Know How You Can Become a CHA? Know the Role of CHA in International Trade

Have you heard about CHA? Becoming a Customs House Agent (CHA) in India involves a series of steps, as mentioned under the Customs Broker Licensing Regulations (CBLR), 2018. A CHA is referred to as a Customs Broker (CB) and is authorized to act as an intermediary between importers/exporters and customs authorities.

Specific eligibility criteria must be necessary for becoming a CHA. The role of CHA is inevitable as they act as intermediaries between businesses (importers/exporters) and the customs authorities to ensure smooth clearance of goods across borders. The CHA Plays vital role in international trade operations.

What is CHA?

Customs clearance is one of the most crucial steps in international trade. Strict customs regulations and stringent checks are too hectic to traders. CHA  are experts providing guidance to exporters to pass through the complex customs clearance procedure smoothly. They are also referred to as a customs broker, they serve as an intermediary between the exporters/importers and the customs authorities.

Eligibility

Eligibility for becoming CHA  are mentioned under CBLR, 2018.A strong understanding of customs and taxation laws and proficiency in logistics and supply chain management will  help to elevate the role of CHA. Excellent communication and negotiation skills is a necessary skill.

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Following are the Educational Requirements;

• Minimum of a bachelor’s degree from a recognized university.
• Must have at least 2 years of experience in customs-related work or clear the CHA exams conducted by the Directorate General of Performance Management (DGPM).
• Applicants must be at least 21 years old.
• Proof of financial stability is required.
• The applicant must not have any prior convictions under customs or other economic laws.

Application for License as a Customs Broker under Regulation 5 of CBLR

To become a Customs Broker one has to apply using Form A as per the CBLR, 2018. Then submit the application to the Commissioner of Customs in the jurisdiction where you intend to operate.

After initial scrutiny of the application, the applicant must clear a written examination that tests the Knowledge of customs law, regulations, and procedures, Basic knowledge of GST and allied laws, Shipping, import/export documentation, Cargo management and related subjects.

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The written test is conducted by DGPM, typically once a year. Upon passing the written test, candidates must appear for an oral examination to assess practical knowledge and communication skills. Successful candidates are granted a Customs Broker License, allowing them to operate as intermediaries.

After receiving the license, the applicant must execute a bond and furnish a bank guarantee/security deposit as stipulated by the customs authority.

Key Responsibilities of a Customs Broker

Responsibilities of Customs Brokers are outlined under the Customs Broker Licensing Regulations (CBLR), 2018 Regulation 10. They are

• Documentation and Compliance: Ensuring accurate preparation and submission of essential documents such as, Bill of Entry, Shipping Bill, Import/Export licenses, Packing lists, invoices, and other trade documents are the duty of CHA or CB. Advising clients on compliance with Customs Acts, GST laws, and international trade regulations also being the part of responsibility. 
• Customs Clearance: Filing and processing customs documentation through electronic systems like ICEGATE. Ensuring timely clearance of goods by coordinating with customs officials is another important responsibility. Facilitating duty payments on behalf of clients.
• Tariff Classification and Valuation: Advising clients on appropriate HS Code classification of goods. Assisting in valuation for determining the applicable Customs Duty or other taxes to avoid disputes with customs authorities.
• Advisory Services Offering guidance on: Applicable import/export duties and taxes. Duty exemptions, concessions, or schemes under the Foreign Trade Policy (e.g., EPCG, MEIS). Changes in trade policies and customs regulations.
• Coordination with Multiple Stakeholders: Acting as a link between importers/exporters, shipping lines, freight forwarders, and customs authorities. Managing logistics for the smooth movement of goods, including coordination with port and airport authorities.
• Handling Disputes and Appeals: Representing clients in disputes related to customs assessments, penalties, or duty demands. Filing appeals before customs authorities if needed.
• Assistance in Duty Drawbacks and Incentives: Helping clients claim duty drawbacks, refunds, or other export incentives as per government policies.
• Risk Management: Ensuring proper classification, valuation, and documentation to mitigate risks of penalties, delays, or confiscation of goods. Advising clients on trade compliance risks and strategies to handle them.
• Verification of Client Information: Conduct due diligence to verify the identity and credentials of clients. Ensure that the information provided by clients is authentic, complete, and accurate to avoid fraudulent practices.
• Trade Facilitation: Expedite customs clearance processes by coordinating with customs officials and other stakeholders.Minimize delays in the clearance of goods to enhance the efficiency of supply chain operations.
• Assistance in Regulatory Approvals: Obtain necessary permits, licenses, and clearances required for specific goods, such as those regulated under DGFT (Directorate General of Foreign Trade), FSSAI (Food Safety and Standards Authority of India), or Wildlife Protection Act.
• Compliance with Anti-Smuggling Measures: Report any suspected smuggling activities or irregularities to customs authorities.Avoid facilitating unlawful trade practices.

Importance of CHAs in International Trade Ensuring Regulatory Compliance:

The role of a Customs House Agent (CHA) under the Customs Broker Licensing Regulations (CBLR), 2018, is crucial in international trade. CHAs ensure businesses adhere to ever-evolving customs laws and international trade policies, avoiding legal complications. They simplify the intricate processes of customs clearance, enabling businesses to focus on their core operations.

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By managing documentation, clearances, and coordination, CHAs help avoid delays, penalties, and excessive demurrage charges. Their role aligns with global trade facilitation initiatives like the WTO's Trade Facilitation Agreement, enhancing efficiency in cross-border trade. CHAs play a significant role in easing the movement of goods, contributing to the seamless flow of international trade.

Penalty Imposable over CHA

The CBLR specifies penalties that can be imposed on a Customs Broker (CB), for violations of regulations or misconduct.

• Suspension or Revocation of License as per Regulation 16 of CBLR: A Customs Broker’s license may be suspended or revoked if they:
• Fail to comply with the provisions of the Customs Act or CBLR.
• Engage in fraudulent or unethical practices.
• Misrepresent facts or submit false documents.
• Fail to discharge duties as specified under Regulation 10.
• Monetary Penalties under Section 158A of the Customs Act, 1962: Customs Brokers may face monetary penalties for violations such as, failure to verifying client credentials, submitting inaccurate or misleading information and facilitating unlawful activities or duty evasion. Penalty Amount upto ₹50,000 or as prescribed, depending on the nature of the violation is being imposed.
• Forfeiture of Security Deposit as per Regulation 8 of CBLR: In cases of misconduct or non-compliance, the Customs authorities may forfeit the security deposit provided by the Customs Broker during the licensing process.
• Penalty for Breach of Obligations as per Regulation 10 of CBLR : Customs Brokers are obligated to verify the identity and authenticity of their clients, maintain proper records, and ensure compliance with all laws and regulations. Failure to fulfill these obligations can result in penalties under the Customs Act, including fines or other punitive actions.
• General Penalty for Violation of Rules under section 117 of the Customs Act: If a Customs Broker contravenes any customs law provision for which no specific penalty is provided. 

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Monetary fines and suspension are common penalties for minor violations. Severe cases involving fraud, smuggling, or collusion attract harsher punishments, including prosecution and imprisonment.

 CHA  has eased the customs clearance procedure for international  businesses. Businesses that seek assistance from CHA brokers are able to get through the customs clearance process speedily without facing any hindrance. Hiring a knowledgeable and experienced agent, will help in managing the trade with ease.

The responsibility of CHA from carrying out inspections, coordinating with the customs authorities, carrying out inspection and calculating the customs duty are important steps in international trade. With the help of a reliable CHA who has expertise in the field will increase efficiency in global trade.

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