import the goods using section 57 warehouse of custom act 1962, Customs - Exim - SEZ

[Danish Azfar]

Hi Experts,

I have a query on which need your expert advise.

We need to import the goods using section 57 warehouse of Custom Act 1962.

1. What is the procedure need to be followed.

2. Can we sell the goods from section 57 warehouse to SEZ.

3. Can we sell the goods from section 57 warehouse to section 58 warehouse.

4. Can we sell some of the goods to SEZ on Free of cost basis.

Thanks

Posts / Replies

[YAGAY andSUN]

Importing goods under the Section 57 warehouse of the Customs Act, 1962 involves specific procedures and guidelines. Section 57 of the Customs Act refers to the warehousing provisions, which allow the importer to keep the goods in a warehouse without paying customs duties until they are either cleared for home consumption or exported.

Let's address your queries one by one.

1. Procedure for Importing Goods under Section 57 (Warehouse of Customs Act, 1962)

The procedure for importing goods using a Section 57 warehouse is as follows:

1. Registration and Bond:

   • The warehouse operator (typically a private or government warehouse) needs to be registered with the Customs Department.

   • The importer (or their agent) must execute a bond with the customs authorities, guaranteeing the payment of applicable customs duties when the goods are finally cleared from the warehouse.

   • The goods are stored under customs control, and the warehouse operator is required to maintain proper records.

2. Importation of Goods:

   • Goods are imported and presented at the Customs Station with the customs declaration. At this stage, the customs duties are suspended as the goods are stored in the warehouse.

   • The customs authorities must be notified, and the warehouse keeper must allow inspection and keep the goods under customs surveillance.

3. Warehousing Procedure:

   • The goods are cleared for warehousing under Section 57, and they are held without the payment of duties.

   • The importer may re-export the goods or clear them for home consumption by paying the applicable customs duties.

4. Duration of Storage:

   • Goods can be stored for a maximum period of 5 years (subject to extensions) unless a specific exemption is granted.

   • Before the expiration of the storage period, the goods need to be cleared, either through re-exportation or by payment of duties.

5. Customs Inspection:

   • Regular customs inspections may be required to ensure that the goods are not tampered with and are accounted for properly.

2. Can We Sell Goods from Section 57 Warehouse to SEZ?

Yes, **goods stored in a Section 57 warehouse can be sold to a Special Economic Zone (SEZ). According to the SEZ Act, 2005, and the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017, goods can be transferred from a Customs warehouse to an SEZ.

The following process is generally involved:

1. Transfer from Warehouse to SEZ:

   • Goods can be transferred from the customs warehouse to an SEZ without payment of customs duties (duty-free) as part of the duty exemption scheme.

2. Documentation:

   • The transfer must be documented properly, and all relevant customs formalities must be followed, including the submission of the necessary customs declarations.

3. No Customs Duty:

   • Under the SEZ Act, goods supplied to SEZ units are exempt from customs duties and other taxes. As long as the goods are delivered to SEZ as part of the duty-exemption scheme, no customs duty will apply.

4. SEZ Rules:

   • It’s essential to adhere to the SEZ rules and regulations to ensure the goods remain within the scope of tax exemptions and duty-free benefits.

3. Can We Sell Goods from Section 57 Warehouse to Section 58 Warehouse?

Yes, goods stored in a Section 57 warehouse can be transferred to a Section 58 warehouse (which refers to private warehouses under the Customs Act) under certain conditions.

1. Transfer Procedure:

   • Goods can be transferred from a Section 57 warehouse to a Section 58 warehouse if the importer wishes to move the goods to a warehouse under a different customs regime.

   • The documentation for the transfer must comply with customs requirements, including filing the correct declarations with the customs authorities.

2. Customs Duties:

   • If the goods are transferred from one customs warehouse to another, customs duties remain suspended. However, when the goods are eventually cleared for home consumption or exported, customs duties will apply at that stage.

3. Warehouse Ownership:

   • The warehouse must be authorized under the Customs Act (Section 58) to receive and store goods from customs warehouses. The operator of the warehouse must also have a valid license and meet all other regulatory requirements.

4. Can We Sell Some of the Goods to SEZ on a Free-of-Cost Basis?

Yes, it is possible to supply goods free of cost to an SEZ unit, but it must be done in compliance with both customs regulations and SEZ regulations. Here are the details:

1. Free Supply to SEZ:

   • Under the SEZ Act, goods can be supplied free of cost to an SEZ unit. However, the customs duties on the goods will be exempt as long as they remain within the SEZ.

2. Documentation:

   • Proper documentation must be maintained to show that the goods were supplied free of cost. This includes invoices, delivery notes, and any customs documents that validate the transaction.

3. Exemption from Duties:

   • The supply of goods to SEZ units, whether for free or at a cost, is exempt from customs duties, central excise duties, and GST as long as the goods are not used for non-authorized purposes within the SEZ.

4. Stock Transfer:

   • If goods are transferred to SEZ units for free, it is effectively a stock transfer from the importer or the manufacturer. The SEZ unit receiving the goods will need to follow the SEZ procedures and guidelines to ensure that no duties are triggered.

5. No Additional Consideration:

   • Since the goods are provided free of cost, the transaction should not involve any exchange of money or consideration. The free supply should be well-documented and aligned with customs and SEZ regulations.

Conclusion

To summarize:

1. Procedure for Section 57 Warehouse:

   • Import goods into a customs-approved warehouse, execute a bond, and comply with customs inspection and storage requirements.

2. Selling Goods to SEZ:

   • You can sell goods from a Section 57 warehouse to an SEZ under the duty-free export scheme, but all customs formalities must be adhered to.

3. Selling Goods from Section 57 Warehouse to Section 58 Warehouse:

   • Goods can be transferred between a Section 57 warehouse and a Section 58 warehouse, with customs duties remaining suspended until the goods are cleared for consumption or export.

4. Free Supply to SEZ:

   • Goods can be supplied free of cost to an SEZ, and such supply is exempt from customs duties and other taxes, subject to proper documentation and compliance with SEZ and customs rules.

Note: It is always advisable to consult with a customs expert or a professional consultant to ensure you follow the correct procedures and comply with all regulatory requirements before carrying out these transactions.

[Danish Azfar]

thanks for reply, please provide the legal backing. 

[YAGAY andSUN]

Certainly! Here’s the legal backing for the processes involved in using Section 57 warehouses, the sale of goods to SEZ, and related processes under the Customs Act, 1962.

1. Procedure for Importing Goods under Section 57 (Warehouse of Customs Act, 1962)

Section 57 of the Customs Act, 1962 allows goods to be stored in a customs warehouse without the immediate payment of customs duties. The provisions relevant to the procedure are as follows:

• Section 57: This section allows an importer to store goods in a customs warehouse under customs control, thereby deferring the payment of duties until the goods are cleared for home consumption or re-exported.

• Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017: The importer must execute a bond and keep the goods in the warehouse under customs surveillance. Goods can be stored for a maximum of five years (subject to an extension by the customs authorities).

• Section 58: The provisions under Section 58 of the Customs Act allow the goods to remain in the warehouse until they are cleared for consumption or re-export, with the customs authorities retaining control over the goods.

2. Can We Sell Goods from Section 57 Warehouse to SEZ?

Yes, goods stored in a Section 57 warehouse can be sold to Special Economic Zones (SEZs) under specific provisions:

• Section 2(m) of the SEZ Act, 2005 defines the Special Economic Zone (SEZ). SEZs are entitled to certain exemptions on customs duties, including the exemption from customs duties on goods supplied to them.

• Notification No. 48/2017-Customs: The goods can be transferred from a customs warehouse to SEZ units without the payment of customs duties. This is allowed under the duty-exemption scheme applicable to SEZ units.

• SEZ Act, 2005 and Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017: The goods moved from a warehouse to SEZ are eligible for exemption from customs duties as long as they are in compliance with the provisions and used exclusively for authorized operations within the SEZ.

3. Can We Sell Goods from Section 57 Warehouse to Section 58 Warehouse?

Yes, goods stored in a Section 57 warehouse can be transferred to a Section 58 warehouse (which is a private warehouse under the Customs Act, 1962), subject to certain conditions:

• Section 58: This section deals with private warehouses where goods can be stored under customs control, and such goods can be transferred from a customs warehouse to a private warehouse without triggering the payment of duties.

• Customs (Warehousing) Regulations, 2016: These regulations allow goods to be transferred between customs warehouses (Section 57) and private warehouses (Section 58) under certain procedural requirements. The duties remain suspended while the goods are still in a warehouse.

The key legal provisions here are the Customs Act, 1962, and Warehousing Regulations that govern the procedures for transferring goods from one warehouse to another without attracting customs duties at the time of transfer.

4. Can We Sell Some of the Goods to SEZ on a Free-of-Cost Basis?

Yes, goods can be supplied free of cost to an SEZ, but there are conditions to comply with the legal framework:

• SEZ Act, 2005: Under this act, goods can be supplied to SEZ units without payment of customs duties. When supplied free of cost, the goods must comply with the SEZ regulations, ensuring that they are used exclusively for the authorized operations within the SEZ.

• Notification No. 48/2017-Customs: This notification allows for the duty-free supply of goods to SEZs. It includes provisions where the goods can be supplied at no cost to the SEZ, with the condition that they are used for authorized operations within the zone.

• Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017: This sets out the procedural requirements for such transactions, where proper documentation, including invoices, delivery notes, and customs declarations, must be maintained to confirm the free supply of goods.

The supply of goods free of cost to an SEZ is essentially treated as stock transfer, and the transaction is exempt from customs duties, central excise duties, and GST, provided that the goods are used in authorized activities within the SEZ as per the SEZ Act.

Conclusion: Legal Backing

1. Section 57 of the Customs Act, 1962 governs the warehousing provisions, allowing goods to be stored in customs warehouses without the immediate payment of duties.

2. Section 58 of the Customs Act, 1962 allows for the transfer of goods between different warehouses without the immediate payment of duties.

3. SEZ Act, 2005 provides the framework for duty exemptions on goods supplied to SEZ units, including those imported under a Section 57 warehouse scheme.

4. Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 support the procedures and exemptions for such transactions.

It is essential to ensure that all formalities, documentation, and compliance with SEZ and Customs Act rules are followed for these transactions to be legally valid.

Advice

You should consult with a customs expert or consultant who can assist you in properly adhering to these provisions, ensuring full compliance with the laws, and avoiding any penalties or legal challenges.

[YAGAY andSUN]

Please also go through the Procedural aspects of Customs Law by reading Customs Manual, Regulations, SEZ FAQs, SEZ Act, Rules etc. for keeping your knowledge enriched in such matters.