Shipping is considered the key part of trade between countries, even after such great technological advancements. From raw materials to manufactured goods, everything moves. And there is one crucial document that, if it goes missing, can become a nightmare for the importer: the bill of entry (BoE).
It serves as a legal binding between the importer and the customs, granting permission to an importer to import whatever goods they have and offload at the port. This article will define the bill of entry, its key functions, and types.
What Is a Bill of Entry?
A bill of entry (BoE) consists of a summary of what is within the shipping container. It includes information such as the origins of the goods, quantity, value, and the nature of the goods. This file helps port authorities and the government keep a check on everything that any prohibited material or goods are not imported into the country.
In other words, through this customs clearance document, the importer declares the goods that they have imported. Each country or port has its own set of rules, policies, and SOPs that the importer has to follow. BoE may go by different names like Entry Summary, Import Declaration, and Customs Declaration.
Yet the content of the file is basically the same. It may include the goods that are allowed, any limitations on the quantity, or whether any licenses are required before importing the goods. The BoE needs to have accurate information and attestation for the port authorities to give the clearance order.
There are also several other mandatory documents in the customs clearance process, such as the packing list, bill of lading, and commercial invoice.
Key Functions of Bills of Entry
The BoE helps the authorities in managing and processing the goods. A correctly filled BoE can assist with the tariffs applicable to the goods.
It not only helps the authorities in deciding and applying the applicable duties and taxes, but also serves a broader purpose. For instance, it is the primary legal document where the importer lawfully declares everything in their possession, ensuring transparency and serving as proof during audits or disputes.
Furthermore, bills of entry enable importers to claim an ITC (input tax credit on imports), which applies to the taxes paid indirectly at the border. For instance, when you pay IGST (Integrated GST) on imports, you can claim that as ITC in your GST return.
Types of Bills of Entry
There are 4 major types of bills of entry, primarily applicable in India or other countries that are often influenced by the Commonwealth or South Asian trade frameworks.
Green BoE
The green BoE, or the bill of entry for warehousing, is used by importers when goods are to be stored in a customs-bonded warehouse. With the help of this bill, the importers are able to keep the taxes and duties suspended until the goods are removed from the warehouse.
White BoE
The white BoE or BoE for home consumption is one of the most common and easiest bills of entry types used by importers. When the imported goods are meant for immediate usage, they simply file the entry of the shipment, pay the appropriate applicable taxes and duties at the time of clearance, without having to store them in a warehouse awaiting processing.
Blue BoE
This bill is also called the ex-bond bill of entry, used primarily for the withdrawal of goods for home consumption purposes. Importers need it to clear goods from a bonded warehouse for home use and pay the duties then.
Advance BoE
It is filed before the arrival of goods to expedite customs clearance. Advance BoE helps in faster processing at the port of arrival.
Bill of Entry and Bill of Lading
Even though the names are quite similar and can be mistaken, they both serve entirely different purposes and are issued by different parties as well. The BoE is the responsibility of the importer or their customs broker. The prerequisites are to be filled out thoroughly to assist authorities with the handling and processing of the goods. From taxes, tariffs, and duties to when to release and to whom to give possession is determined with the help of bills of entry.
A bill of lading, on the other hand, is issued by the carrier and is intended for the person importing the goods. It serves as a receipt of acknowledgment of the goods onboard and grants the title to the importer so the importer can pick up their cargo at the destination.
Filing Bills of Entry
This process can be simply divided into 5 simple stages, but it often looks confusing to many people. Following the easy-to-follow steps shared below, you can file a BoE yourself and avoid any hassle.
Preparation
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First and foremost, you, as an importer, should gather all of the necessary documents, such as:
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Trade License (if applicable)
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Commercial Invoice
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Bill of Lading (or airway bill in case of air freight)
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Special Permits: Like a fumigation certificate (if applicable)
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Packing List
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Certificate of Origins
Among these, you will need to find out the Harmonized System code for your item. Wrong HS codes can result in delays in processing and penalties.
Submission
In order to submit the online bill of entry, you are required to log in to the filing portal using the credentials of your licensed house agent or simply through your importer code. Double-check your e-signature and digital certificate, making sure they are up to date.
Select the right BoE type to fill. All of the details should be accurate. A quick scan before submission can eliminate the chances of discrepancies.
After filling the form, upload the scanned PDFs of the mandatory and supporting documents. It is advised to label them correctly in case of future audits or investigations.
Lastly, a quick pre-submission validation will be required, assisted by the online portal. It will further help you eliminate any errors or mistakes that can be a hurdle at the time of processing.
Payment of Duty
To avoid any miscalculation of the duties and tariffs, many online portals now offer the calculation of the duties as a built-in feature of the online portal. After the estimate is provided, you may simply generate an invoice or pay online through a secure payment gateway.
A receipt of the bank transaction may be required if paid via other modes of payment.
Goods Assessment
If your business is trusted, you can speed up customs clearance by doing your own assessment of duties. But if you’re not prepared or the shipment looks risky, expect more scrutiny.
If any shipment is flagged for high-risk or physical inspection, closely coordinate with your customs agent or freight forwarder to make the inspection as smooth and quick as possible.
Clearance
Once the duties are paid and all inspections are passed, the Release Order is generated through the same online portal that was used for online submission. Using that release order, the goods will be released from the warehouse.
Mistakes to Avoid
To avoid any possible mistakes when filing a bill of entry, be aware of the following aspects.
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Incorrect HS (Harmonized System) Code: Misclassification may result in underpayment or overpayment of the imported goods, which can potentially lead to fines.
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Misreported Invoice Value: You should not include only the FOB price instead of taking into account the insurance, freight, and other landing costs, or this will trigger disputes.
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Incomplete Documentation: Not uploading the certificate of original or any special permit (if required) can also become an obstacle while importing the goods.
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Late Filing: It is recommended to handle the filing of the BoE at your earliest convenience to avoid any possible disputes.
Conclusion
The bill of entry can safeguard you from penalties, disputes, and hurdles during customs clearance. Filing it well and consistently also helps your business build a stronger reputation and open up trade opportunities.
Frequently Asked Questions (FAQs)
Is it necessary to file a bill of entry?
Yes, it is, in fact, a mandatory requirement in order to import goods. Failing to file one may result in the goods being held and not being cleared.
Who should prepare a BoE?
Bills of entry can either be filed by the importer or through their customs clearing agent with a license and authorization.
What if I made a mistake when filing the BoE?
If it’s a minor error, customs may approve the amendment quickly. Or you should contact your customs agent to start the correction process. This may require you to submit an amendment request and pay more.
