The Problem Most Importers Discover Too Late
Every week, we receive distress calls from importers facing the same situation: cargo stuck at the port, demurrage mounting, and their Customs House Agent (CHA) / Customs Broker (CB) either unreachable or offering vague explanations. The cost of choosing the wrong CHA / CB isn’t just financial—it’s operational paralysis at the worst possible time.
After six decades of clearing cargo through Indian ports, we’ve seen brilliant businesses crippled not by market forces, but by a single poor decision: selecting a CHA / CB based solely on the lowest quote or a casual referral, without asking the right questions.
Why This Decision Matters More Than You Think
Your CHA / CB is not just a service provider—they are your legal representative before Indian Customs. Under the Customs Brokers Licensing Regulations, 2018 (CBLR 2018), a licensed Customs Broker acts on your behalf for all customs-related matters. Any error, omission, or misrepresentation by your CHA can result in:
- Detention and demurrage charges running into lakhs
- Show cause notices issued in your company’s name
- Penalties under Section 112 and 114AA of the Customs Act, 1962
- Suspension of your IEC (Importer Exporter Code)
- Seizure of goods for compliance failures
The relationship isn’t transactional—it’s fiduciary. Yet most importers spend more time choosing an office printer than vetting the CHA who will handle crores worth of imported goods annually.
The Real Cost of a Wrong CHA / CB Choice
Consider this actual scenario from Nhava Sheva in 2023: An importer of industrial machinery selected a CHA / CB offering rates 15% below market. The shipment arrived, and the CHA filed the Bill of Entry with incorrect HSN classification to expedite clearance. Customs raised a query. The CHA / CB, lacking technical expertise, couldn’t respond adequately. Result: goods were examined, reclassified to a higher duty slab, differential duty demanded with interest and penalty, and the cargo cleared 18 days late. The importer paid ₹4.2 lakh in demurrage, ₹2.8 lakh in additional duty and penalties—all to save ₹12,000 in CHA/CB fees.
This isn’t rare. It’s routine for importers who don’t ask the right questions upfront.
10 Questions Every Importer Must Ask Before Appointing a CHA/CB
1. Are You a Licensed Customs Broker Under CBLR 2018?
This isn’t optional—it’s law. Ask for:
- Copy of the Customs Broker License
- License validity and the customs locations covered
- The license holder’s name (individual or firm)
Red flag: If they hesitate or offer “we work with a licensed broker” explanations, walk away. Only licensed CBs can legally represent you before Customs.
2. Which Ports and ICDs Do You Operate At?
A CHA / CB license is location-specific. If you import through Mundra, Chennai, and ICD Tughlakabad, your CHA / CB must hold valid licenses for all three locations or have genuine operational tie-ups with licensed brokers there.
Ask: “Can you show me cargo clearance records from these specific locations in the past six months?”
3. What Is Your Experience With My Product Category?
Customs clearance for pharmaceutical APIs differs vastly from engineering goods or food products. Each category has unique compliance requirements—different testing protocols, NOCs, certifications, and documentation.
Ask: “How many consignments of [your product type] have you cleared in the past year? Can you walk me through the compliance checklist you follow?”
If they claim to handle “everything,” they likely specialize in nothing.
4. Who Will Be My Point of Contact, and What Is Your Escalation Process?
You need a dedicated relationship manager, not a ticket number in a queue. Ask:
- Who handles my file day-to-day?
- Who do I reach if that person is unavailable?
- What’s the escalation matrix for urgent issues?
Insist on meeting the actual person who will process your Bills of Entry. If they’re overloaded or undertrained, you’ll pay the price in delays.
5. How Do You Verify Documents Before Filing?
Document discrepancies are the number one cause of customs queries. A professional CHA should have a documented process:
- Invoice vs. Packing List reconciliation
- HS Code verification against product description
- SCOMET/restricted item checks
- Certificate of Origin validation
- License/quota verification for notified goods
Ask: “What is your document verification checklist? Can I see it?”
Generic answers like “we check everything” are worthless. You want specifics.
6. What Is Your Process for HS Code Classification?
Incorrect classification is a goldmine for revenue recovery. Section 17(5) of the Customs Act, 1962, and CBIC circulars make the importer—not the CHA / CB ultimately responsible for correct classification.
Ask: “How do you determine the correct HS Code for new products? Do you issue a classification rationale document? Have you ever filed an Advance Ruling application under Section 28E?”
A competent CHA / CB doesn’t guess. They document their classification logic and can defend it before Customs officers.
7. How Do You Handle Customs Queries and Examinations?
Queries will come. The difference between a 2-day resolution and a 2-week nightmare lies in your CHA’s / CB’s response capability.
Ask: “What’s your average query resolution time? Can you show me a sample response you’ve submitted to Customs for a technical query?”
If they’ve never prepared a detailed technical reply or requested a personal hearing, they’re not equipped to handle serious scrutiny.
8. What Is Your Professional Indemnity Insurance Coverage?
Under Regulation 10(n) of CBLR 2018, Customs Brokers must maintain professional indemnity insurance. This protects you in case of errors or omissions by the CHA/CB.
Ask: “Can I see a copy of your current professional indemnity insurance certificate? What is the coverage amount?”
No insurance = no accountability when things go wrong.
9. How Do You Stay Updated on Regulatory Changes?
The customs landscape changes constantly—amended notifications, new circulars, rate revisions, CBIC instructions. A CHA/CB who relies on “we’ve always done it this way” will cost you dearly.
Ask: “What was the last significant regulatory change affecting my product category, and how did you communicate it to your clients?”
Their answer reveals whether they’re proactive or reactive.
10. Can You Provide References From Current Clients in My Industry?
This is non-negotiable. Ask for three references—companies importing similar products. Call them. Ask:
- Average clearance timeline
- How they handle emergencies
- Any instances of penalties or duty disputes
- Would they recommend this CHA / CB without reservation?
If the CHA refuses or provides only generic testimonials, that’s your answer.
What PKM Has Learned Since 1963
At Premji Kanji Masani Private Limited, we’ve cleared everything from industrial machinery to perishable cargo through every major Indian port and ICD. Over six decades, we’ve seen regulatory regimes change, ports modernize, and technology transform customs clearance but one truth remains constant: there are no shortcuts in compliance.
We’ve built our reputation on a simple principle: your cargo clears on time because we get it right the first time. Every Bill of Entry filed is verified against a 47-point checklist developed over decades. Every HS Code is documented with classification rationale. Every query is responded to within 24 hours with technical depth, not generic platitudes.
When importers choose PKM, they’re not just hiring a CHA / CB they’re partnering with professionals who understand that your business continuity depends on our precision.
Your Action Plan
Before you sign that CHA / CB appointment letter, schedule a face-to-face meeting (or detailed video call). Bring this list of ten questions. Evaluate the answers not just for what is said, but how confidently and specifically it’s said.
Remember: A professional CHA / CB will welcome these questions because they demonstrate your seriousness as a client. One who evades, generalizes, or rushes you is showing exactly who they are—believe them.
The right CHA / CB becomes an extension of your supply chain. The wrong one becomes your most expensive mistake.
Choose wisely. Your cargo, your cash flow, and your compliance record depend on it.
Premji Kanji Masani Private Limited has been a licensed Customs Broker since 1963, serving importers and exporters across India’s major ports and ICDs. For a confidential consultation on your customs clearance requirements, visit www.pkm-co.in
