Some rules change at bonded warehouses

In his Budget speech, Finance Minister Arun Jaitley said he proposed a change in procedure to provide for a shift from physical control to record-based control for Customs-bonded warehouses, supported by sophisticated information technology systems. His proposal for changes in the Customs Act went through without any changes and seven new notifications were issued on May 14. Four new Circulars were also issued, for facilitating transition to the new regime.

There are three types of bonded warehouses, where imported goods can be stored without duty payment. These are, respectively, special warehouses where notified sensitive goods can be deposited, private warehouses where non-sensitive goods imported by or on behalf of the licensee can be deposited and public warehouses where non-sensitive goods imported by anyone can be deposited. The licensing conditions are more or less similar, except for different stipulations regarding solvency certificates, supervision charges, Customs locks, etc. Those who already have licences for existing private or public warehouses must comply with some aspects of the new regulations within three months. Those who want to establish special warehouses must apply within one month.

Sensitive goods include gold, silver, other precious metals and semi-precious metals, and articles thereof, goods warehoused for the purpose of supply to duty-free shops (DFSs) in a Customs area, supply as stores to vessels or aircraft and supply to foreign privileged persons. Special warehouses will be under the physical control of the Customs. Sensitive goods will only be allowed to be brought into or taken out of a special warehouse with the permission and in the presence of the bond officers in charge. In other warehouses, permission is not required for allowing entry of the imported goods and presence of a Customs officer is not required, except for export removal. Movement of goods from port to warehouse or one warehouse to another or from warehouse for export has to be under a one-time lock, bottle-sealed and numbered.

In all cases, the necessary infrastructure for storage and handling of goods, a computerised system for accounting of receipt, storage, operations and removal of goods, and adequate personnel must be deployed. The warehouse keeper must use a digital signature to file all documents electronically. Proper records must be maintained and periodic returns furnished.

The Central Board of Excise and Customs makes it clear that a DFS located in a Customs area should not be treated as a warehouse. It is a point of sale for goods, which are to be ex-bonded and removed from a warehouse for being brought to a DFS in the Customs area, for sale to international passengers arriving or departing from India. DFS operators who store goods in large warehouses in the city and/or in smaller warehouses in and around the precinct of the airport to act as a staging area for replenishing stocks in the duty-free shopping area can get their warehouses licensed as bonded ones.

The new self-removal procedures for private and public bonded warehouses ease the processes for deferment of duty payment. Importers, however, have to provide a bond for thrice the duty amount, instead of the double duty bond earlier. Hopefully, these changes will help export-oriented units and other importers to transit to the new system without difficulty. email: tncrajagopalan@gmail.com