Customs board extends warehousing scheme

EXIM MATTERS

The Central Board of Excise and Customs (CBEC) has extended the facility for setting up export warehouses to two- and three-star export houses.

The CBEC circular no 832/09/2006-CX, dated September 4, 2006, has been issued to align the relevant provisions with the foreign trade policy five months after the policy was amended to allow two-star export houses to set up export warehouses.

The scheme envisages that the class of exporters notified by the CBEC can set up warehouses that can be registered with the central excise at locations notified by the CBEC. These warehouses have to execute a bond with the jurisdictional central excise authorities for removal of excisable goods from various manufacturing units without payment of duty for the purpose of exports. They can debit the running bond account and issue CT2 form and send them to various units on the basis of which the manufacturers can clear the goods to warehouses without payment of duty under the cover of ARE3 form.

Upon receipt of the goods, the warehouses should arrange to send re-warehousing certificates to the manufacturers. The warehouses can then agglomerate the goods received from various factories and clear the goods so repacked and containerised for export under the ARE1 form. One ARE1 form may contain goods received under the cover of various ARE3 forms. After export, the warehouses can take credit in the running bond account. The jurisdictional superintendent can then issue certified attested copies of ARE.1 (more than one copies may be required by exporter as one application may consist of goods of several ARE-3s) and deliver to the exporter for forwarding to the factory whose goods were exported so that such factories can avail other export benefits, such as refund of Cenvat credit accumulated on account of export under the Cenvat credit rules.

This refund will be given only after goods covered by the ARE-3 are entirely exported. In case of any diversion for home consumption, refund will be reduced on a pro-rata basis. This facility of export warehousing was available only to foreign departmental stores of repute, the automobiles manufacturers who have signed memorandum of understanding with the directorate-general of foreign trade, and 4-star and 5-star export houses. Now, two- and three-star export houses can also set up such warehouses, but only at Ahmedabad, Bangalore, Kolkata, Chennai, Delhi, Hyderabad, Jaipur, Ludhiana, Mumbai, the districts of Pune and Raigad in Maharashtra, East Midnapore in West Bengal, Indore district in Madhya Pradesh, Ankleshwar taluka in Bharuch district in Gujarat and Navi Mumbai in Maharashtra's Thane district.

The export warehousing scheme is quite practical but it suffers from a serious flaw that the manufacturers who clear the goods under ARE3 against CT2 cannot claim export benefits like discharge of export obligation against advance licence/authorisation or duty free import authorisation, duty drawback or duty entitlement passbook (DEPB) scheme.

Many large manufacturers having several manufacturing units can very well use the scheme to improve the efficiency of their supply chain but it appears that the supply chain managers are not aware of the scheme as they are not exposed to the excise provisions and the persons dealing with excise seem to be unaware of the logistics options they get and the possibility of supply chain efficiencies that export warehouses give.

tncr@sify.com