7.2 Import/Export Compliance

Customs authorities function as the ultimate physical firewall in your supply chain. They do not care about your production line down (line-down) situation, your quarter-end targets, or your engineering urgencies. If the documentation is imperfect, the physical flow stops immediately, often indefinitely. Compliance is not an administrative afterthought; it is a master data attribute that must be validated before the freight forwarder picks up the cargo. A shipment stuck in customs is useless inventory that you have paid for but cannot use.

The "Golden Set" of Artifacts

No shipment moves without this exact stack. Incomplete or mismatched data triggers automatic inspection holds.

1. Commercial Invoice (CI)

• Function: The financial declaration of value.
• Requirement: Must list the Unit Price (matches PO), Total Value, Currency, and Incoterm.
• Critical Detail: "Samples" or "Warranty Replacements" cannot have zero value. They must carry a value for customs purposes (e.g., "Value for Customs Only: $10.00"). Zero-value invoices trigger immediate audits.

2. Packing List (PL)

• Function: The physical map of the shipment.
• Requirement: Must match the CI exactly. Net Weight, Gross Weight, and Dimensional (Dim) Weight must be real, not estimated.
• Critical Detail: If the PL says "Box 3 contains PCBAs" and Customs opens Box 3 to find cables, the entire shipment is seized.

3. Harmonized System (HS) Codes

• Function: The universal tax and regulatory classification.
• Ownership: You (The Buyer) own the final HS classification. Do not trust the supplier's shipping clerk to classify your proprietary hardware.
• Risk: Wrong HS code = Wrong Duty Rate. Underpaying duty is tax evasion; overpaying is margin erosion.
• Logic: If the part is a custom PCBA → Then determine if it is a "part of a computer" (0% duty) or a "control board" (variable duty). Define this in the Item Master before PO release.

4. Country of Origin (COO)

• Function: Determines eligibility for Free Trade Agreements (FTA) or Punitive Tariffs (e.g., Section 301).
• Requirement: Physical marking on the product/packaging usually required ("Made in China").
• Trap: COO is where the product was manufactured, not where it was shipped from. A component made in China and shipped from a Singapore hub is still Chinese origin.

The "Shipment Ready" Gate

Implement a strict "Green Light" process. The freight forwarder is forbidden from collecting goods until the Commercial Invoice and Packing List have been reviewed by the internal Logistics/Procurement team.

• Step 1: Supplier sends draft CI/PL via email.
• Step 2: Buyer verifies:
  • Does Price match PO?
  • Is HS Code correct?
  • Is Incoterm correct (FCA vs DAP)?
• Step 3: Buyer replies "Approved for Booking."
• Step 4: Supplier contacts Forwarder.

Pro-Tip: Never allow "Pass Through" shipping where the vendor hands docs directly to the carrier without your review. This is the #1 cause of customs holds.

Broker Handoff & Escalation

Your Customs Broker acts on your behalf, but they are data-entry processors, not technical experts.

The Handoff:

Provide a Standing Letter of Instruction (SLI) to your broker. This document dictates that they must contact you for HS code clarification on new parts, rather than guessing based on vague descriptions like "Electronic Part."

Escalation: When Customs Holds a Shipment

1. Stop: Do not argue with the officer. Do not pressure the broker to "just push it through."
2. Identify: Request the specific "Notice of Action" or "Information Request" form.
3. Rectify: Provide the missing technical sheet, schematic, or proof of payment immediately.
4. Root Cause: If held for valuation, update the Item Master price. If held for classification, issue a binding ruling request for future shipments.

Record Retention

Customs audits are retrospective, often occurring 3–5 years after the import. You must maintain a digital thread linking:

PO → Commercial Invoice → Customs Entry (7501/Import Declaration) → Proof of Payment

Store these in a centralized repository, not in email inboxes.

Final Checklist