Warehouse
Section 2(43) of Customs Act, 1962 (‘Act’ for short) defines the term ‘warehouse’ as a public warehouse licensed under section 57 or a private warehouse licensed under section 58 or a special warehouse licensed under section 58A.
Licensing of 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.
Section 58 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 private warehouse wherein dutiable goods imported by or on behalf of the licensee may be deposited.
Section 58A 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 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. The Board may, by notification in the Official Gazette, specify the class of goods which shall be deposited in the special warehouse.
Manufacture and other operations
Section 65 of the Act provides that with the permission of the Principal Commissioner of Customs or Commissioner of Customs and subject to such conditions as may be prescribed, the owner of any warehoused goods may carry on any manufacturing process or other operations in the warehouse in relation to such goods. Where in the course of any operations permissible in relation to any warehoused goods, there is any waste or refuse, the following provisions shall apply-
- if the whole or any part of the goods resulting from such operations are exported, import duty shall be remitted on the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen from the operations carried on in relation to the goods exported :
- such waste or refuse is either destroyed or duty is paid on such waste or refuse as if it had been imported into India in that form;
- if the whole or any part of the goods resulting from such operations are cleared from the warehouse for home consumption, import duty shall be charged on the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen from the operations carried on in relation to the goods cleared for home consumption.
Rules
The following rules were framed in regard to the manufacture of various items in the warehouses, which were repealed by the Manufacture and other operations in warehouse Regulations, 1966-
- Rules prescribed for the purpose of operation on goods in a warehouse - Wines and Spirits - vide late C.B.R. Notification No. 56, dated the 2nd July, 1927 as amended by Notifications No. 29-Cus., dated 16th May, 1931 and No. 11-Cus., dated the 22nd January, 1938.
- Rules for the manufacture of cigarettes in bond from unmanufactured foreign tobacco imported and warehoused under the provisions of section 92 of the Sea Customs Act at an inland bonded warehouse - late C.B.R. Notification No. 34-Cus., dated the 30th May, 1942.
- Rules for the manufacture of cigarettes or tobacco in bond from unmanufactured foreign tobacco imported and warehoused under the provisions of section 92 of the Sea Customs Act-late C.B.R Notification No. 54-Customs, dated the 25th October, 1941, as amended by Notifications No. 8-Customs, dated 17th April, 1943 and No. 62-Customs, dated the 8th July, 1950.
- Rules for manufacture of complete Gramophone machine (including electric gramophones) in bond - late C.B.R. Notification No. 9-Customs, dated the 13th July, 1946.
- Rules for the free-entry at the Madras Customs House of unmanufactured foreign tobacco imported for the manufacture of cigars intended for export to foreign ports-Notification dated the 1st November, 1910, published in pages 1685-86 of Part II of the Fort St. George Gazette, dated the 8th November, 1910 as amended by notification dated the 22nd May, 1920 published on page 1051 of Part II of the Fort St. George Gazette, dated the 1st June, 1920, late C.B.R. Notification No. 79-Customs, dated the 5th December, 1936, Notification No. 12-Customs, dated the 22nd January, 1938 and No. 47-Customs, dated the 12th October, 1940.
- Rules to regulate the canning of motor spirit and kerosene oil from the stock imported and warehoused in a bonded tank at Bombay-late C.B.R. Notification No. 5-Customs, dated the 5th January, 1935 as amended by Notification No. 70-Customs, dated the 26th March, 1938.
- Rules for the manufacture or repairs of vessels from material imported by the Hindustan Shipyard Ltd., Visakhapatnam etc. - late C.B.R. Notification No. 78-Customs, dated the 7th August, 1954 as amended by C.B.R. Notification No. 63-Customs, dated the 3rd June, 1961.
- Motor Vehicles (Manufacture-in-bond) Rules, 1956 - late C.B.R. Notification No. 97-Customs, dated the 6th November, 1956.
- Rules for the manufacture or re-manufacture of cigarettes or tobacco in bond from indigenous or imported duty paid tobacco or cigarettes and unmanufactured imported tobacco warehoused under the provision of section 92 of the Sea Customs Act - late C.B.R. Notification No. 22-Customs, dated the 29th June, 1957.
- The Handicrafts (Manufacture-in-bond) Rules, 1958 - C.B.R. Notification No. 229-Customs, dated the 13th August, 1958.
- The Manufacture-in-Bond (General) Rules, 1960 - late C.B.R. Notification No. 15-Customs, dated the 27th February, 1960.
Regulations
Vide Notification No. 155-Cus., dated 30th July, 1966 the Central Board of Excise and Customs hereby made the Manufacture and Other Operations in Warehouse Regulations, 1966, which came into effect from 04.06.1966.
The procedure prescribed under these regulations is as under-
- The owner of any goods warehoused under the Act intending to undertake any manufacturing process or other operations in the warehouse in relation to such goods shall make an application to the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] in the proper form with the required information.
- The Assistant Commissioner of Customs or Deputy Commissioner of Customs] may, if he is satisfied that the applicant has carried out such alterations to the warehouse premises as may be required for this purpose and that the volume of trade and other considerations justify grant of sanction direct the applicant to file a bond.
- On execution of the bond, in the manner hereinbefore provided, the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] shall accord sanction to the applicant to carry on such manufacturing process or other operations.
- Conditions that may be imposed by the Assistant Commissioner of Customs or Deputy Commissioner of Customs, from time to time.
- The manufacturer shall maintain accounts relating to stocks, raw materials, goods in process, finished goods, waste and refuse in proper form.
- The proper officer may, at any time, inspect or call for the accounts and connected records for scrutiny.
- The Principal Chief Commissioner of Customs or Chief Commissioner of Customs, as the case may be] may, for reasons to be recorded in writing, direct a manufacturer to get the accounts of his warehouse, office, stores, godowns, factory, depot, or other establishment audited by a Cost Accountant, nominated by him in this behalf.
- The Assistant Commissioner of Customs or Deputy Commissioner of Customs] shall, having regard to the manufacturing process or other operations to be carried on in the warehouse, direct the manner in which the imported goods shall be issued from and the unused items received back into stock.
- No manufacturer shall suspend or discontinue the manufacturing process or other operations authorized to be carried on in the warehouse without giving in writing to the Assistant Commissioner of Customs or Deputy Commissioner of Customs], one month's notice of his intention so to do.
- If the manufacturer or any person in his employ commits a breach of the provisions of the Act or the terms and conditions imposed by or under these regulations or if the particulars furnished in the application for sanction are false or incorrect, or if any undertaking given in the bond is not fulfilled the Assistant Commissioner of Customs or Deputy Commissioner of Customs may, without prejudice to any other action that he may take under the provisions of the Act or these regulations cancel the sanction for carrying on the manufacturing process or other operations.
New Regulations
Vide Notification No. 44/2019-Customs (NT), dated 19.06.2019, in supersession of the Manufacture and Other Operations in Warehouse Regulations, 1966, except as respects things done or omitted to be done before such supersession, the Central Board of Indirect Taxes and Customs (hereinafter referred as “Board”) hereby made the Manufacture and Other Operations in Warehouse Regulations, 2019, which came into effect from 19.06.2019.
Eligibility
The following persons shall be eligible to apply for operating under these regulations-
Application for permission
An application for operating under these regulations shall be made to the Principal Commissioner of Customs or the Commissioner of Customs.
Grant of permission
Upon due verification of the application made the Principal Commissioner of Customs or the Commissioner of Customs shall grant permission to operate under the provisions of these regulations to a person, who -
- has been granted a licence for a warehouse under Section 58 of the Act, in accordance with Private Warehouse Licensing Regulations, 2016;
- undertakes to maintain accounts of receipt and removal of goods in digital form in such format as many be specified and furnish the same to the bond officer on monthly basis;
- undertakes to execute a bond in such format as may be specified.
- undertakes to inform the input-output norms, wherever considered necessary, for raw materials and the final products and to inform the revised input-output norms in case of change therein.
Any permission granted under regulation 5 shall remain valid unless it is cancelled or surrendered, or the license issued under Section 58 is cancelled or surrendered, in terms of the provisions of the Act or the rules and regulations made there under.
Audit
The proper officer may conduct audit of a unit operating under section 65 in accordance with the provisions of the Customs Act and the rules made there under.
Penalty
If any person contravenes any of the provisions of these regulations, or abets such contravention or fails to comply with any of the provisions of these regulations, he shall be liable to pay a penalty in accordance with the provisions of the Act.
