work requires utmost efficiency and experience, CHA needs to obtain a valid license issued by the commissioner of customs under Section-146 of the Customs Act, 1962, as per the regulations.
Educational qualification and other requirements
Regulation-6 of the Regulations provides for educational qualifications and other requirements to apply for the CHA which is as follows:
- They must be a graduate from any recognized University.
- They must have three years of experience in customs clearance work.
- They must have assets of Rs.5,00,000 or more, certified with a bank.
- They must possess a pass in form-G for a year as an employee of a firm. It must have authorization by the commissioner of the customs.
- They must be an Indian citizen.
- They have passed the examination.
- They have at least ten years of experience in Group-A of the Indian Customs and Central Excise Service (ICCES).
- They must have assets of not less than Rs. 2,00,000, certified with a scheduled bank.
A CHA can acquire either a temporary or permanent (regular) license. Regulation-5 states that the applicant must apply for the same in Form-A to the commissioner of customs within the appropriate jurisdiction. Information that the applicant has to specify differs in the following cases:
In the case of a firm
- Name of the firm.
- Name and address of all the partners.
- Name of the partner or duly authorized employee who will take care of the clearance process.
In the case of a company
- Name of all directors, managing directors etc.
- Name of the director or managing director who will take care of the clearance process.
Evaluation of the application
On receiving the application, the commissioner of customs must carefully evaluate and verify it, as Regulation-7 provides. The commissioner may make inquiries essential in this respect.
Only after the applicant fulfills all the conditions under regulations-5 and 6, they will be eligible to appear for the written and oral examination as stated in Regulation-8. Once they clear the written exam, they can appear for the oral exam. It is essential to pass both exams. A maximum period of seven years is allowable within which they have to clear the exams. The exam may include some of the following questions:
- Currency conversion;
- Types of bills of entry and shipping bills;
- Import-export prohibitions;
- Import-export promotion schemes;
- Value determination and assessment;
- Bonding procedures;
- Clearance from bonds;
- Refund of duty procedures;
- Rates of duty;
- Tariff classification;
- Terms and conditions of free re-entry;
- Provisions contained in the Trade and Merchandise Marks Act, 1958, the Patents Act, 1970 etc.
Before the grant of a license, the applicant must enter into a bond in Form-D and a surety bond in Form-E for the due observance of all the regulations. They also have to furnish a bank guarantee, postal security or National Savings Certificate in the commissioner’s name for an amount of Rs. 50,000.
Granting of the license
Regulation-9 states that the commissioner must furnish the license in Form-B to the applicant on successful completion of exams, on payment of fees of Rs.5000. Now the applicant is a CHA and can work in any custom station across the country. They have to inform where they want to work in Form-C.
Regulation-11 states that the licence will be valid for ten years from the date of issue and renewed in accordance with the provisions in the Regulations.
Suspension and revocation of license
Regulation-20 states that the license may be subject to revocation by the commissioner of customs if:
- CHA fails to fulfill terms and conditions stated in the bond implemented by them.
- They fail to fulfill the provisions of the Regulations.
- They indulge in wrongful acts, within the commissioner’s jurisdiction or elsewhere as the commissioner may deem them unfit to act as the agent.
The license may be subject to suspension if there’s an ongoing inquiry against the agent.
CHAs assist the importers and exporters in understanding complicated procedures. These procedures include rates of duty fees and admission requirements etc. A recent study suggests that custom work involves around forty-four percent of the time to meet the demands of drafting and processing paperwork documents. But soon, there will be a reduction by thirty-one percent in terms of both cost and time when digitization will come on the scene.
Digitization would result in an increase in income by USD 257 billion in the Asia-Pacific region. Similarly, there would be an increase of EUR 5400 billion in Europe. It is because what hampers the income is the declaration of workflow and document for both the clearing agents and consignment partners.
The present paperwork documentation is not only time-consuming but also costly and often referred to as sunk costs. It highlights the need for a viable system that would enable sharing shipping documents digitally. Such structured documentation will make trade far more convenient by making them available to the authorized parties for every consignment.
Apart from that, it will enable the agents to expedite filing and processing for the shipments. Digitization will save them thirty-three minutes of calls, emails and data entry. Shipment status will become easily traceable, ending the problem of calling up the customer care provider now and then.
Digitization will also leave no room for error which one encounters during the manual data entry process and reduce the risk of fraud documents. The future of CHAs is bright and flourishing indeed.
Famous custom house agencies
Mentioned below are India’s fifteen top most custom house agencies:
VTL Logistics (Chennai)
VTL clearing agency facilitates the shipment flow timely, safely and securely with accurate documents and a real-time tracking facility.
Xtra Care Logistics Pvt. Ltd. (Ahmedabad)
Xtra Care Logistics Pvt. Ltd. is a premier freight forwarding company meeting all customer requirements.
Dolphin Logistics India (Gujarat)
Dolphin Logistics India has a reliable and well-settled network throughout India and worldwide. They provide their customers with smooth custom clearing services.
Auroma Logistics Pvt. Ltd. (Chennai)
Founded by Ajay Virmani in 2009, Auroma Logistics Pvt. Ltd. has the sole motive of helping customers with all their logistics requirements. It makes use of the latest technology and has a vast transportation network.
Easy Way Logistics (Chennai)
Easy Way logistics agency caters to its customers’ needs concerning international custom requirements. It has its own CHA licensing and transportation network for round-the-clock services to customers.
Fly Over Cargo (New Delhi)
Fly Over Cargo was set up in 2010 and is International Organisation for Standardisation (ISO) certified. It has its branches in Mumbai and China.
Inext Logistics (New Delhi)
Inext Logistics was set up in 2009 by Amardeep Singh Khurana. It supports its customers in international trade-related affairs by providing efficient clearing facilities.
Capricorn Logistics (Maharashtra)
Founded in 2001, Capricorn Logistics has the sole purpose of offering the best logistics solutions. It has its network across thirty-two offices in India and ten overseas offices in countries like the USA, China, Europe and UAE.
Abhishan Logistics (Maharashtra)
Abhishan Logistics offers complete logistics and specific services such as customs clearance for import and export consignments. It also arranges for sea freight forwarder services, transportation services within India, insurance services and courier services.
20Cube offers complete digitization of custom-related services.
Inventrax Pvt. Ltd. (Visakhapatnam)
Inventrax Pvt. Ltd. helps businesses with their vast experience in application services and the latest technology, keeping in mind changing demands at the international level.
TVS Dynamic Global Freight Services (Hyderabad)
TVS Dynamic Global Freight Services has a turnover of USD 8.5 billion and has more than fifty thousand employees.
Staqo Pvt. Ltd. (Uttar Pradesh)
Staqo Pvt. Ltd. combines technology with business to give better services to its clients.
Kerry Indev Logistics (Chennai)
Founded in 1984, Kerry Indev Logistics provides impeccable services to its clients. It has a perfect track record of success. Its motto is – Competent, Competitive and Comprehensive.
Eagle International Custom House (New Delhi)
Eagle International Custom House helps its customers to get rid of all the troubles concerning shipment processes. Their expertise is in handling consignments that require special care and combines with a good network of overseas agents. They have several multinational companies as their clients.
International trade is growing at full tilt, and the associated transactions come with their risks and limitations. With the entry of customs on the scene, international trade has become more difficult. Also, people are not aware of how much tax is pertinent to their goods or other essential paperwork. They need expert advice on the same. A custom house agent, with their vast experience, will be able to help people carry out trade transactions smoothly. Henceforth, custom house agents have a pivotal role in the trade industry and economy.
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