A customs duty is a tariff or tax on the import of or export of goods. In England, customs duties were traditionally part of the customary revenue of the king, and therefore did not need parliamentary consent to be levied, unlike excise duty, land tax, or other forms of taxes.

Commercial goods not yet cleared through customs are held in a customs area, often called a bonded store, until processed. All authorized ports are recognized customs area.

Red and Green Channels

Customs procedures for arriving passengers at many international airports, and some road crossings, are separated into Red and Green Channels. Passengers with goods to declare (carrying items above the permitted customs limits and/or carrying prohibited items) should go through the Red Channel. Passengers with nothing to declare (carrying goods within the customs limits only and not carrying prohibited items) can go through the Green Channel. Passengers going through the Green Channel are only subject to spot checks and save time. But, if a passenger going through the Green Channel is found to have goods above the customs limits on them or carrying prohibited items, they may be prosecuted for making a false declaration to customs, by virtue of having gone through the Green Channel.

Canada and the United States do not operate a red and green channel system.

Airports within the EU also have a Blue Channel. As the EU is a customs union, travellers between EU countries do not have to pay customs duties. VAT and Excise duties may be applicable if the goods are subsequently sold, but these are collected when the goods are sold, not at the border. Passengers arriving from other EU countries should go through the Blue Channel. Luggage tickets for checked in luggage within the EU are green-edged so they may be identified.

Privatization of customs

Customs is an important part of the government involved in one of the three basic functions of a government, namely, administration, maintenance of law, order and justice and collection of revenue. However, in a bid to get Customs rid of corruption, many countries have partly privatized its Customs. This has occurred by way of engagement of Pre-shipment Inspection Agency who examine the cargo and verify the declared value before importation is effected and the nation Customs is obliged to accept the report of the agency for the purpose of assessment of leviable duties and taxes at the port of entry. While engaging a preshipment inspection agency may appear justified in a country with an inexperienced or inadequate Customs establishment, the measure has not really been able to plug the loophole and protect revenue. It has been found that evasion of Customs duty escalated when pre-shipment agency took over. Chowdhury, F. L. (2006) Corrupt bureaucracy and privatization of Customs in Bangladesh, Pathok Samabesh, Dhaka.It has also been alleged that such involvement of such agencies has been causing delay in the shipment process. Privatization of Customs has been viewed as a fatal remedy.