Which documents are needed to facilitate the import of goods?
A company may choose to source locally or internationally to leverage the market competition. When sourcing from another country, buyers need to understand legal requirements and other regulation to facilitate customs clearance. If they do not prepare sufficient importing documents, they may face risks such as delivery delay or spoiled goods due to being held at customs. In the CIPS exams, there are 1 or 2 questions asking about mandatory documents required when importing goods. In the post, I would like to introduce essential importing documents that you should keep in mind.
Commercial Invoice
This document serves a proof of sales between seller and buyer. It indicates the value of their transaction. Normally, the invoice includes information of buyer/seller, a description of items, value of items, HS codes and Incoterms. Customs authorities will calculate duties and taxes based on the information provided in the invoice.
Bill of Lading or Air Waybill
Bill of Lading is issued by a courier, which aims to confirm the following information:
- It serves as a delivery contract between a courier and a shipper, outlining terms and condititons for transporting the goods to the agreed destination.
- It is considered a receipt of goods, showing that the courier receives goods in good condition.
- The Bill of Lading represents the title of goods. The person who holds the Bill of Lading, has the right to claim the goods at the destination port. Normally, the shipper will send the original Bill of Lading to the consignee, allowing them to claim the goods at the port.
Packing list
This document outlines the contents of each package, including item names, quantities, weights and dimensions. It helps customs authorities verify the shipment.
Certificate of Origin (C/O)
This document indicates where items are manufactured. The origin of items determine the level of tarrif imposed on them, as some goods qualify for preferential tariffs under a trade agreement.
Import License
This document is released by a national governement who authorizes the importation of specific goods into its territory. If the buying organization does not prepare this document, it will not be able to carry out the customs clearance procedure.
Bill of Entry
This is a legally binding document filed by an importer with the customs authorities. It involves information about the importer, the description of each imported cargo, the value, the quantity, the origin of cargo. The purpose of Bill of Entry is to:
- Calculate the taxes, duties and other fees that an importer must pay to the governement.
- Verify the cargo to check whether it complies with import regulation and law
- Record the data related to imported goods
I have outlined essential docuements required to faciliate the customs clearance procedure. In fact, many companies encounter a lot of troubles when preparing these docuements, leading to fines or delays in customs clearance.
- Vague product description
- Wrong HS Code Selection: HS Code play a role in classifying goods. If an importer choose an inaccurate HS code, it may result in higher duties or shipment rejection
- Inaccurate forms: Mismatched data between documents can trigger customs audit or shipment holds
- Missing supporting documents: If an importer fails to prepare various supporting documents like a certificate of origin, invoice, bill of lading or import license, the customs clearance process will be halted.
- ….
We provide CIPS practice questions with answers and detailed explanation, besides they are updated regularly to reflect the actual exam. If you want to consolidate your knowledge before the exam, you can check the links below. The discount code is EXAMAUG25.
L4M1: https://www.udemy.com/course/cips-l4m1-practice-test-short-learning-guide/?couponCode=EXAMAUG25
L4M2: https://www.udemy.com/course/cips-diploma-l4m2-practice-test/?couponCode=EXAMAUG25
L4M3: https://www.udemy.com/course/cips-diploma-practice-test-commercial-contracting/?couponCode=EXAMAUG25
L4M5: https://www.udemy.com/course/cips-practice-test-commercial-negotiation/?couponCode=EXAMAUG25
L4M6: https://www.udemy.com/course/cips-diploma-practice-test-supplier-relationships/?couponCode=EXAMAUG25
L4M7: https://www.udemy.com/course/level-4-diploma-whole-life-asset-management-l4m7/?couponCode=EXAMAUG25
L4M8: https://www.udemy.com/course/cips-l4m8-practice-in-procurement-and-supply/?couponCode=EXAMAUG25
L5M2: https://www.udemy.com/course/cips-l5m2-daniel-do/?couponCode=EXAMAUG25
L5M3: https://www.udemy.com/course/l5m3-daniel/?couponCode=EXAMAUG25
L5M4: https://www.udemy.com/course/l5m4-advanced-contract-and-finance/?couponCode=EXAMAUG25
L5M5: https://www.udemy.com/course/l5m5-daniel/?couponCode=EXAMAUG25