LICENSING OF WAREHOUSES

[Mr. M. GOVINDARAJAN]

The CBEC made the following regulations in respect of giving licensing of warehouses-

• Public Warehouse Licensing Regulations, 2016 – Vide Notification No .70/2016-Cus (NT), dated 14.05.2016;
• Private Warehouse Licensing Regulations, 2016 –Vide Notification No. 71/2016-Cus (NT), dated 14.05.2016;
• Special Warehouse Licensing Regulations, 2016 – Vide Notification No. 72/2016-Cus (NT), dated 14.05.2016.

All these three regulations came into effect from 14.05.2016

Public Warehouse

The term ‘public warehouse’ is defined under Regulation 2(1)(c) of  Public Warehouse Licensing Regulations, 2016 as a site or building that is licensed as such by the Principal Commissioner of Customs or Commissioner of Customs as the case may be, under Section 57, wherein dutiable goods may be deposited.

Private Warehouse

The term ‘private warehouse’ is defined under Regulation 2(1)(c) of Private Warehouse Licensing Regulations, 2016 as a site or building that is licensed as such by the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, under Section 58 wherein dutiable goods imported by or on behalf of the licencee may be deposited.

Special Warehouse

The term ‘Special Warehouse’ is defined under Regulation 2(1)(d) of Special Warehouse Licensing Regulations, 2016 as a site or building that is licensed as such by the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, under Section 58A, wherein dutiable goods may be deposited.

Licensing of Warehouse

Upon an application being made to a licence, the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may issue a licence to an applicant. The common provisions for licensing of warehouses are as follows:

• The applicant is a citizen of India or is an entity incorporated or registered under any law for the time being in force;
• The applicant is to submit an undertaking to comply with such terms and conditions as may be specified by the Principal Commissioner of Customs or Commissioner of Customs, as the case may be;
• The applicant is to furnish a solvency certificate from a scheduled bank-

• In respect of public ware house for a sum of ₹ 2crores;
• In respect of private and special warehousefor an amount to be specified by the Principal Commissioner of Customs or Commissioner of Customs, as the case may be.

The furnishing of solvency certificate shall not be applicable to an undertaking of the Central Government or Statement Government or Union Territory.

Besides the above common provisions, the Special Warehouse has to-

• Propose to store goods notified by the Board under Section 58A (2);
• Undertakes to pay for the services of supervision of the warehouse by officers of customs on recovery of costs.

Disqualification

The Principal Commissioner of Customs or Commissioner of Customs, as the case may be, shall not issue a licence to an applicant if-

• he has been declared an insolvent or bankrupt by a Court or Tribunal;
• he has been convicted for an offence under any law for the time being in force;
• he has been penalized for an offence under the Act, the Central Excise Act or service tax;
• he is of unsound mine and stands so declared by a competent court;
• the Principal Commissioner of Customs or the Commissioner of Customs, as the case may be, is satisfied that-

• the site or building of the proposed public/private/special warehouse is not suitable for secure storage of dutiable goods;
• the site or building of the proposed public/private/specialwarehouse is not suitable for general supervision by officers of customs;
• bankruptcy proceedings are pending against the applicant; or
• criminal proceedings are pending against the applicant and the offences involved are of such nature that he is not a fit person for grant of licence.

Conditions to be fulfilled by the applicant

Where, after inspection of the premises, evaluation of compliance to the conditions and conducting such enquiries as may be necessary, the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, is satisfied that licence may be granted, he shall require the applicant to-

• provide an all risk insurance policy, that includes natural calamities, riots, fire, theft, skillful pilferage and commercial crime, in favor of the President of India, for a sum equivalent to the amount of duty involved on the dutiable goods proposed to be stored in the public/private/special warehouse at any point of time;
• provide an undertaking binding himself to pay any duties, interest, fine and penalties payable in respect of warehoused goods under Section 73A(3) or under the Warehouse (Custody and Handling of Goods) Regulations, 2016;
• provide an undertaking indemnifying the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, from any liability arising on account of loss suffered in respect of warehoused goods due to accident, damage, deterioration, destruction or any other unnatural cause during their receipt, delivery, storage, dispatch or handling; and
• appoint a person who has sufficient experience in warehousing operations and customs procedures as warehouse keeper.

Grant of licence

Upon fulfillment of the conditions the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may grant a licence in respect of public/private/special warehouse subject to such conditions as deemed necessary.

Validity of licence

Any licence granted under these regulations shall remain valid until and unless it is cancelled in terms of provisions of Section 58B or cancelled by the Principal Commissioner of Customs or Commissioner of Customs.

Surrender of licence

A licence may surrender the licence granted to him by making a request in writing to the Principal Commissioner of Customs or Commissioner of Customs, as the case may be.

Cancellation of licence

On receipt of the request for surrender of licence, the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may cancel the licence if-

• the licencee has paid all monies due to the Central Government under the provisions of the Act, rules or regulations made there under;
• no warehoused goods remain deposited in the public/private/special warehouse or deposited in the public/private/special warehouse from the date of request; and
• no proceedings are pending against the licencee under the Act or the rules made there under.

Non transferability of licence

A licence granted to public warehouse and special warehouse shall not be transferrable.

Licence for existing public/private/special warehouse

A public/private/special warehouse appointed as it stood immediately before the commencement of the Finance Act, 2016, i.e., 14.05.2016 shall be valid under these regulations provided such warehouses fulfilled the requirements of these regulations and conditions within a period of three months from 14.05.2016.

In respect of special warehouse  the warehouse shall remain under the lock of customs.  If the warehouse intends to store goods beyond the period of three months, shall apply for a licence within a period of one month from 14.05.2016.