The core differences in compensation for seized goods during sea freight customs clearance lie in the different responsible parties, insurance coverage, claim procedures, and liability for losses. Inaccurate declarations are mostly the responsibility of the shipper, making compensation difficult; policy reasons are often due to force majeure or third-party policy changes, allowing for compliance remedies and compensation.
Next, Weefreight will provide you with a detailed explanation, hoping to be helpful to you.
I. Responsibility Determination: Who is responsible is the core dividing line for compensation
- Inaccurate Declaration (Shipper/Declarant bears full responsibility, non-negotiable)
Common situations: Under-declaration of cargo value, incorrect HS code classification, concealment of product name/quantity, false origin, etc. (according to Article 86 of the Customs Law). Responsibility determination hinges on “subjective fault + objective violation.” For example, under-declaring cargo value to evade taxes or concealing dangerous goods will result in the declarant bearing full responsibility, and the carrier and freight forwarder are usually exempt from liability (unless the freight forwarder participated in the concealment) (Yantai Intermediate People’s Court).
- Policy Reasons (Responsibility is mostly with a third party or due to force majeure, without subjective fault)
Common situations: Sudden imposition of tariffs by the destination country, new import quotas, special customs crackdowns, trade policy adjustments, etc. The responsible party is usually a government department, and the shipper has not violated any regulations, but the seizure is due to policy changes, which are uncontrollable external factors.
II. Insurance Claims: Coverage and compensation results are vastly different
- Inaccurate Declaration: Insurance generally refuses compensation, and losses are borne by the shipper
Standard marine insurance (FPA, WPA, All Risks) all list “seizure/confiscation due to violation of customs regulations” as an exclusion, and the insurance company can refuse compensation. Under-declaring the value of goods will result in compensation only being paid based on the declared value, even if a claim is filed, failing to cover the actual losses.
If illegal activities such as smuggling are involved, legal liability may also be incurred, and insurance coverage will be impossible.
- Policy Reasons: Partial coverage, depending on the type of insurance and terms
Basic insurance does not cover government actions, but purchasing “political risk insurance” or “customs risk additional insurance” can cover losses due to policy changes, such as return shipments or destruction of goods.
Physical damage to goods caused by warehousing and handling during customs detention, if within the scope of insurance coverage, can be claimed.
Without corresponding additional insurance, although insurance will not cover the losses, losses can be reduced through compliant channels (such as applying for policy exemptions or return shipments).
III. Claim Paths and Remedial Measures: Proactive Remediation vs. Compliant Appeals
- Inaccurate Declaration: Difficult remediation, narrow claim path
Remedial measures: Correcting the declaration, paying back taxes + late payment penalties, paying fines (usually 10%-50% of the goods value). In severe cases, the goods may be confiscated, and the company may be blacklisted by customs.
Claim path: Only when the freight forwarder/carrier is involved in the incorrect declaration can they be held accountable; if there is no third-party fault, the loss must be borne by the company itself, with no effective claim target.
- Policy Reasons: Greater room for remediation, more flexible claims
Remedial measures: Applying for a policy transition period grace period, obtaining relevant licenses, using other trade channels (such as re-export), or returning the goods to the port of origin or a third country.
Claim path: Applying for additional insurance compensation from the insurance company; negotiating with the freight forwarder/carrier to share return shipment and warehousing costs; if the carrier failed to inform the company of policy changes in a timely manner, they can be held accountable. IV. Loss Allocation: Losses due to inaccurate declarations are borne entirely by the declaring party; losses due to policy reasons may be shared.
- Inaccurate Declaration: All losses are borne by the declaring party.
This includes supplementary tax payments, fines, demurrage charges, warehousing fees, container detention fees, losses due to confiscation or destruction of goods, and compensation for breach of contract by the customer. There are no channels for sharing these losses.
- Policy Reasons: Losses can be shared through compliant procedures and negotiation.
Compliant return of goods can reduce the risk of total loss, and allow for sharing of some freight and warehousing costs;
Purchasing corresponding additional insurance can provide compensation for some losses;
Negotiating with trade partners to modify contract terms (such as extending delivery dates or changing destinations) can reduce losses due to breach of contract.
V. Core Claims Handling Techniques: Precise Response, Minimize Losses
Inaccurate Declaration: Immediately obtain the customs detention notice, submit accurate documents to correct the declaration, and strive for leniency; if the freight forwarder is involved in the violation, retain communication records and guarantees to hold them accountable.
Policy Reasons: Collect policy documents immediately, and entrust a professional customs clearance agent to appeal; at the same time, report the case to the insurance company, submit policy documents and a list of losses, and apply for additional insurance compensation.
(Note: The above information regarding timelines or costs is for reference only. Please refer to the actual situation at the time of shipment for specific details. Thank you!)
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