The customs nightmare for gadget lovers - a guide on what not to do

Like most gadget lovers, I spend a fair amount of money ordering from international sites and sellers. There will always be something that I cannot find on an Indian site - it could be as small as a replacement cable for my earphones - or something as big as the new Pebble smartwatch that I have been eyeing. Or sometimes, even if I find them on Indian sites, they are at eyewatering premiums over the same product on say, Amazon USA.

To a large extent, my international purchases have been restricted to eBay sellers, or Amazon. Recently however, I was tempted by the newly launched Beddi Alarm Clock, a $99 smart alarm clock that raised Kickstarter backing and also got a lot of favorable reviews.

I ordered it direct from Witti Design, the creators, who were offering international shipping at $20, making the total order value $120(approximately Rs. 7500). It was shipped through DHL, who delayed delivery by a week, citing hold up at customs. Finally, they called me and asked me to send an invoice copy for the product. I did not have an invoice - instead I sent a screen grab of the order page on the Witti Design page. 2 days later the product arrived at my door with an invoice of charges slapped by DHL, attached below. For those who do not have the patience to click, the various duties/octroi/handling charge all amount to Rs.4223. If you add back to that the $20 shipping fee, I would have effectively paid nearly 90% of the product value as shipping, import etc - making it  a disastrously impractical purchase. I love new gadgets and iOT but I would balk a little at owning an alarm clock costing Rs. 12,000.

Here are some of the problems that I faced, and what I have learnt:

1) In my basic understanding, customs duty would have been levied at a maximum of 30% for an electronic product on the entire invoice+shipping value, and I would have expected a customs duty of approximately Rs.2200. I verified this using the horrendously complicated import duty calculator on the Indian Customs Website. Instead, customs has been charged at Rs.2917. The only explanation I can think of for this, is that I have been penalised for absence of an invoice, and the Customs took the assessable value, as being higher than the invoice value (approximately Rs.12,000)

In order to understand the customs duty better, I asked DHL for a proof of payment and they sent me this document. All it proves that in the cattle truck of customs clearance, no one would have really bothered about getting the exact value of one item right.

Learning 1: When buying directly from a seller abroad, especially a startup, insist on getting the invoice copy and remind them that the courier/customs need to receive a copy of it too. In this case, I blame DHL for even accepting the consignment sans an invoice. They are the 'experts' who should have known better, but probably did not care about just another small value parcel.

2) You would notice the handling and warehousing charge that DHL has levied. Both these were disputed by me. Importing a product to India involves clearing through customs, and so this should have been quoted as part of the original fee. If the handling charge arose as a result of their mistake in not obtaining an invoice copy, then I should not be asked to pay it. Warehousing charges, though nominal, were again not due to my error but the seller/ courier failure to arrange the proper papers.

Learning 2: The courier/clearing agent is your choice between the proverbial devil and the deep blue sea. 

For maximum peace of mind, you should import only through Amazon, who will quote to you upfront an 'Import Deposit Fee' - an extortionate amount that corresponds to anything between 30-40% of invoice value of the product, and offer you the option to purchase at an unfavorable exchange rate (Rs.70 was the going conversion rate against the dollar, when I checked last week). Amazon guarantees that you will not be charged extra, however, that's a small consolation when you have paid the maximum that you could. Amazon promises to refund any amount that is not used, but in 10 years I have never got a refund. I would love to hear if anyone has.

On the other hand, you can ship through regular post (postal charges are not added to Customs Duty) but you will have to stand in queue and clear your own product at Customs. Waste of time and temper flares are the chief threat here and both are guaranteed at Customs. On the other hand, you get to present your case personally and you can never under-estimate face to face interaction and negotiation in India. I have personally been allowed to walk with nominal duty on a television set after pleading my case. If I had been present to explain my alarm clock, I am sure that the customs duty would be lower.

The courier will save your time and is supposed to expertly handle customs - in this case, it did not happen and I was left with a huge price to pay. I would advise that both devil and deep blue sea are at least predictable in their outcomes and depending on your time and budget, you should choose one or the other. Working directly with the courier can become a nightmare of logistical red tape - more on that in this blog.

3) I conveniently forgot it when ordering, but octroi is payeable if Mumbai is the destination for the product! Though Mumbai is the port of entry, octroi would not have been charged if I had a delivery address in Thane or Vashi. 

Learning 3 : One more reason to look forward to the unified GST which will hopefully lead to abolition of octroi, forever. Meanwhile, you still pay a price to be a citizen of Mumbai (or a few other cities). 

Meanwhile, if you find a local site which is offering your product, compare the price they are offering with what you will pay after customs and octroi (Don't compare with the US price!). Then decide what makes better economic sense.

Also, unfortunately, even in this era of liberalisation it still makes better sense to do what earlier generations of Indians did - ship to a relative in the USA and wait for them to bring the product to India. Or, wait till you travel yourself. It will save you a lot of time and money. In a recent survey of airport authorities, I was told that Customs department focusses passenger surveillance on detecting and stopping gold, drugs and currency - or other criminal acts. They derive more revenue from their Cargo operations and focus their attention there. Cargo is unfortunately where your precious imported products land up, straight into the Customs net.

4) At the same time, I had ordered a small value item off eBay from an international seller. It was shipped free of charge through Hong Kong Post and delivered to me by the postman within a week. The seller had marked the invoice value as $20 and indicated the product as a gift, so no customs was charged. 

Learning 4 : There are legitimate workarounds and some sellers understand them. It's good to learn what these are and leverage them to your advantage. For example, the cost of shipping through post is not added to your customs duty, unlike courier charges. It also pays to have an expert friend who can help you to specify which category your goods should be imported/declared as. Goods declared under certain categories attract lower customs duty than others and the range is as wide as 10-110%

5) After a lot of time spent arguing with DHL and trying to understand the charges, I did what I should have done initially - I reached out to my seller, Witti Design. When I explained the issue to them, they did something unprecedented and heartwarming. They offered to bear half of the costs, without any further questions. Within 24 hours, the additional amount was deposited in my PayPal account.

Learning 5: It pays to deal directly with small sellers and companies who care about individual customers and whom you can reach out to on a one to one basis. In fact, anytime when you ship internationally, you should reach out to the seller BEFORE purchase and clarify shipping and customs charges. Having a rapport and relationship with the seller can ease a lot of heartache.

6) You should not think that my ordeal ended with the fees. I tried unsuccessfully to visit the DHL office to pay their fees and collect my package. Only to be told that they had instructions from the seller to only deliver at home. I asked WittiDesign to send an authorisation letter to DHL so I could collect my parcel. They sent me a 'yes it's ok' email and I took that to DHL only to be told that they need a certain format to be filled. They pointed out that the name of the company and the name of the shipper did not match and rejected the email. I had to 'allow' them to deliver at home.

Learning 6: I was tempted to say, do not ship with DHL. They suck!!!
Jokes apart, it's a toss up between dealing with customs yourself and dealing with a bureaucratic, rigid, rule-bound courier. I think DHL riled me up just as much as the Customs Office would have and probably more - I expect government officials to throw the book at me and I expect a courier company to be more customer friendly. Just remember, that as an importer, it is your responsibility to facilitate clearing of your goods, whether you are an individual or a company. Either ways, you pay - in money or in time and effort that you put in. If you want to save the Amazon tax, and save paying huge import duties, your only way is to familiarise yourself with the rules and see how you can best protect your interest.

I was discussing this with some of my uncles and family elders and one of them gave me possibly the best advise that I can end this article with, 'Don't buy abroad", one of my uncles said. "It's the age to Make in India. Find a local substitute'

Appropriate advice in an age when trade agreements are ending, borders are closing and imports may get more and more expensive.

By the way, the Beddi Alarm clock is doing fabulous and I plan to do a review about it soon, so stay tuned!


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