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Small and Medium Enterprise Development Authority

Government of Pakistan


6th Floor, LDA Plaza, Egerton Road, Lahore

Tel: (042) 111-111-456, Fax(042) 6304926-7


8th Floor, LDA Plaza, 5th Floor,Baharia Ground floor Banglow No.15-A
Egerton Road, Complex-II, M.T.Khan State Life Building Chaman Housing,
Lahore. Karachi. The Mall,Peshawar. Scheme, Airport, Road,
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 6304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
Clearance Procedure for Imports Legal Services Cell

December 27, 2005

1. Introduction of SMEDA
2. Role of Legal Services Cell
3. Customs Clearing Process for Imports
4. Customs Clearance / Introduction
5. Arrival of Goods at the Customs Port
6. Filing / examination of Bills of Entry
7. Clearance Procedure for White bill of entry
8. Clearance Procedure for Yellow Bill of Entry
9. Clearance Procedure for Green Bill of Entry
10. Important Issue
11. Where the owner does not have full information
12. Clearance of goods requiring immediate release
13. Assessment of duties/taxes
14. Basis of Calculation of Duty
15. Release of Goods
16. Clearance through Pakistan Customs Clearance System
17. Procedure under PACCS
18. Submission of Goods Declaration
19. Process of Goods Declaration
20. Difference of Opinion over Assessment by the Customs
21. Automated Customs Clearance Procedure
22. Exceptions to ACP

Clearance Procedure for Imports Legal Services Cell

The Small and Medium Enterprise Development Authority (SMEDA) was established
with the objective to provide fresh impetus to the economy through the launch of an
aggressive SME development strategy.

Since its inception in October 1998, SMEDA had adopted a sectoral SME development
approach. A few priority sectors were selected on the criterion of SME presence. In
depth research was conducted and comprehensive development plans were formulated
after identification of impediments and retardants. The all-encompassing sectoral
development strategy involved overhauling of the regulatory environment by taking
into consideration other important aspects including finance, marketing, technology
and human resource development.

SMEDA has so far successfully formulated strategies for sectors, including fruits and
vegetables, marble and granite, gems and jewellery, marine fisheries, leather and
footwear, textiles, surgical instruments, transport and dairy. Whereas the task of SME
development at a broader scale still requires more coverage and enhanced reach in
terms of SMEDA’s areas of operation.

Along with the sectoral focus a broad spectrum of services are now being offered to the
SMEs by SMEDA, which are driven by factors like enhanced interaction amongst the
stakeholders, need based sectoral research, over the counter support systems,
exclusive business development facilities, training and development for SMEs and
information dissemination through wide range of publications.


The Legal Services Cell [LSC] is a part of Business and Sector Development Division of
SMEDA and plays a key role in providing an overall facilitation and support to SMEs.
The LSC provides guidance based on field realities pertaining to SMEs in Pakistan and
other parts of the world.

LSC believes that information dissemination among the SMEs on the existing
regulatory environment is of paramount importance and it can play a pivotal role in
their sustainable development.

In order to facilitate SMEs at the Micro Level LSC has developed user-friendly systems,
which provide them detail description of the Laws, and Regulations including the
process and steps required for compliance.

The purpose of this document is to disseminate information amongst the SMEs about
the Customs Clearance Procedure for Imports. For convenience of the readers a
process flow chart explaining the procedural details and sample of various forms are
also annexed with the document. The information given herein is provided on as is
basis with no liability of SMEDA of whatsoever as to any act or omission consequent

Clearance Procedure for Imports Legal Services Cell

3. Procedure for Imports

The procedure for imports comprises of following three processes:

 Arrival of Goods at Customs Port

 Filing and Examination of Bills of Entry; and
 Assessment of customs duty

4. Customs Clearance / Introduction:

It is a common belief by the importers in Pakistan that custom clearance is very difficult,
time consuming and cumbersome procedure. As a result it has become a common
practice to engage a clearing agency in fulfilling the requirements and procedures of the
customs departments, as well as clearance of consignments. However a part of the
negative perception relates to the low awareness level about the compliance requirements
for import procedure. It can be divided into two major segments. First appraisal, where
the goods are physically verified and customs duty is assessed and second appraisal
where the actual or final duty is calculated and levied upon the importer.

This document covers all the necessary aspects, which are the fundamental part in
clearance of goods/shipment and the process of assessment of customs duty and taxes.

Shipments may be received at either the Sea, Air port or Dry port declared by the
customs authorities as customs ports, customs air port and land customs station; the
procedure for clearance is same for every customs station.

5. Arrival of the goods at Customs Ports

The Central Board of Revenue of and on declares the customs ports comprising of sea,
land and air ports for the purposes of clearance of goods. The customs clearance process
starts with the arrival of cargo ship, plane or other carrier of goods in the country on the
designated sea, land and air ports. Upon arrival of the goods at the customs port, the port
authorities issue the Import General Manifest (IGM) to each shipment. It is a number
indicating the serial of the shipment arrived during the year. Upon receipt of the IGM the
consignment is further indexed to allow for a systematic reference of all goods received.
After issuing this number, the shipment is off loaded and sent back to port warehouse. In
the case of land customs station i.e. dry port etc. the IGM is issued not at the time the
goods reach the land customs station but at the time the goods are off loaded at the sea or
air port.

Upon arrival of the off loaded goods, the clearance process starts. Normally at this point a
clearing agency is engaged by the importer to facilitate the process of customs clearance
and to reduce interface with the customs officials. Following documents are required and
provided to the clearing agent for processing.

a) Invoice of shipment
b) Packing list

Clearance Procedure for Imports Legal Services Cell

c) Bill of lading
d) Copy of the Letter of Credit or Contract

If the importer is importing for the first time, following additional documents are to be

a) Copy of the Sales Tax Registration Certificate as an importer

b) Copy of Registration Certificate issued by the Export Promotion Bureau in
case of import of Gems and Jewelry
c) Copy of the National Tax Number
d) Copy of the most recent sales tax return

It may be noted that now there is no need to obtain import and export licence from the
Export Promotion Bureau.

6. Filing / Examination of Bills of Entry:

Provided all the above mentioned documents are complete, the clearing agency prepares
the Bill of Entry. It may be noted that at present the bills of entry are being filed
electronically with the customs department. For such purposes the customs official have
issued Pin Code to every clearing agent along with a CD which contains the standard
formats of bills of entry in blank form. The clearing agent after giving all the particulars
in the bills of entry hand over the CD along with all the requisite documents to the
customs officials for their review and clearance of goods. There are three types of color
coded Bills of Entries, which are explained as hereunder:

White Bill of Entry: The bill is prepared when the consignment is to be cleared against
the cash payment of the duty levied without transferring it to a warehouse.

Yellow Bill of Entry: This bill is filed when the shipment is transferred to the bonded

Green Bill of Entry: This bill of entry is used for the release of shipments which have
been placed in bonded warehouse against the yellow colored bill of entry.

7. Clearance Procedure for White Bill of Entry

The clearing Agent first receives the delivery order from the shipping agency and
subsequently files the Bill of Entry contained in the computer CD along with the
previously mentioned documents with the customs department, where a manifest for the
consignment is filed. After the filing of the manifest machine number and group number
is allotted. Group number is a predefined number based on the category set by Customs

The bill of entry should be completed in all respects and the amount of payable customs
duty, sales tax, income tax etc. should also be typed on the bill of entry, calculated on the
basis of invoice under the correct Pakistan Customs Tariff (PCT) Heading. The test
reports (where applicable) should be typed in case of chemicals. Similarly, in case of

Clearance Procedure for Imports Legal Services Cell

imports of tea, the values certified by Pakistan Tea Association shall be declared on the
bill of entry for the purposes of assessment.

Next step is the Appraisement of the consignment. The designated customs officials
examine the goods to ensure whether the particulars given in the bill of entry i.e. amount
of duties and taxes, PCT Heading etc. correspond with the goods imported. Provided
there is no contradiction with the particulars given in the bill of entry and the goods
actually imported, the case is marked to the principal appraiser of the assessment hall, for
assessment of duties and taxes on the imported goods. On assessment of the duties and
taxes, the amount so assessed is deposited in the treasury and the goods are released.

8. Clearance Procedure for Yellow Bill of Entry:

The procedure for the yellow Bill of Entry is almost identical to the white bill of entry
however, the only difference is that instead of clearing the shipment against cash, it is
placed in a bonded warehouse. The customs appraisal procedure remains the same,
however, in case of filing of yellow bill of entry, a No Objection Certificate is required
from the bonded warehouse authority. In addition to NOC a surcharge amount equivalent
to 2% of the customs assessed value of the shipment or such other rate, as is for the time
being fixed by the CBR, is paid to the Government.

Bonded warehouse can be very helpful to business, which do not require the whole
shipment immediately released. It can be best utilized in case of shortage of cash amount
with an importer for the release of a consignment. It is a storage facility, where the
consignment is stored under secured conditions for a certain period of time that has been
predefined. The shipment remains in the bonded warehouse against nominal charges for a
specified period until the importer requires part of whole of the shipment, which can be
cleared and released against the filing of green bill of entry.

9. Clearance Procedure against Green Bill of Entry:

The procedure for clearance against green bill of entry is same as that of white bill of
entry except that it is filed to ex-bond the goods in whole or in part of the goods bonded
against yellow bill of entry.

Once the white bill of entry is filed for clearance of goods, it is not possible to transfer
the consignment into bonded warehouse.

 Where the owner does not have full Information about the consignment:
In case an owner of a shipment is unable to make complete entry of the goods
imported in a bill of entry, he may make a declaration to that effect before the
appropriate officer with the request to examine the goods. The appropriate officer
may, subject to the conditions prescribed by the Collector, permit such officer to
examine the goods in the presence of an officer of customs or to deposit of such
goods in a public warehouse without warehousing the same, pending the production
of such information.

Clearance Procedure for Imports Legal Services Cell

10. Clearance of Goods requiring immediate Release:

An officer of customs not below the rank of Assistant Collector Customs may allow
release of goods requiring immediate clearance, even prior to presentation of bill of entry
thereof and subject to such conditions and restrictions as may be prescribed by the
Central Board of Revenue.

11. Assessment of duties / taxes

On delivery of the bill of entry, the goods or any part thereof is examined without delay
for the purposes of assessment of customs duty and other taxes thereon. This examination
is made in the following manner:
First appraisal of the consignment: During first appraisal the case is forwarded to the
appraisement hall where the specific percentage of goods imported is determined for
examination. The principal appraiser marks the case to the Inspector and Deputy
Superintendent for examination. The inspector after examining the goods marks the case
to the Deputy Superintendent for further approval. Provided the case is approved by both
of them, the case is referred to the Principal Appraiser for assessment of customs duty
and other taxes thereon.
The second appraisement of the shipment is carried out by the customs department in
reference to the report forwarded by the principle appraiser along with documents
submitted by the clearing agent for determination of customs duty.

12. Basis of calculation of duty:

The customs duty calculation on the consignment is based on three different methods; the
same are:
Declared Value: This is the value of the consignment as given on the invoice and shown
in the bills of entry;
Karachi Data Base Value: The value of the consignment is calculated on the recent
price of the commodity released from the report by the Karachi Collectorate from their
data base; and
Evidence Value: This value is based on the history of previous duty paid by the importer
of the same commodity.

13. Release of Goods:

After assessment of valuation the case is then forwarded to the “Inspector - Out of
Charge” for final release and issuance of a gate pass. Following documents are submitted
to the Inspector for Processing:
a) Copy of Invoice
b) Copy of Packing List
c) Bill of Entry (Original Copy, Quadruplicate Copy and Statistical Copy)
With the issuance of gate pass, the importer is directed to deposit the amount of duty
assessed, warehouse charges, fines and penalties, if any, placed by the port authorities.
Once the payment is made, the shipment is released and can be loaded and transported to
its destination.

Clearance Procedure for Imports Legal Services Cell

14. Provisional Assessment of duty:

Where it is not immediately possible to assess the customs duty on any imported goods
for the following reasons:
 That the goods require chemical or other test or
 Further inquiry for the purposes of assessment or
 That all the documents or complete documents or full information pertaining to
those goods have not been furnished,

An officer not below the rank of Assistant Collector or Deputy Collector of Customs may
order that the duty payable on such goods be assessed provisionally subject to the
payment of any additional amount or furnishing of bank guarantee for the purposes of
securing payment of duty, if any, payable on final assessment, by the importer, as such
officer deems sufficient.

15. Limitation for Final Assessment:

In cases of provisional assessment of customs duty, the amount of duty actually payable
is finally assessed within one year of the date of provisional assessment or such other
extended period not exceeding ninety days as may be allowed by the Collector of
Customs concerned.

16. Clearance through Pakistan Customs Computerized System (PACCS)

In addition to the above, CBR has also started clearance of goods through PACCS with
immediate effect from May 01, 2005. In this regard, initially, a Model Custom
Collectorate has started clearance of goods under PACCS from Karachi International
Container Terminal (KICT). However, following cargo are not covered under the
clearance through PACCS:
1. LCL Cargo
2. EPZ Cargo
3. Commercial Afghan Transit Cargo
4. Temporary Imports under SRO 410 and DTRE
5. Imports under quotas for Deletion Program and Survey Certificates

17. Procedure under PACCS

For clearance under PACCS following requirements must be met:
 The importer, and if clearance is desired through agent, both must have a PACCS
user ID. This user ID may be obtained from Model Customs Collectorate,
Customs House Karachi between 1000hours to 1400hours on all working days.
 Copy of the packing list and invoice of the cargo must be available inside the
imported containers. These documents are retained by the customs and are not
returned to the importer.
 National Tax Number
 No objection certification Number from any government department in case of
any restriction of import of an item by such department.
 Free Tax Number FTN in case of exemption from income tax liability.
 Minimum Computer System Requirements i.e.

Clearance Procedure for Imports Legal Services Cell

1. Internet Explorer 6.0 (or above)

2. In case you wish to use off-line software for filing of Goods
Declaration: MS Office info Path 2003 (with MS Office 2003
Service Pack 1)
3. High Speed Internet Access preferably a DDP connection through
4. Regulatory Authorities like Government departments, Banks etc.
would require static IPs to interact with PACCS

 There is no need to file any document to the customs. All the declarations (Bills
of Entry, shipping Bills etc.) are electronically available online.

18. Submission of Goods Declaration:

The Goods Declaration i.e. on line filing of bills of entry etc. may be filed on line at least
24 hours before the arrival of the vessel. The duties and taxes are computed and
discharged (at any nearest online bank branch) by the importer before submission of the
declaration to the Customs. On submission of the document the importer is granted an
online receipt in the shape of Customs Reference Number (CRN) also known as Machine

19. Process of Declaration:

The moment a CRN is allotted, the Risk Management System of PACCS commences the
processing of the declaration. In case the customs are satisfied that the particulars
contained in the declaration do not pose a threat to the country of the exchequer, the
cargo is cleared in seconds and the importer is intimated online. However, in case a threat
is detected, detailed scrutiny including examination of the cargo is undertaken.

PACCS has a highly sophisticated automated Risk Management System and designed to
detect any illicit practices. Therefore, in order to avoid delays and confusion later it is
advisable to file your declaration carefully and to ensure that correct information is
declared to customs.
 The Customs if not satisfied with the declaration may also require additional
information, verify certain documents, question value, HS code etc.

20. Difference of opinion over Assessment by the Customs:

In case the importer differs with the assessment of Customs he will be provided with an
online opportunity to record his grounds for differing with the Customs. This will initiate
first review of the assessment. The first review will be conducted by an officer not below
the rank of Principal Appraiser and the importer will have the right to appear in person if
he so desire.
If after the first review, the importer is not satisfied with the decision of Customs,
he is entitled to file a second review which will be conducted by an officer not below the
rank of Assistant Collector of Customs and the importer shall have the right to appear in
person if so desired by him.

Clearance Procedure for Imports Legal Services Cell

In case the importer is still not satisfied with decision of the Customs, he may get
his cargo cleared from the port by furnishing security equivalent to the differential
amount. In such an event the case would be automatically forwarded to the valuation
department, HS committee etc. depending upon the nature of the dispute.

However, in case the importer does not clear your cargo by furnishing the security, he
may challenge the decision before the relevant appellate authorities.

21. Automated Customs Clearance Procedure (ACP):

In addition to the above, on some other main ports including Lahore, Peshawar etc. other
than KICT, Customs Clearance procedure under ACP is also operative. The same is
however, available to following eligible importers:

I. All the Federal / Provincial Governments, Public sector organization, State

owned corporations and defence imports.

II. All the importers, having import value more than Rs. 30 million during
last twelve months will be eligible for ACP as per parameters laid down in
implementation strategy (para 3).

III. The import of risk prone commodities shall not fall in the preview of ACP.

IV. The clearing agents (upto five) who have been clearing goods of such
importers in the past one year would be taken as nominated clearing
agents, unless otherwise desired by such importers through application to
the Deputy Collector, Import Section or any proceedings have already
been initiated against clearing agent under customs law or.

V. The importers who do not meet the ACP criteria may also apply to the
Collector for special enrollment.

VI. The facility of ACP shall be withdrawn at any stage if it is found that a
case of misdeclaration or fiscal fraud exists or has been detected against
the importer, (or a director in case of company / firm).

VII. The facility of ACP will be availed only for goods imported against valid
LC (letter of Credit) or registered bank contract.

21. Exception to the ACP:

The ACP will not be available in following cases:

a) Where the Goods Declaration is filed prior to the arrival of the

vessel under section 79 (1);

Clearance Procedure for Imports Legal Services Cell

b) Import of scrap of all kinds, second hand machinery, job lot / stock
lot goods;

c) Chemicals on the controlled list or useable in the manufacturing of

narcotics, psychotropic substance or chemical weapons;

d) Items meant for re-export.

e) Banned / restricted items as per current Import Trade & Procedures


f) Items in section II (Procedural Requirements) of current Import

Trade & Procedures Order, except CKD kits of motor cars and
other motor vehicles, and trucks and buses, or unless allowed by
Collector of Customs,

g) Items ordered to be excluded from ACP due to high risk, by the

Appraisement Intelligence Branch, after approval of additional
Collector in charge and notice issued by Additional Collector

22. M/s. PRAL has been authorised by the customs authorities to feed the list of
names of importers in the data base to whom facility of ACP will be extended.
This list is duly signed by all the Additional Collectors (Appraisement) and
Collector (Appraisement).

23. The system under ACP aims to process the customs declarations made at the
time of import by notified eligible importers, on the Goods Declaration (GD)
form, using Custom House computer. However, under the facility about 10%
of such declarations will be checked in detail randomly in order to ensure their

24. In case any discrepancies prejudicial to government revenue or import policy

are found in random checking or Post Clearance Audit etc, severe penal action
may be initiated against the importer as well as the Custom House Agent, in
accordance with Customs Act, 1969.

25. Unless the case is selected for random check, the computer system prints on
the Good Declaration, ‘CLEARED UNDER ACP’. All such Goods
Declarations shall not be presented in Assessment Group for manual
assessment or processing. The assessment for the purposes of duties and taxes
would be made automatically by the computer. The assessment aspect of such

Clearance Procedure for Imports Legal Services Cell

Goods Declaration will be scrutinized under Post Clearance Audit / Post

Import Audit.

26. In case the case is not selected for random checking, following procedure is
followed for clearance of goods:

a. In case of FCL cargo Superintendent (cash) shall “out of charge” the

Goods Declaration after duties and taxes have been paid. At the
wharves, shed etc. the FCL cargo may not be examined. The container
seal shall be checked for being intact and its numbers verified. If the
seal is found missing, broken or tampered, or its numbers do not tally,
this fact will be endorsed in the computerized examination report and
detailed examination will be carried out.

b. In case of LCL cargo, the marks and numbers and total number of
packages are tallied at wharves, sheds etc. The Goods Declaration of
LCL cargo shall be “out of charge” by Principal Appraiser (Shed). If
the number of packages / quantities or marks and number do not tally,
this fact will be endorsed in the computerized examination report and
detailed examination will be carried out.

c. The Examining Officer (exit gate) shall re-verify the container number
and seal number in case of FCL cargo, marks and numbers in case of
LCL cargo; and payment of duty stamp on the Goods Declaration,
before goods are allowed out of customs area.

 All imports pertaining to deletion programs of availing benefits of conditional /

concessionary SROs [ whereby certain security i.e. Indemnity Bond, Bank
Guarantee, etc is required to be submitted in group / bank guarantee cell ] shall be
allowed to avail the facility of ACP after completing the due procedure in the
group / Bank Guarantee Cell. Superintendent Cash will “out of charge” such
Goods Declarations after completion of process by the group.

 Notwithstanding the above, as per the facility, the computer system at Customer
Service Centre at the ports may also randomly select GDs for detailed scrutiny
and processing (assessment) and examination of goods. Such GDs shall be
marked by computer system ‘RANDOMLY SLECTED FOR DETAILED
Declaration will be presented in Assessment Groups and to shed examination staff
for examination as per examination order. In cases, where Goods Declaration
selected is for more than 10 containers the examination shall be of 20% of the
total number of containers, unless otherwise ordered by the Assistant Collector in

Clearance Procedure for Imports Legal Services Cell

charge. The Principal Appraiser (Shed), after satisfying himself will “out of
charge” all such Goods Declarations.

 The facility of ACP will stand withdrawn on detection of any discrepancy or mis-
declaration, which shall be fed in the main computer system by the person / group
/ section making detection by filling out form ACP-2. This will form a part of the
company profile kept on the customs data base, unless otherwise order by the
Collector of Customs.

 The Additional Collector of Customs, Appraisement in charge of Import Section

has been authorised to notify or de-notify the importers, or restrict certain types of
import or certain items of import from using the ACP.

 It may be noted that in cases where the goods are cleared under the facility
of PACCS or ACP, only white bills of entry shall be used for clearance of
goods against cash, in bond or out bond. However, in all other cases usual
mode of clearance of goods as described herein above shall be operative.