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Warehousing

Customs - CBEC s Customs Manual 2015 - 09 - Chapter 9 1. Introduction: 1.1 There are instances when the importer does not want clearance of the imported goods immediately due to factors such as market price, salability, requirement in the factory of production, paucity of funds etc. The importer would prefer to warehouse such goods till they are required. Some imported goods are also warehoused for supplies to EOU/EHTP/STP/SEZ units. Goods imported for sale in Duty Free Shopsat International Air .....

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. Legal provisions: 2.1 The facility of of the imported goods in Custom Bonded Warehouses, without payment of Customs duty is permitted in terms of Chapter IX of the Customs Act, 1962. Further, where necessary the Manufacture and Other Operations in Warehouse Regulations, 1966 provide the procedure to be followed for manufacture under bond. On their part, Warehoused Goods (Removal) Regulations, 1963 provide the procedure for movement of the goods from one warehouse to another. 3. Stations: 3.1 P .....

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ers to the Chief Commissioners of Customs or Chief Commissioners of Customs and Central Excise, as the case may be. Also, in respect of setting up of EOUs, the powers for declaring places as stations have been delegated to the jurisdictional Commissioner of Customs or Commissioner of Customs and Central Excise, as the case may be. 3.3 The following guidelines shall be followed for ensuring uniformity in practice in the declaration of places as stations: (a) The industrial development of the prop .....

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ng aforesaid criteria but if it is considered that there is a strong justification for declaring a place as a station shall be referred to the Board for decision. 4. Appointment of Public Warehouses: [Refer Circular No. 473/232/88-Cus VIII, dated 28-11-1988 and F.No.473/25/91-Cus IV, dated 30-5-1991] 4.1 Section 57 of the Customs Act, 1962 provides that at any station, the Assistant Commissioner of Customs or Deputy Commissioner of Customs, may appoint public warehouses wherein dutiable goods ma .....

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f the warehouse operator, his financial status and his expertise in field; (b) Past record of the applicant in complying with the provisions of the Customs and Central Excise Laws: (c) The operational requirements such as suitability and security of the premises, availability of customs expertise, proximity to the users etc. shall be taken into account; (d) The applicant should agree to take the services of the Customs Officer on Cost- Recovery basis, if services of the Customs Officers are requ .....

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icensee; or (iii) Any other goods imported by other importers in respect of which specialized storing / handling facilities are required and such specialized storing /handling facilities for deposit are not available in a public warehouse. The specialized facilities are like liquids in bulk, hazardous goods, explosive goods, goods requiring controlled temperature conditions etc. 5.2 The main conditions for granting Private Bonded Warehouse licences are: (i) The applicant is financially sound and .....

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t theft, pilferage and other risks; fire fighting equipments shall be installed in the warehouse; (iii) The premises shall be accessible to the Customs officers for verification; (iv) The warehouse shall not be located in residential area; and (v) The goods deposited in the warehouse shall be fully insured against theft, pilferage, fire accident, other natural calamities, risk against rioting etc. by a comprehensive insurance policy drawn in favour of Commissioner of Customs or Central Excise, a .....

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uce a solvency certificate (not a reference or confidential letter) from a Scheduled bank of repute (i.e. other than a co-operative bank or a bank which has operation limited to a city) for a value not less than ₹ 50 lakhs. Further, in case of individual consignments to be warehoused, a bond as per Section 59 of the Customs Act, 1962 for a sum equal to twice the duty leviable on the goods should be given backed by bank guarantee/ cash deposit of 25% of the duty liability for each consignme .....

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they shall be solvent for an amount of ₹ 10 lakhs and should possess a good record. The double duty bond as per Section 59 of the Customs Act, 1962 shall be sufficient for bonding of non-sensitive goods without a cash deposit/bank guarantee. However, if concerned Assistant/Deputy Commissioner of Customs is not satisfied about the transactions of a particular licencee, a suitable bank guarantee may be obtained. (c) As a measure of relaxation to the Central/State Government Undertakings, al .....

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uspension of licences for Private Bonded Warehouses: 7.1 Section 58(2) of the Customs Act, 1962 provides that the Assistant/Deputy Commissioner of Customs may cancel a license, if the licensee has contravened any of the provisions of the said Act or the rules or regulations or committed breach of any of the conditions of the license after giving a reasonable opportunity of being heard. 7.2 Pending an enquiry regarding cancellation of a license, the Assistant/Deputy Commissioner of Customs may su .....

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ons of the Customs Act, 1962 and the rules and regulations in respect of such goods; (ii) To pay on or before a date specified in a notice of demand: (a) All duties, and interest, if any, payable under Section 61(2) of the Customs Act, 1962; and (b) Rent and charges claimable on account of such goods under the Customs Act, together with interest on the same; (iii) To discharge all penalties incurred for violation of the provisions of the Customs Act and the rules and regulations in respect of su .....

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h bond from the transferee in a sum equal to twice the amount of duty assessed on the goods transferred and thereupon the bond executed by the transferor shall be enforceable only for a sum mentioned therein less the amount for which a fresh bond is accepted from the transferee. 9. Permission for deposit of goods in a warehouse: 9.1 After assessment of the into-bond Bill of Entry and execution of the bond by the importer, the proper officer may make an order permitting the deposit of the goods i .....

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ay be kept for five years; (ii) Goods other than the capital goods intended for use in any EOU, may be kept for three years; (iii) Any other goods may be kept for one year. However, if the goods are likely to deteriorate, the period of one year may be reduced by the Commissioner of Customs to such shorter period as he may deem fit: 11. Extension of period: 11.1 In the case of any goods which are not likely to deteriorate, the period, on sufficient cause being shown, be extended- (i) In the case .....

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ted only if the authority granting the extension is satisfied that the goods are not likely to deteriorate during extended period. Wherever necessary, goods should be got tested to ensure quality and fitness for further extension of period. (ii) Lack of finance to pay the duty is not necessarily a good ground for granting extension of period. (iii) Depending on the circumstances of the case, requests made to the Chief Commissioners for extension in period, beyond the extension granted by the Com .....

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e to strike, lock-out, natural calamities, etc. Financial constraints of the importers are not to be considered as adequate ground for granting extension of period. (v) Before consideration of a request for extension of period, Custom Houses should ensure that the interest accrued on the goods in the preceding period are paid by the applicants before further extension is permitted. Interest thus collected will be adjusted against the interest finally payable. (vi) A liberal approach may, however .....

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to ships. (vii) he applications for extension of period shall, as far as possible, be filed prior to 15 days of expiry of the period. All such requests should normally be decided by the Customs within this period. The requests for grant of extension of period can be considered after the expiry of initial or extended period of , after taking into consideration the exceptional circumstances of the cases, nature of commodity, rate of duties, particularly, whether the same could result in loss of re .....

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port the goods within the permitted period of . Chief Commissioners would consider/decide such requests from the importers taking into consideration all the relevant rules/ regulations for export. [Refer Circulars No.473/232/88-Cus VII, dated 28-11-1988, No.12/98-Cus, dated 6-3-1998, F.No.473/77/89-Cus VII, dated 9-10-1989, No. 47/02-Cus, dated 29-7-2002 and No.3/2003-Cus, dated 14-1-2003] 12. Interest for storage beyond permissible period: 12.1 In the event the warehoused goods remain the wareh .....

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s are warehoused for a period beyond 3 years, by reason of extension of the aforesaid period or otherwise; (ii) If goods other than the goods for use by EOUs remain in a warehouse beyond a period of ninety days. 12.2 The current rate of interest for of the goods beyond specified period as per Notification No.28/02(NT)-Cus, dated 13-5-2002 issued under Section 47(2) of the Customs Act, 1962 and Notification No.18/03-Cus, dated 1-3-2003 issued under Section 61(2)(ii) of the said Act is 15% per ann .....

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the warehoused goods. The period of 90 days, under Section 61(2)(ii) of the Customs Act, 1962, would commence from the date of deposit of goods in the warehouse. [Refer Circular No. 39/2013-Cus., dated 1-10-2013] 12.4 No interest is liable to be paid in terms of the provisions of Section 47(2) of the Customs Act, 1962 on goods deposited in a warehouse and being cleared for home consumption by filing the Bill of Entry prescribed under Section 68 of the Act, ibid, for delayed payment of duty. In o .....

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cify the class of goods in respect of which no interest shall be charged. Accordingly, the interest on warehoused goods imported by EOUs/EHTP/STP units is exempt vide Notification No. 67/95-Cus.(NT), dated 1-11-1995. 13.2 The powers of waiver of interest on Customs duty warehoused goods upto a limit of ₹ 2 crores have been delegated by the Board to the Chief Commissioners of Customs and Central Excise vide Notification No.122/2004-Cus.(NT), dated 25-10- 2004. All requests for waiver of int .....

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ores/aircraft stores (ii) Goods supplied to diplomats (iii) Goods used in the units operating under manufacture-in-bond scheme (iv) Goods imported by EOUs (v) Goods warehoused and sold through duty free shops (vi) Machinery, equipment and raw materials imported for building and fitment to ships (vii) Petroleum products (viii) Plant and Machinery imported for projects (ix) Machinery, equipment and raw-materials imported for manufacture and installation of power generation units (x) Goods imported .....

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e Customs officers but shall not be enforced immediately. Further, the request of waiver of interest from EOUs shall be considered only at the time of de-bonding of the unit. 13.5 Cases not covered by the guidelines mentioned above should be referred to the Board for decision. 13.6 With regard to the issue as to whether interest is payable in case of export of warehoused goods under Section 69 of the Customs Act, 1962, Board has adopted the ratio of Hon'ble Supreme Court's judgment in th .....

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all enter a warehouse or remove any goods therefrom without the permission of the proper officer. 14.2 The proper officer may cause any warehouse to be locked with the lock of the Customs Department and no person shall remove or break such lock. 14.3 The proper officer shall have access to every part of a warehouse and power to examine the goods therein. 15. Payment of rent and warehouse charges: 15.1 The owner of any warehoused goods shall pay to the warehouse-keeper rent and warehouse charges .....

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house-keeper may select. 16. Owner's right to deal with warehoused goods: 16.1 With the sanction of the proper officer and on payment of the prescribed fees, the owner of any goods may either before or after the same: (i) inspect the goods; (ii) Separate damaged or deteriorated goods from the rest; (iii) Sort the goods or change their containers for the purpose of preservation, sale, export or disposal of the goods; (iv) Deal with the goods and their containers in such manner as may be neces .....

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or repairs, re-conditioning etc. and then export and such exporters also work under the said Section 65. This activity is referred to as manufacturing and other operations in Bonded Warehouses and the procedure for such manufacturing operations is prescribed as per the Manufacture and Other Operations in Warehouse Regulations, 1966 . 17.2 The owner of any warehoused goods intending to undertake any manufacturing process or other operations in the warehouse is required to make an application to t .....

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ssistant/Deputy Commissioner of Customs, binding himself to: (i) Observe all the provisions of Manufacture and Other Operations in Warehouse Regulations, 1966; (ii) Maintain detailed accounts of all imported and other goods used in the manufacturing process or other operations in the proper form and to produce such accounts for inspection by the proper officer; (iii) Submit detailed statements of all imported and other goods used in the manufacturing process or other operations and those remaini .....

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in the warehouse for supervision and control of the manufacturing process or other operations, or imported and other goods; and (vi) Comply with such conditions as may be imposed by the D.C./A.C. of Customs from time to time for carrying out the purposes of Manufacture & Other Operations in Warehouse Regulations, 1966 and the Act. 17.4 After execution of the bond, Assistant/Deputy Commissioner of Customs shall accord sanction to the applicant to carry on such manufacturing process or other .....

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number of Customs officers that may be attached to the warehouse for purposes of supervising the manufacturing process or other operations; and (vii) Fix the sum payable by the manufacturer towards the cost of such establishment and the extra charges payable towards the overtime services, if any, performed by such establishment at the request of the manufacturer. 17.5 The manufacturer is required to maintain accounts relating to stocks, raw materials, goods in process, finished goods, waste and .....

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coverable from the manufacturer in the manner provided in Section 142 of the Customs Act, 1962. The manufacturer shall be given a copy of the audit report and he may make a representation. 17.7 The Assistant/Deputy Commissioner of Customs may direct the manner in which the imported goods shall be issued from and the unused items received back into stock. Further, the application for issue of imported goods and the vouchers against which the unused items may be returned shall be in the proper for .....

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of the Act or these regulations cancel the sanction for carrying on the manufacturing process or other operations after giving reasonable opportunity of being heard. 17.9 The waste or refuse arising during the course of manufacture under bond may be disposed by any of the following modes: (i) If goods manufactured in bond are exported, import duty on the quantity of the warehoused goods contained in the waste or refuse shall be remitted provided that: (a) Such waste or refuse is either destroyed .....

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oms Act, 1962, the owner of any warehoused goods may, with the permission of the proper officer, remove the warehoused goods from one warehouse to another warehouse. The procedure as per Warehoused Goods (Removal) Regulations, 1963 is to be followed for removal of goods from one warehouse to another warehouse. The procedure for removal of goods is as per Warehoused Goods (Removal) Regulations, 1963 and the following guidelines apply: (i) As per Regulation 2 of Warehoused Goods (Removal) Regulati .....

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the warehouse owner shall produce re- certificate within a period of three months otherwise shall pay import duty leviable on such goods. (iv) If transfer takes place within the territorial jurisdiction of Commissioner of Customs and is within a reasonable distance of say 50 Kms. Commissioner of Customs may waive bank guarantee if he is satisfied with the bonafides of the party and goods are sent under customs escort. (v) If the goods are of sensitive nature, Customs duty is to be secured by a .....

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nt of furnishing bank guarantee has been waived subject to the condition that the jurisdictional Assistant/Deputy Commissioner of Customs/ Central Excise has issued a Procurement Certificate for removal of goods to EOUs. The waiver is due to the fact that the B-17 bond executed by EOUs covers the transit risk also and therefore there is no need of executing a separate transit bond for removal of the goods from a warehouse to an EOU. [Refer Circular No.99/95-Cus, dated 20-9-1995] 18.3 After trans .....

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r of any warehoused goods may clear them for home consumption after filing an ex-bond (Green) Bill of Entry for home consumption and payment of the import duty leviable on such goods alongwith penalties, rent, interest and other charges, if any. 19.2 At the time of actual removal of the goods from the warehouse, the declared description of the goods recorded on bill of entry, should be tallied with the description declared on the ex-bond (Green) bill of entry. 19.3 As per provisions of Section 1 .....

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otal value of goods exceeds ₹ 1 lakh should be invariably counter-signed by the Assistant/Deputy Commissioner in charge of the bonded warehouse. (ii) All Bills of Entry covering products noticed for the first time, must be countersigned by the Assistant/Deputy Commissioner. (iii) All ex-bond Bills of Entry in respect of which there is any reassessment done by the Superintendent should be countersigned by the Assistant/Deputy Commissioner. (iv) All Bills of Entry after the clearance of the .....

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: (a) On re-export, the exporter realizes full foreign exchange spent on import in freely convertible foreign currency, if the goods were imported on payment in freely convertible foreign currency; and (b) The import in the first instance was not un-authorized or in contravention of the FTP. 20.3 It shall be ensured that due to re-export from the bonded warehouses there is no net loss of foreign exchange i.e. value of the goods at the time of re-export shall not be less than the foreign exchange .....

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f duty or may be allowed to be so exported subject to such restrictions and conditions as may be specified in the notification. In terms of Section 69 of the Customs Act, 1962, the following notifications have been issued: (i) Notification No.45-Cus, dated 13-2-1963 provides that the warehoused goods shall not be exported to Bhutan, Nepal, Burma, Sikang, Tibet or Sinkiang, However, the warehoused goods can be exported to Nepal in the following circumstances: (a) If goods are exported against an .....

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uction of bank certifies of receipt of the payment in freely convertible currency or Indian Rupees, as the case may be. (ii) As per Notification No.46-Cus, dated 1-2-1963, export of warehoused goods without payment of import duty in a vessel of capacity less than 1000 tons gross is permitted subject to the condition that the exporter or agent of the vessel executes a bond for an amount equal to the import duty leviable on such goods backed by surety or security and produces a certificate within .....

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time of delivery from a warehouse are found to be deficient in quantity on account of natural loss, the Assistant/Deputy Commissioner of Customs may remit the duty on such deficiency. 21.2 Notification No.122-Cus, dated 11-5-1963 issued under Section 70 of the said Act specifies the volatile goods on which duty may be remitted on account of natural loss. These goods are aviation fuel, motor spirit, mineral turpentine, acetone, menthol, raw naphtha, vaporizing oil, kerosene, HSD, batching oil, d .....

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