Customs house agent

Customs House Agent (CHA) is a person who is licensed to act as an agent for transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs station.

Section 146 of the Customs Act is the enabling provision, which allows agents of importers and exporters to act on behalf of importers and exporters. This is necessitated by the highly involved and technical nature of the work to be done in connection with clearance of imports into and exports out of country. The importers and exporters themselves may have neither time nor the requisite knowledge on their own. Therefore, agents are allowed to act on their behalf. The work of the agents is governed by the Customs House Agents Licensing Regulations, 1984 framed under this section read with Section 157.

There are certain liabilities fastened on the agent of the importer or exporter under Section 147. Some of these liabilities are in the nature of extension of and exceptions to the liability of an agent under the Indian Contracts Act, 1872.

Sub-section (1) empowers the agent to do everything that an importer or an exporter can do. Filing a bill of entry, shipping bill, submitting supporting documents therewith, helping in examination of goods, payment of duty on behalf of the principal, warehousing of goods, removal from warehouse and the like.

The common law principle that an agent’s actions bind the principal is given the status of a legal presumption. The consequences of all actions of a CHA will bind the importers and exporters on whose behalf they act. An agent who is authorized to act on behalf of the importer or exporter is treated as the owner of imported or exports goods. In respect of that particular transaction, a notice could be given to that agent. This does not normally extend to recovery of duty not paid or short paid by the owner, importer or exporter of goods. As an exception, this is permissible when the Deputy/Assistant Commissioner is of the opinion that such recovery from the owner, importer or exporter of goods is not possible.

1. No ceiling for number of CHAs who can be appointed in a Customs House.
2. Issue of regular licence is preceded by a period of grant of temporary licence.
3. Prescribing criteria of experience and financial soundness for appointment.
4. Grant of regular licence is subject to passing examination, satisfying minimum volume of business and complying with obligations under Regulation No. 14.
5. Change in the constitution of partnership or firm not to affect the operations of CHA.
6. Commissioners have been empowered to prescribe fees to prevent excess billing by the CHAs.

The applicant individual working for a firm or a company should be:

• A graduate from a recognized University.
• Should hold a pass in Form G as employee of the firm / company.
• Should have engaged in Customs clearance work for three years.
• Should possess assets of Rs.1 lakhs or Rs.50,000/- as certified by a scheduled bank.
• Reliability of the applicant and soundness of financial status are very important criteria.
• If there are too many applicants than the licenses that can be granted, the Commissioner has to select persons for licensing by seniority of holding G pass. If there are two persons of same seniority, the older person will be preferred [Regulation 8(3)].

Relaxations, which can be granted by the Commissioner: An applicant need to possess pass in Form G for one year only if permitted by the Commissioner for reasons to be recorded in writing.

Various Custom Houses and Commissionerate prescribe certain volume of business as qualification for considering application for regular licences:

1. 150 documents per year (for ex: shipping bill or bill of entry)
2. Clearance or shipment 1500 packages per year.
3. Clearance or shipment of packages of value not less than Rs.60 lakhs.
4. A G-Pass holder with one year experience may also appear for examination if permitted by the Commissioner for reasons to be recorded in writing.

1. Diploma in “Customs clearance and freight forwarding” offered by Bombay University is not considered as graduation for the purpose of eligibility.
2. An employee or partner or director of a CHA licensee authorized to take examination under Regulation 9(5) is allowed to take three examinations in a period of two years from the date of application by the licensee for examination.
3. Level of knowledge of local language has to be determined by the Commissioners as the Regulations do not prescribe any requirement. Knowledge of local language by the authorized representative is considered sufficient.
4. A person who passes examination under Regulation 9(5) can apply for independent CHA licence when applications are called for, subject to possessing other qualifications.
5. Persons who were granted CHA licence before the amendment of 1997 prescribing graduation as qualification would continue to qualify for renewal of licence.

Multimodal transport operators (MTOs) are appointed under Multimodal Goods Transportation Act, 1993 by the Ministry of Surface Transport. Their work involves carriage of goods by more than one mode of transport between India and any place abroad. They handle export cargo stuffing and destuffing. This does not automatically confer any right on them to obtain appointment as steamer agents or CHAs unless thy are otherwise qualified for such appointment. Their role is different from that of a CHA or a steamer agent.

After scrutinizing and accepting the application a temporary licence for a period of one year is granted under Regulation 8 in Form B.

Before receiving the temporary or regular licence, the applicant has to go through another important step. He is required to execute a bond and give a surety or bank guarantee in Forms D and E. For major ports, the surety amount is Rs.25000/- For other ports, it is Rs.10000/- Surety may also be given in the form of National Savings Certificates or postal security. In the last two forms of surety, these should be pledged in the name of the Commissioner. It is important to note that since a regular licence holder is allowed to work in more than one Customs station, separate bond and surety have to be given in respect of each Customs station.

An application for regular licence can be made by a person who has passed the examinations. Application for regular licence is made in Form C. Form A and Form C are almost identical except that while the first form is issued under Regulation 5, the latter form is issued under Regulation 10. Licence fee is Rs.5000/-. Regular licence is granted in Form D. The applicant for regular licence has to satisfy following conditions:

1. The applicant must satisfy the norms regarding quantity or value of cargo cleared form the Custom House. This is determined by the Commissioner.
2. The conduct of the applicant during the period of holding temporary licence must be business like. There should be no delay in clearance of goods or in payment of duty on account of conduct of the applicant. There should be no complaint of misconduct of the applicant. There also should not be any complaint of non-compliance of provision of Regulation 14, which casts some important obligations on the CHAs.

Disqualifications for regular licence Regulation 10(1) specifies that only a person who qualifies in the examination can apply for a regular licence, Nevertheless, sub-regulation (3) provides that the Commissioner may reject the application of a person who fails to qualify in the examination, It further provides that if performance criteria is not satisfied (regarding quantity and value of clearances or conduct), the application may be rejected. A representation can be made against an order of rejection within 30 days to Chief Commissioner. The Chief Commissioner is also empowered to review the procedure of grant of regular licence within one year.

Regular licence granted to a person cannot be transferred [Regulation 13].

Validity of licence Under Regualtion12 (1), the validity of licence is for a period of five years.

CHAs have to maintain detailed, itemized and up to date books of accounts. The accounts should reflect all financial transactions entered into as a CHA. A copy of all documents such as shipping bill, bill of entry, transhipment application etc. filed must be maintained by the CHA for at least five years. These records should be made available for inspection by the officers of the department.

Clearances only against authorization A CHA is required to clear goods for import or export only against specific authorization from the principal and must produce it whenever required by the Deputy/Assistant Commissioner.

Method of transacting business The CHA has to either personally clear the goods or clear it through an employee who is approved by the Deputy/Assistant Commissioner who is designated for this purpose by the Commissioner. All the documents prepared by him should prominently bear the CHAs name at the top of the document. The CHA should not attempt to influence the conduct of Customs officers in matters pending before him or his subordinates. There should be no threats, false accusations or duress against such officers. No promise of advantage or benefit or gift should be made or bestowed on such officers. Duty of CHA should be discharged with utmost speed and avoid delays. He cannot charge for his services in excess of rates approved by the Commissioner.

Personal interests of CHA If the CHA is a former officer of the department, he cannot represent any matter before a Customs officer, which he had personally considered as such officer. He cannot also use facts which came to his knowledge when he was an officer.

Duty to tender correct advise The CHA is duty-bound to advise the client to comply with the provisions of the Act and the regulations. If there is non-compliance of provisions by any client, he is required to bring it to the knowledge of the Deputy/Assistant Commissioner. This regulation requires the CHAs to act as source of information to the department.

The CHA has to exercise diligence and ensure that he passes on correct information to the client, ensure that all information relevant for clearance or cargo or baggage is passed on to the client if it is relevant for clearance of cargo or baggage.

Accounting for money received The CHA has a duty to promptly pay to Government all money received from client for payment of duties and taxes. Similarly, any money received by him from the client or from the Government should be promptly and fully accounted to the client.

Liability as to information CHA should not attempt to gather information from Government records if it is not granted by the proper officer. Access to record maintained by him should not be denied, nor removed or concealed when sought by the Commissioner. There is a duty to maintain records and accounts as directed by the Deputy/Assistant Commissioner and produce them before that officer for inspection. All documents have to be prepared strictly in accordance with the rules and orders.

If the licence granted to a CHA is lost, it should be promptly reported to the Commissioner.

If there is failure in complying with obligations under Regulation 14, the Commissioner may prohibit a person from acting as a CHA within his jurisdiction.

Any change in the partners or directors should be informed to the Commissioner [Regulation 15].

If there is any change in the constitution of the firm or company, an application for grant of temporary and regular licence should be made within 30 days of such change. If there is nothing adverse against the firm or company, the Commissioner will grant licence of the category held by the firm or company earlier. In the meantime, the concern may be allowed to continue its business as a CHA if an application to that effect is made to the Commissioner.

If the concern is not a firm or company, in case of any change in the constitution of the concern, permission will be granted to continue the business as CHA by the Commissioner, If the change occurs due to death of person who was licenced to act as a CHA, his legal heir who was assisting him in his work as CHA under Regulation 20 may be granted licence if there is nothing adverse against that person and he also passes the examination.

If there is any change of qualified person acting on behalf of the firm or company, such information should be immediately given to the Deputy/Assistant Commissioner.

NIC (National Informatic Center)developed RES for Indian Customs, a basic software for creating and filing Shipping bill(Customs Document)on Indian Customs Website- ICEGATE. The software is free to download from Indian Customs website but to use this software, one need to register at website as a registered user with ICEGATE. This software is Internet Browser depended. One need to install and configure Netscape Navigator and Netscape Communicator first.

There are some private sector companies, which also provide software packages for online preparing SB(Shipping Bill) and BE(Bill of Entry) and filing it to Indian Customs gateway, ICEGATE.

iCAFFE(Customs and Freight forwarding Expert)is one of the available option, shares a good market ratio of Customs House Agents and Freight Forwarding Companies. It is complete and integrated solution to manage all activities associated with Customs Clearance and Freight Forwarding activity in India with online connectivity of various offices. The Software has been developed, with the feedback from persons having years of experience in Cargo trade and an aptitude for processing of data and managing activities electronically in order to achieve smooth functioning of an agency broadly covering the all important functional areas. The Software is also available in SAAS model. User just need to pay for the usage.

CHA Software & Custom Clearance Software in India

• Vishruta Software Solutions ([1]) has its product CHA Eternity,an online ERP software for CHA and it is also on SAAS technology.It has an in-built JOB COSTING ACCOUNTS system.Perhaps the only product with accounts module in-built in the market
• Royal Tech Systems ([2]) also provide CHA Software
• FOCUS is the most used product and it also of low cost.But it assists only in online filing alone
• Visual Impex

These Software packages are very much helpful in following manners

• Minimize the data entry operations and to reduce human errors, to being almost non-existent, which occur during the entry of the information in the Customs Annexure.
• Increases efficiency.
• Customized MIS Reports for Top and Middle Management.
• Keep track of SB and BE filed with ICEGATE.
• Integrated Customer Relationship Management.
• Multi User, Multi Branch working.