How Customs Enforces QCO Compliance at the Port

Customs law

Customs enforcement of QCO compliance is not derived from a single instrument. The Customs Act, 1962 grants customs officers with an independent authority to examine goods, verify conformance with applicable import conditions and detain or seize goods that do not meet those conditions. The BIS Act, 2016 creates the mandatory certification requirement for notified products.

When a product is subject to a QCO, importing it without a valid BIS licence violates the import conditions specified under the Foreign Trade Policy and the Customs Act,1962.

Customs officers do not require a separate BIS enforcement action before detaining goods. Their detention authority under the Customs Act is independent with its own cost consequences from the very first day.

Note: Every major port and inland container depot operates with access to the BIS portal for real-time licence verification. The verification is not manual or document-based but an automated check triggered at the Bill of Entry filing. A licence that was valid on a previous shipment carries no presumption of validity on the current one.

How enforcement unfolds at the port

When a Bill of Entry is filed for a product in a notified category, the system flags it for BIS compliance. The importer’s customs broker provides the applicable BIS licence number, i.e., the FMCS number for industrial and consumer goods or the CRS R-number for electronics. The customs officer verifies three things against the BIS portal: whether the licence is active, whether it covers the declared product and whether it corresponds to the declared manufacturing facility.

If any of the checks fail, the goods are detained immediately and a detention memo is issued. Container demurrage and ground rent begin accruing from that day in escalating daily slabs while the shipping line container detention charges apply separately. The importer receives a show-cause notice with a short response window. If a valid BIS licence number or a documented pre-approved exemption cannot be produced within that window, the limited available options are to either arrange for re-export (it requires customs permission and shipping line cooperation and incurs continuing costs) or to apply to the Ministry for a conditional exemption (it is rarely granted on a timeline that is commercially useful) or to face confiscation and destruction. Importers do have the option of placing the goods under Bond in a Bonded warehouse with high warehousing charges.

At major ports including JNPT, Mumbai, Nhava Sheva, Chennai and Mundra, combined demurrage, ground rent and container detention charges in extended detentions can, in practice, reach several hundred thousand rupees per week, with rates escalating in subsequent charge slabs. A detention of two weeks or more can produce a cost comparable to or exceeding the customs duty on the goods, with the importer’s supply chain commitments disrupted throughout.

The importer’s liability

The customs authority’s counterparty at the port is the importer and not the foreign supplier. The importer is held responsible for the compliance status of goods at the moment they arrive. The fact that a supplier’s BIS licence lapsed without the importer’s knowledge provides no procedural defence against detention. A show-cause notice is addressed to the importer with a response obligation with the demurrage liability.

A recourse against the supplier for a compliance failure that caused detention is generally contractual. The importer may pursue the supplier for losses under the terms of the supply agreement. That recourse does not stop the demurrage clock at the port, does not produce a valid licence number, and does not accelerate the resolution of the detention.

Risk management framework

The first and most effective control is pre-shipment licence verification to be conducted before each purchase order is placed. The BIS portal is publicly accessible and free. Entering the supplier’s BIS licence number returns current status, the IS code covered and the named manufacturing facility. This check confirms three things – the licence is active, it covers the specific product being ordered and it applies to the facility from which the goods will be sourced.

The second control is supplier contractual obligations. Supply agreements with manufacturers in notified categories should include representations on BIS licence, an obligation to maintain valid certification as a condition of each order and an obligation to notify the importer of any change in certification status including AIR changes under FMCS, renewal timelines and any BIS surveillance findings.

The third control is the indemnity provisions. For high-volume import operations in notified categories, supply agreements should include indemnity clauses that allocate the financial consequences of a detention caused by the supplier’s licence failure to the supplier. However, these provisions in lieu of pre-shipment verification do not prevent detention but can create a contractual framework for recovery that does not otherwise exist.

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