CUSTODY AND HANDLING OF GOODS

[Mr. M. GOVINDARAJAN]

Powers of Board

Section 157 of the Customs Act, 1961 (‘Act’ for short) gives powers to the Board to make rules regarding the goods handled in the warehouses. 

Licensing of public warehouse

Section 57 of the Act provides that the Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, license a public warehouse wherein dutiable goods may be deposited which have been effected from 14.05.2016.

Licensing of private warehouse

The erstwhile Section 58 of the Act was substituted vide Finance Act, 2016 with effect from 14.05.2016.  The new section provides that the Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, license a private warehouse wherein dutiable goods imported by or on behalf of the licensee may be deposited.

Licence to special warehouse

Section 58A was newly inserted vide Finance Act, 2016 with effect from 14.05.2016.  The new Section 58A (1) provides that the Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, license a special warehouse wherein dutiable goods may be deposited and such warehouse shall be caused to be locked by the proper officer and no person shall enter the warehouse or remove any goods there from without the permission of the proper officer.  Section 58A (2) provides that The Board may, by notification in the Official Gazette, specify the class of goods which shall be deposited in the special warehouse licensed under sub-section (1).

Custody and removal of warehoused goods

Section 73A was newly inserted vide Finance Act, 2016 with effect from 14.05.2016.  This section provides for custody and removal of warehoused goods.  Section 73A(1) provides that all warehoused goods shall remain in the custody of the person who has been granted a licence under section 57 or section 58 or section 58A until they are cleared for home consumption or are transferred to another warehouse or are exported or removed as otherwise provided under this Act.  Section 73A(2) provides that The responsibilities of the person referred to in sub-section (1) who has custody of the warehoused goods shall be such as may be prescribed.  Section 73A(3) provides that Where any warehoused goods are removed in contravention of section 71, the licensee shall be liable to pay duty, interest, fine and penalties without prejudice to any other action that may be taken against him under this Act or any other law for the time being in force.

Regulations

The Board, in exercise of the powers conferred by Section 157 of the Act read with Section 57, 58 and Section 73A(2) of the Act made the regulation viz., ‘The Warehouse (Custody and Handling of Goods) Regulations, 2016 with effect from 14.05.2016 vide Notification No.68/2016-Customs (NT), dated 14.05.2016.   Similarly in exercise of the powers conferred by Section157 read with Section 58A and 73A(2) of the Act the Board made the regulation viz., ‘The Special Warehouse (Custody and Handling of Goods) Regulations, 2016 vide Notification No. 69/2016-Customs (NT), dated 14.05.2016.

Appointment of warehouse keeper

Both the regulations provide for the appointment of warehouse keeper.  A licensee shall appoint a warehouse keeper who has experience in warehousing operations and customs procedures, to discharge functions under these regulations on his behalf.  The warehouse keeper shall obtain a digital signature from authorities licensed by the Controller of Certifying Authorities for filing electronic documents required under the Act, rules or regulations made there under.

Facilities, equipment and personnel

Both the regulations provides for the provisions of facilities, equipment and personnel in the warehouses.  A licensee shall provide at the warehouse in respect of which a licence has been issued-

• Such facilities, equipment and personnel as are sufficient to control access to the warehouse and provide secure storage of the goods in it, including-

• Doors, windows and other building components of sturdy construction;
• Facility for locking the warehouse by the bond officer;
• Signage that prominently indicates that the site or building is a customs bonded warehouse.

• Adequate personnel, equipment and space for the examination of goods by officers of customs; and
• A computerized system for accounting of receipt, storage, operations and removal of goods.

Maintenance of records

Both the regulations provide for the maintenance of records in relation to warehoused goods.   According the regulations a licensee shall-

• maintain detailed records of the receipt, handling, storing and removal of any goods into or from the warehouse, as the case may be, and produce the same to the bond officer, as and when required;
• keep a record of each activity, operation or action taken in relation to the warehoused goods;
• keep a record of drawal of samples from the warehoused goods under the Act or any other law for the time being in force; and
• keep copies of the bill of entry, transport documents, forms for transfer of goods from a warehouse, shipping bills or bills of export or any other documents evidencing the receipt of removal of goods into or from thewarehouse and copies of the bonds executed;

The records and accounts shall be kept updated and accurate and preserved for a minimum period of five years from the date of removal of the goods from the warehouse and shall be made available for inspection by the bond officer or any other officer authorized under the Act.

A licensee shall also preserve updated digital copies of the records at a place other than the warehouse to prevent loss of records due to natural calamities, fire, theft, skillful pilferage or computer malfunction.    A licensee shall file with the bond officer a monthly return of the receipt, storage, operations and removal of the goods in the warehouse within 10 days after the closure of the month to which such return relates.   Where the period of warehousing of goods is expiring in a particular month, the licensee shall furnish such information to the bond officer on or before the 10^th day of the month immediately preceding the month of such expiry.

Provisions applicable to warehouse

Receipt of goods from customs station

Regulation 5 of the Warehouse (Custody and Handling of Goods) Regulations, 2016 provides that upon receipt of goods at a warehouse from a customs station, the licencee shall-

• verify the one time lock affixed by the proper officer at the customs station on the container or means of transport, as the case may be, carrying the goods to the warehouse;
• inform the bond officer immediately if the one-time-lock is not found intact and refused the loading of the goods;
• allow unloading, provided the one-time-lock is found intact and verify the quantity of goods received by reconciling with the bill of entry for warehousingand invoice;
• report any discrepancy in the quantity of the goods within 24 hours to the bond officer;
• endorse the bill of entry for warehousing bearing the order referred in Section 60(1) with the quantity of goods received and retain a copy thereof;
• acknowledge the receipt of the goods by endorsing the transportation document presented by the carrier of the goods and retain a copy thereof; and
• take into record the goods received.

The licensee shall cause to be delivered an acknowledgement to the proper officer referred to in Section 60(1) of the Act and to the bond officer regarding the receipt of the goods at the warehouse.

Transfer of goods to another warehouse

Regulation 6 provides that a licensee shall not allow transfer of warehoused goods to another warehouse without the permission of the bond officer under Section 67 on the Form for transfer of goods from a warehouse.  Where an owner of the warehoused goods produces the Form for transfer of goods from a warehouse bearing the orders of the bond officer, the licensee shall-

• allow removal of the goods and their loading onto the means of transport;
• affix a one-time-lock to the means of transport;
• endorse the number of one-time-lock on the Form for transfer of goods from a warehouse and retain a copy thereof;
• endorse the number of the one-time-lock on the transport document and retain a copy thereof;
• take into record the removal of the goods; and
• cause to be delivered, copies of the retained documents to the bond officer.

Receipt of good from another warehouse

Regulation 7 provides that upon receipt of goods from another warehouse, a licensee shall-

• verify the one-time-lock on the means of transport carrying the goods to the warehouse;
• inform the bond officer immediately if the one-time-lock is not found intact and refuse the unloading of the goods;
• allow unloading, provided the one-time-lock is found intact, and verify the quantity of goods received by reconciling with the Form for transfer of goods from a warehouse bearing the orders of the bond officer;
• report any discrepancy in the quantity of goods to the bond officer within 24 hours;
• endorse the Form for transfer of goods from a warehouse with quantity received and retain a copy thereof;
• acknowledge the receipt of the goods by endorsing the transportation document presented by the carrier of the goods and retain a copy thereof;
• take into record the goods received; and
• cause to be delivered, copies of the retained documents to the bond officer and to the warehouse keeper of the warehouse from where the goods have been received.

Removal of warehoused goods for home consumption

Regulation 8 provides that a licensee shall not allow the goods to be removed from the warehouse for home consumption, unless the bond officer permits the removal of the goods.   Upon the owner of the goods producing an order made by the proper officer under Section 68, the bond officer shall permit removal of the goods and the licensee shall-

• deliver the quantity of goods as mentioned in the Bill of entry for home consumption to the owner of the goods and retain a copy of the bill of entry; and
• take into record the goods removed.

Removal of warehoused goods for export

Regulation 9 provides that a licensee shall not remove or cause to be removed any warehoused goods for export except by an order made by the proper officer under Section 69.    Upon the bond officer permitting the removal of the goods from the warehouse, the licensee shall, in the presence of the bond officer, cause the goods to be loaded onto the means of transport and affix a one-time-lock to the means of transport.

Operations in relations to warehoused goods

Regulation 10 provides that a licensee shall ensure that the warehoused goods are not manipulated, altered, processed or otherwise dealt, except for or during the course of operations permitted under Section 64 or Section 65.

Compliance by existing warehouse

Regulation 14 provides that a public warehouse or private warehouse appointed as it stood immediately prior to 14.05.2016 shall comply with the provisions of these regulations within a period of three months from 14.05.2016.

Provisions relating to special warehouse

Control over warehouse

Regulation 5 of the Special Warehouse (Custody and Handling of goods) Rules, 2016 provides that the bond officer shall cause the warehouse to be locked and no person shall enter the warehouse or deposit or remove any goods there from, except in his presence.

Receipt of goods

Regulation 6 provides that a licensee shall not receive any goods or permit unloading of any goods at the warehouse except in the presence of the bond officer.   Upon the bond officer permitting the deposit of the goods in the warehouse, the licensee shall take into record the goods received in the warehouse and cause to be delivered an acknowledgement to the proper officer for receipt of the goods at the warehouse or proper officer of the warehouse of dispatch, as the case may be.

Transfer of goods to another warehouse

Regulation 7 provides that a licensee shall not allow the transfer of warehoused goods to another warehouse without the permission of the bond officer on the Form for transfer of goods from a warehouse.   Upon the bond officer permitting the removal of the goods from the warehouse, the licensee shall in the presence of the bond office, cause the goods to be loaded onto the means of transport and affix a one-time-lock to the means of transport.

Removal of warehouse goods for home consumption

Regulation 8 provides that a licensee shall not remove or cause to be removed any warehoused goods for home consumption, except in the presence of the bond officer.  Upon the owner of the warehoused goods producing an order made by the proper officer the licensee shall, in the presence of bond officer, deliver the quality of goods mentioned in the bill of entry for home consumption to the owner of the goods and retain a copy of the bill of entry.

Removal of warehoused goods for export

Regulation 9 provides that a licensee shall not remove or cause to be removed any warehoused goods for export by an order made by the proper officer.  Upon the bond officer permitting the removal of the goods from the warehouse, the licensee shall, in the presence of the bond officer, cause the goods to be loaded onto the means of transport and affix a one-time-lock to the means of transport.