CBEC relaxes export warehousing norms, bank guarantee not required

The Central Board of Direct Taxes has relaxed the warehousing provisions for export warehousing. 

 

Under the revised norms, exporters could submit letter of undertaking (LUT) in place of bank guarantee which no longer is a compulsory requirement for availing warehousing provisions for exports. According to officials, furnishing of bank guarantee increases transaction costs besides  being time consuming. 
 

But this facility will only be available to an exporter who is a manufacturer and status holder with a clean track record. Besides earlier the exporter was required to furnish bank guarantee   of security equal to 25% of the bond amount.  Now, the exporter could only furnish a LUT and not bank guarantee.

 

This facility is only available for export warehousing and not for warehousing for domestic consumption. Officials explained that concept of letter of undertaking is prevalent in warerehousing for domestic consumption where goods are warehoused for domestic consumption. 

 

On the other hand, for optimum use of export warehouses, the board has amended its earlier provision that goods may be kept in the warehouses for a period of three years, under the new norms, warehousing of goods will be initially allowed for a period of six months a and then could be renewed for another six months and not more at one go. This means, at stretch an exporter cannot enjoy the warehousing facilities for a period of three years. 

 

This slows down an exporter has to do for moving the goods out of the warehouses. Officials explained that for any reason, the goods cannot get exported; the exporter has no urgency to remove the goods. This way, other exporters who have confirmed order and need the warehousing facilities suffer.  Besides every such renewal of warehousing facility will be done upon verification of the quality of goods, said officials. 

 

Meanwhile, in its recent foreign trade police, the Department of Commerce in its pitch to provide transport/logistic support has made increase in  warehousing facilities as one of the actionable agenda. 

 

It seeks to encourage greater containerization, computerization of cargo clearance and electronic data interchange, warehousing, setting up of Inland Container Depots (ICDs), Container Freight Stations (CFSs) etc. In order to resolve the infrastructural constraints being faced by exporters / importers on infrastructural front, DOC has been taking up the matter with Ministry of Shipping, Ministry of Road Transport and Highways, Department of Revenue, Ministry of Civil Aviation, Ministry of Railways etc. 

 

One such measures taken for trade infrastructure development and trade facilitation includes setting up of single Window Clearance for the proposals for setting up of Inland Container Depots/Container Freight Stations.