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Procedure to be followed in cases of manufacturing or other operations undertaken in bonded warehouses under section 65 of the Customs Act

..... ustoms North Block, New Delhi Dated 1st October 2019 To, All Principal Chief Commissioners/Chief Commissioners of Customs Principal Directors General/Directors General of Customs Principal Commissioners/Commissioner of Customs Subject: -reg. Madam/Sir, Please refer to the Manufacture and Other Operations in Warehouse Regulations 2019, issued vide Notification No. 44/2019-Customs (N.T) dated 19th June, 2019 and Circular 38/2018-Customs dated 18.10.2018 issued to streamline the procedure, documentation and compliances to be followed under Section 65 of the Customs Act, 1962 (hereinafter referred to as the Act ). 2. Representations have been received from the trade including potential investors seeking clarifications on some issues. With a view to provide clarity and predictability and to facilitate investments, Board has decided to issue a revised circular along with the Manufacture and Other Operations in Warehouse Regulations 2019 (no. 2 regulations), issued vide Notification No.69/2019-Customs (N.T.) dated 01.10.2019, hereinafter referred to as, MOOWR, 2019 . Circular 38/2018-Customs stands consolidated and integrated into this Circular. 2. MOOWR, 2019 and this circular covers the .....

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..... the form prescribed under this circular (Annexure B). Regulation 4 of the MOOWR, 2019, provides that the applicant under section 65 shall undertake to execute a bond in such format as specified. Further, Section 59 of the Customs Act requires the owner of the warehoused goods to execute a triple duty bond for the warehoused goods. Thus, the bond prescribed under this Circular as per Annexure C serves the requirements of both MOOWR, 2019 and Section 59 of the Customs Act. 7. To the extent that the resultant product manufactured or worked upon in a bonded warehouse is exported, the licensee shall have to file a shipping bill and pay any amounts due. A GST invoice shall also be issued for such removal. In such a case, no duty is required to be paid in respect of the imported goods contained in the resultant product as per the provisions of section 69 of the Act. 8. To the extent that the resultant product (whether emerging out of manufacturing or other operations in the warehouse) is cleared for domestic consumption, such a transaction squarely falls within the ambit of supply under Section 7 of the Central Goods and Service Tax Act,2017 (hereinafter referred to as the, CGST Act ). It .....

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..... 61 of the Act or clear them as such for export under section 69 of the Act. The licensees shall also be required to submit monthly returns in Form B as prescribed under Circular No. 25/2016-Cus dated 8th June 2016 in case the warehouse is used for such purposes i.e. non-section 65 purposes. This is being allowed to enable optimum utilization of available infrastructure. 13. As per Regulation 3 (2) (e) (i) of the Private Warehouse Licensing Regulations, 2016, the Principal Commissioner or Commissioner has to be satisfied that the site or building of the proposed private warehouse is suitable for secure storage of dutiable goods. Regulation 8 of MOOWR 2019 requires the licensee to provide such facilities, equipment and personnel as are sufficient to control access to the warehouse, provide secure storage of the goods and ensure compliance to the regulations. Thus, the regulations do not mandate that a structure fully closed from all sides is a pre-requisite for grant of license. What is important is that the site or building is suitable for secure storage of goods and discharge of compliances, such as proper boundary walls, gate(s) with access control and personnel to safeguard the .....

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..... y and shipping bill, respectively) and pay the duties due, prior permission of the proper officer is not an essential condition for removal of the warehoused goods (as part of the resultant goods). The licensees who wish to avail self-sealing facility for exports can avail the facility made available under circular 26/2017 customs dated 01.07.2017 and its linked circulars. 16. Board has partnered with Invest India under the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India to launch a microsite for the promotion of the scheme and facilitation of investors. The same can be accessed at https://www.investindia.gov.in/bonded-manufacturing.The microsite also hosts a digitized application that an applicant can fill online, upload the supporting documents, submit online and also print the application form. 17. Clarification required, if any, may be sought from the Board 18. Hindi version follows. (Temsunaro Jamir) Joint Commissioner (ICD) Annexure- A Application for License for a private bonded warehouse under section 58 and permission for manufacturing and other operations under section 65 of the Customs Act 1962. Part I (to b .....

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..... entify by location and size all accesses to the site / building to pedestrian and vehicles: (viii) Identify by location and size all other accesses to the building including doors & windows: (ix) Please indicate whether the premises have been authorized for commercial use by local Government authorities? 9. Goods proposed to be manufactured or other operations proposed to be carried out (if necessary, additional sheets may be attached). Details of goods: Description of Goods Classification as per Customs Tariff Briefly detail, input- out norms (if applicable) Please attach any supporting publication /document, if available. proposed to be imported proposed to be domestically procured Intermediate product final product details of waste & scrap In case of any change in the nature of operations subsequent to the grant of permission, the same shall be informed to the Jurisdictional Commissioner of Customs within 15 days. 10. SECURITY FACILITIES AT THE PREMISES, EXISTING OR PROPOSED: (i) Burglar Alarm System: (ii) CCTV Facility: a. Is there a CCTV monitoring system installed to cover the surrounding area of the site and storage area? b. Please indicate the no. of cameras install .....

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..... it to the premises by the bond officer: 3. Findings of the bond officer with respect to security, fire protection, IT enabled inventory management system, type of construction, area available for examination of goods, if required etc. 4. Is the Premises recommended for issue of license as a warehouse along with permission for manufacture or other operations? Signature: Name: Designation: Date: Part IV (For use by Customs Only) 1. Upon the satisfaction of the Commissioner that the licence may be granted, the following shall be obtained from the applicant (Please refer Regulation 4 of Private Warehouse Licensing Regulations, 2016): (i) Insurance Policy. (ii) Undertaking under section 73A. (iii) Indemnity undertaking. (iv) Bond as per Annexure C to this Circular. (v) Details of Warehouse keeper appointed by the Licensee: (a) Name (b) Address (residential) (c) Tele: (office) (d) Tele: (mobile) (e) E-mail id: (vi) Confirmation that digital signature has been obtained by the warehouse keeper (as per guidance available on ICEGATE website). 2. Licence No. and date of issue: 3. Warehouse Registration Code on ICEGATE (refer Circular 19/2016 dated 20th May 2016): Signature: Name: Designation: .....

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..... 017 and the rules and regulations made thereunder in respect of such goods; (2) pay in the event of our failure to discharge our obligation, the full amount of duty chargeable on account of such goods together with their interest, fine and penalties payable under section 72 of the Customs Act, 1962 in respect of such goods; (3) pay all penalties and fines incurred for contravention of the provisions of the Customs Act, 1962, Central Goods and Services Tax Act, 2017 or Integrated Goods and Services Tax Act, 2017 or Goods and Services Tax (Compensation to States) Act, 2017 and the rules or regulations made thereunder, in respect of such goods; Then the above written bond shall be void and of no effect; otherwise the same shall remain in full force and virtue. IT IS HEREBY AGREED AND DECLARED that: (1) the Bond shall continue in full force notwithstanding the transfer of goods to any other premises for job work; (2) the President through the Deputy/Assistant Commissioner of Customs or any other officer may recover any amount due under this Bond in the manner laid down under sub-section (1) of section 142 of Customs Act, 1962, without prejudice to any other mode of recovery. IN THE WIT .....

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