What is customs clearance? A detailed explanation of the procedural flow and of the declaration method and documents required, etc.

"Customs clearance" is always involved when conducting import or export business and when individuals purchase goods from overseas. Although many people may have heard the term, a surprisingly small number of people may understand what exactly the procedures are and why they are necessary. 

This article provides a detailed explanation of information that will be useful for parties involved in importing or exporting, including everything from basic knowledge of customs clearance to the flow of the procedures, the documents necessary, and the time required. 

Customs clearance 

Customs clearance is the procedure to obtain permission from customs for the importing or exporting of goods. This customs clearance procedure is always necessary when importing goods from overseas, or exporting goods from Japan to overseas. 
This section explains the purposes and types of customs clearance. 

Purposes of customs clearance 

The three main purposes of customs clearance are as follows. 

1. Collection of customs duties (To collect the appropriate duties on the goods being imported)
2.  Ensuring safety (To prevent the importing or exporting of dangerous or prohibited goods, to protect national security) 
3. Collection of statistical data (To understand the actual situation of international trade to help in the formulation of trade policy) 

Until the customs clearance procedures have been completed for imported goods, they are stored in bonded areas as "foreign cargo" and cannot be freely distributed around Japan. The goods are only considered to be "domestic cargo" when the customs clearance procedures have been completed. They can then be distributed in the domestic market. 

Differences between export customs clearance and import customs clearance 

Customs clearance can be broadly categorized into two types: export customs clearance and import customs clearance. 

Export customs clearance is the procedure necessary when sending goods from Japan to overseas. The main purposes of export customs clearance are to control goods whose export is restricted for security reasons, and to compile trade statistics. As a general rule, Japan does not impose customs duties on goods being exported, but export taxes may be imposed on some special items. 

In contrast, import customs clearance is the procedure necessary when bringing goods into Japan from overseas. The main purpose of import customs clearance is to collect customs duties based on the price and type of goods. There are also examinations performed based on various laws and regulations such as the Food Sanitation Act and the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices. 

Flow of customs clearance 

Some parts of the customs clearance procedures differ between export and import procedures. However, they both have the same basic flow of "Declaration → Examination → Approval." Let's take a closer look at each of the procedures. 

Flow of export customs clearance 

The basic flow of export customs clearance is as follows. 

1. Carry the cargo into the bonded area
2.  Make the export declaration *Depending on the cargo, other legal procedures may also be required 
3. Receive the customs examination and inspections 
4. Obtain an export permit 
5. Load the cargo onto a ship or aircraft 

In the flow of export customs clearance procedures, the cargo is carried into the bonded area and any procedures required by other laws and regulations (such as the Export Trade Control Order and Plant Protection Act) are completed first. The export declaration is then made to customs when those other procedures have been completed. After that, the customs officers examine the documents and inspect the actual goods, and if there are no problems, an export permit is issued. After the permit is granted, the cargo is loaded onto a ship or aircraft and exported.

Flow of import customs clearance 

In the other direction, the flow of import customs clearance is as follows. 

1. Carry the cargo into the bonded area
2.  Make the import declaration *Depending on the cargo, other legal procedures may also be required 
3. Receive the customs examination and inspections 
4. Pay the customs duties and consumption taxes 
5. Obtain an import permit 
6. Receive the cargo from the bonded area 

The major difference is that in export customs clearance, the cargo is loaded after the permission is granted, but in import customs clearance, it is necessary to pay customs duties and consumption taxes, and it is only after that payment that the permission is granted and the cargo can be received.

Documents required for customs clearance

To ensure smooth customs clearance, it is essential to prepare the proper documentation. This section explains the documents necessary for customs clearance. 

Documents required for export customs clearance 

The main documents required for export customs clearance are as follows. 

• Export declaration
• Invoice
• Packing list 
• Certificate of non-applicability
• Permission and approval certificates required by other laws and regulations *Export Trade Control Order, Plant Protection Act, etc., if applicable 
• Letter of attorney for customs clearance *Only necessary the first time 
• Documents explaining the goods *If necessary 

The invoice and packing list are essential documents for export customs clearance. If the details in these documents do not match, the customs examination may take a longer time than usual, and additional explanations or corrections may be required. It is therefore important to thoroughly check the contents of the documents in advance for any deficiencies or inconsistencies. 

In addition, if the cargo to be exported is subject to regulations such as the Export Trade Control Order or the Washington Convention, it is necessary to have a permit or certificate of non-applicability from the relevant authorities. If you are entrusting the procedures to a customs broker, do not forget to also prepare a letter of attorney for customs clearance. 

Documents required for import customs clearance

The main documents required for import customs clearance are as follows. 

• Import declaration
• Invoice
• Packing list
• Bill of lading (B/L) or air waybill (AWB)
• Cargo arrival notice
• Insurance certificate *If insured
• Certificate of origin *When preferential tariffs are applied, and when necessary
• Statement of tax reduction or exemption *If tax reduction or exemption is applied
• Permission and approval certificates required by other laws and regulations *Food Sanitation 
• Act, Plant Protection Act, etc., if applicable
• Letter of attorney for customs clearance *Only necessary the first time
• Documents explaining the goods *If necessary 

For import customs clearance, in addition to the invoice and packing list, a bill of lading (B/L) or air waybill (AWB) is also a required document. 

The cargo arrival notice and insurance certificate may be required to pick up the cargo, or for the action taken in case of damage. Permits and quarantine certificates based on the relevant laws and regulations are required for specified cargoes such as foodstuffs, animals and plants, and pharmaceuticals. A certificate of origin must be submitted when preferential tariff rates are to be applied. 

If there are deficiencies in the documentation, there is an increased risk of delays in the customs examinations and a significant delay in the receipt of the cargo. It is important for personnel in charge of imports to accurately understand the role of each document and the items to be included, and to make preparations in cooperation with a customs broker as necessary.

Time required for customs clearance and key points to shorten the time 

The time required for customs clearance procedures varies greatly depending on the type of cargo, the method of transportation, the situation of documentation readiness, and the level of congestion in customs. Below we will look at guidelines on the time required for customs clearance and some specific key points for expediting the process. 

Guidelines on the time required for customs clearance 

The time required for customs clearance varies greatly depending on whether the shipment is marine or air cargo. Import customs clearance generally takes one to three days for marine cargo, but in many cases can be completed in less than one day for air cargo. For export customs clearance, the time required is even longer. The standard times required are three to five days for marine cargo and one to two days for air cargo. 

The time required will also vary depending on the category of the customs examination. If NACCS (Nippon Automated Cargo and Port Consolidated System) is used, a permit can be received in a short time if it is a simple examination. However, if the processing is transferred to document examination or physical inspections, extra time will be required for those procedures. It is important to understand the risks in advance, as the submission of extra documentation or the verification of the actual items may be necessary for the types of cargo that tend to be subjected to inspections, or if there are any deficiencies in the documentation. 

However, these are only guidelines. The times can vary greatly depending on the contents of the cargo, the accuracy of the documentation, and the extent of the congestion in customs. The time required for the customs clearance process depends on many factors, so it is essential to perform scheduling with time to spare. 

Key points for expediting customs clearance procedures 

The first and foremost factor for ensuring smooth and speedy customs clearance procedures is the accuracy of the submitted documents. Check in advance that the information on the invoice and packing list matches the actual cargo, and also conduct careful checks for errors in the HS codes and certificates of origin. 

In particular, errors in the details written on invoices are a typical factor in trouble where corrections are required by customs. In the case of imports, it becomes necessary to request a correction by the overseas supplier, so there is a risk that the response may be delayed due to the time difference, or because the person responsible is absent. 

Another essential element to expedite customs clearance procedures is cooperation with a reliable customs broker. Highly experienced customs brokers can provide a wide range of support, including advice on the document preparation, coordination with customs, and a prompt response if trouble occurs. 

Laws and regulations to be complied with in customs clearance procedures 

In the import/export business, compliance with laws and regulations is not merely an obligation, but also a lifeline that ensures the credibility of the international transactions. In recent years in particular, export controls and import regulations have become increasingly strict each year in response to the heightened geopolitical risks and the increasing complexity of supply chains. 

This section examines the laws and regulations of particular importance for exports and imports and explains their purposes, the items they apply to, and the risks associated with their violation. 

The Export Trade Control Order 

The Export Trade Control Order is a Cabinet Order that regulates the exporting of cargo from Japan to foreign countries. It aims to maintain international peace by regulating the export of "specified cargo" that could be used for the development of weapons of mass destruction or conventional weapons. It is established based on the Foreign Exchange and Foreign Trade Act, and is characterized by the fact that the cargoes subject to the act are managed under a dual structure of "list controls" and "catch-all controls". 

The list controls clearly indicate specific items that are classified into 15 categories (e.g., aircraft parts and special alloys). Permission from the Minister of Economy, Trade and Industry is required to export these items. On the other hand, the catch-all controls apply to cargo that is not included in the lists, but is of concern regarding use for the development of weapons of mass destruction. There is an obligation to receive prior examination for this cargo when exporting to countries outside the 26 Group A countries (formerly known as White countries). 

The penalties for violations are extremely severe. For individuals, the penalty is up to 10 years in prison or a fine of up to 30 million yen. For corporations, the penalty is a fine of up to 1 billion yen. It is essential that exporters conduct a judgment of the relevance of regulations, called an "applicability assessment," and it is important to avoid risks by obtaining a certificate of non-applicability and consulting with experts. 

Main laws and regulations related to imports 

In customs clearance for imports, in addition to compliance with the Customs Act, it is also necessary to comply with related laws and regulations known as the "other laws and regulations." Typical examples of these other laws and regulations are the Food Sanitation Act (for foodstuffs and additives), the Plant Protection Act (for plants and timber), and the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (for pharmaceuticals). Depending on the type of cargo, these laws may require that prior permission and inspections are conducted. 

The action taken for violations varies depending on the law, but in the case of the Food Sanitation Act, violations can result in the cargo being confiscated, the operation of the business being suspended, and the publication of the name of the violating company. Importers must check the applicable laws and regulations and prepare the necessary documents before making a customs declaration, and it is also recommended that they use a specialist inspection organization to conduct a pre-examination. 

The role of customs brokers, and how to choose one 

When developing business on a global scale, a customs broker is an important partner that supports the sites conducting the trade-related work. This section explains the main work that customs brokers are responsible for, and the key factors to consider when choosing a customs broker. 

Main services of customs brokers 

Customs brokers are agents that specialize in handling customs procedures for imports and exports. They perform operations such as the following. 

• Checking and preparing the documentation related to imports and exports
• Acting as an agent for import and export declarations to customs
• Judgment of HS codes (statistical item numbers) 
• Calculation of the taxes to be paid, including customs duties and consumption taxes, and procedures for payment 
• Attendance at customs examinations and inspections, and submission of additional materials
• Acting as an agent for the various systems such as tariff reductions and refunds, provisional Article 8, etc. 
• Acting as an agent in appeals and statements against administrative dispositions 
• Arrangement and coordination of transportation means (ship and air services) 
• Arrangement of cargo packing in containers (vanning) and cargo retrieval from containers (devanning) 
• Coordination of domestic delivery and international logistics 

The characteristic feature of a customs broker is that in addition to simple document creation and declarations on behalf of the client, the broker also arranges the optimal logistics based on the characteristics of the cargo and the conditions for the transportation. From the perspective of legal compliance and risk management, being able to receive the expert advice of a Registered Customs Specialist and a prompt response when problems occur can be a great source of reassurance for sites conducting trade administration. 

Key points to consider when choosing a customs broker 

The key points to consider when choosing a customs broker are as follows. 

• Do the cargoes handled and areas of expertise meet the needs of your company?
• Whether or not the broker has response capabilities and bases at the ports and airports 
• where your company actually ships cargo in or out 
• Scope of work (Is it only customs clearance? Are transportation and delivery also included?) 
• Extensive past results and experience 
• Clarity of costs and quotation details 
• Expertise of the person in charge, and the politeness/careful nature of the person’s response 

When selecting a customs broker, rather than focusing only on the cost and name recognition, it is important to prioritize whether the broker has previous results and expertise that are appropriate for the cargo and trading conditions of your own company. In particular, in the case of special cargoes such as foodstuffs, pharmaceuticals, and hazardous materials, the experience and ability to handle permits and approvals in that field will greatly affect the smoothness of the operations. 

In addition, the brokers that can provide support will vary between different ports and airports, so selecting a business that has strengths in your actual logistics bases will be an advantage in terms of delivery time and cost. 

Summary

Customs clearance is not just a procedure. It is an important process to ensure both the smooth implementation of international trade and national security. 

The complex procedures and complying with the laws and regulations can be a major burden, especially for parties importing or exporting for the first time. This is when the support of a highly specialized customs broker is essential. 

Goto Kaisoten provides a one-stop service that can include everything from customs clearance, packing, and storage to domestic and international transportation. We use our long years of experience and precise support by our expert staff to provide a powerful back-up for the international business of our customers. 

• A comprehensive logistics company with over 140 years of history
• A global network that utilizes around 70 bases in Japan and overseas
• A one-stop service for everything from marine, air, rail, and truck transportation to packing, storage, and customs clearance
• Extensive experience in special projects such as liquid transportation and large cargo 
• Superior customs clearance results and reliability as an AEO-accredited customs broker 

We provide a wide range of support from import/export and logistics optimization to cost reduction and risk management. Please contact Goto Kaisoten for your international logistics needs. 

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