Warehousing

The CBEC may declare certain places as warehouse stations. Public and private warehouses can be situated only at such approved warehousing places.

Warehouses are of two types :-

1. Public warehouses which are appointed by the Assistant Collector of Customs
2. Private warehouses licensed by the Assistant Collector of Customs. Private warehouse are licensed only at places where facility of public warehousing is not available.

Once goods are kept in a warehouse, they have to be cleared within a specified period. If the goods are not removed within the prescribed warehousing period, the Customs Officer may sell the goods after notice to the owner. Generally, the warehousing period is 1 year from the date of issue of order by the Customs Officer permitting deposit of goods in a warehouse. The period of one year can be reduced by the collector if goods are likely to deteriorate. This period may be increased by the Collector upto 6 months and by the Principal Collector without any limit of period. However interest at the rate of 20% is payable for storing goods beyond one year.

The warehousing period can be extended upto 5 years in case of capital goods intended for use in 100 % export oriented unit. This period may be reduced by the Collector if the goods are likely to be deteriorate.

Warehousing Bond : The importer has to execute a bond binding himself to :-

1. Observing all provisions of the Customs Act, rules and regulations made thereunder
2. Pay the duty, interest, penalty and warehousing rent and charges with interest

The amount of bond is normally twice the amount of duty assessed. Bond will continue to be valid even if the goods are transferred to another person or even if the goods are transferred to another warehouse. Bond is cancelled and returned only when the duty and all other dues are paid and cleared and goods are duly accounted for.

Manufacture in the Warehouse : With the sanction of the Customs authorities, manufacturing and other operations can be carried out in the warehouse. Such manufacture can take place only of the rules and regulations framed for this purpose are complied with. After manufacture, the goods may either be exported without payment of customs duty or either cleared for home consumption on payment of duty at the rate applicable to that leviable on goods stored in the warehouse. In case the manufacturing operations yield any scrap or waste the following are the procedures:

1. If goods manufactured in the warehouse are exported without payment of duty, the scrap may be destroyed in the presence of the Customs authorities without payment of duty or it may be cleared for home consumption after payment of duty as if it is imported as such scrap.
2. If goods manufactured are cleared for home consumption, import duty is payable on the quantity of warehouse goods contained in the waste or scrap.