Breakdown of Duty and Clearance Liabilities: Compliance Risk Differences Between DDP and COD in International Trade

 Breakdown of Duty and Clearance Liabilities: Compliance Risk Differences Between DDP and COD in International Trade

The differences in duty payment and clearance liability between DDP and COD lead to distinct compliance risks. Under DDP, as the import clearance responsible party, the seller must strictly comply with the importing country’s customs regulations and tax policies. This requires accurate declaration of goods value and classification, and timely duty payment. Infringements like false declarations or unpaid duties can result in heavy fines or cargo seizure. For example, a Chinese furniture enterprise using DDP for U.S. exports was fined for incorrect product classification.

Under COD, the buyer assumes clearance and duty obligations, with the seller only providing compliant export documents. However, sellers must still ensure goods meet importing country standards to avoid returns due to quality or packaging issues. If buyers fail to clear customs, it may impact the seller’s future trade. Thus, regardless of terms, enterprises should prioritize compliance management, establish sound customs affairs systems, and conduct regular reviews to reduce legal risks.