Duties and Obligations of a CHA

Custom House Agent (CHA) is a person who is licenced to act as an agent for
transaction of any business to the entry or departure of conveyances or the Import
or Export of goods at any Customs station

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

The Commercial Invoice

The commercial invoice is considered to be the most important international trade document and should be
prepared as accurately as possible. It is the main document used by customs to accept or reject the customs
entry prepared by the customs broker. Even with a sample shipment, a commercial invoice is required, and
needs to state the fact that the goods are not for resale - are samples only - and have little commercial value.

The commercial invoice should reflect the exact nature and terms of the agreement that exist
between the buyer and the seller. Most duties are applied at an Ad Valorem rate, which are on
the value of the goods upon their arrival, usually “CIF,” Cost Insurance and Freight. The invoice
would be totaled to that amount and the duties paid accordingly, so it is key in most customs
clearances. Often, the commercial invoice will be prepared by the seller and totaled to the
desired trade term, then depending on the method of payment, submitted through banking
channels or sent directly to the importer for payment. These arrangements need to be agreed
upon between the seller and the freight forwarder prior to shipping the goods.

Although there is no standard form for a commercial invoice, the following information should
be included:

• Seller’s name and address

• Buyer’s name and address
• Exact description of goods (kind, grade, quality, weight)
• Agreed-upon price in U.S. dollars (in order to reduce foreign exchange risk)
• Description of packages (number, kind, markings, dimensions)
• Type of container
• Delivery point
• Terms of payment
• Date and place of shipment
• Method of shipment
• Signature of shipper/seller

Parties to the Transaction and the Commercial Invoice

The parties involved in the export transaction that need an original or copy of the document
underscores the importance of the commercial invoice. They are:

• The Exporter: As a record of the shipment and the payment mechanism.

• The Importer: Also a record of shipment and payment mechanism.
• The Freight Forwarder: Uses the invoice in part to prepare the documentation they
provide as part of their services.
• The Customs Broker: Uses the invoice to prepare the customs entry forms at the point
of import.
• U.S. Customs: May require a document evaluation if they have concerns about the
shipment’s integrity.
• Foreign Customs: May also require a document evaluation in order to allow the
customs clearance at the point of import.
• The Seller’s Bank: If the bank is involved in the payment, they would evaluate the
invoice as part of their document review.
• The Buyer’s Bank: If the buyer’s bank is making the payment on behalf of the
importer, they would require an invoice as part of their document review.
• The Insurance Company: The company that provides the marine cargo insurance for the
shipment may also require an invoice as part of their file.