Warehousing is a statutory facility for depositing imported goods in a warehouse pending payment of duty. The advantage of the scheme is that the imported goods can be cleared on payment of duty in instalments, as and when required during the warehoused period, up to one year.

Bonded warehousing offers a dual advantage to the importer. On the one hand, it allows the deferral to duty payment, and at the same time, allows for cargo to be stored under the relatively cheaper option of warehouse storage as opposed to holding on to an international container for which dollar lease rentals accrue on the importer.

Public warehouses are managed by public bodies such as the Port Trusts, Central Warehousing Corporation etc. Private warehouses are managed by individual Importers.

Section 46 of the Customs Act requires an Importer (or his Customs House Agent) to file a Bill of Entry for home consumption or for warehousing. If an Importer intends to deposit his consignment in a private or public warehouse he files a Bill of Entry for warehousing in quadruplicate (yellow in colour) in the Import Department of the Custom House. The Importer of the goods which have been entered for warehousing and assessed to duty under Section 17 or 18 shall execute a bond as required in Sec. 59 of the Customs Act for twice the amount of duty leviable on the goods (Instead of executing separate bonds for each consignment imported by him, an Importer may also furnish a general bond for a lump-sum covering twice the amount of duty leviable on goods to be imported by him during a specified period, say 6 months/one year etc.).

The period during which imported goods may remain in the warehouse without payment of duty has been specified in Section 61 of the Customs Act. It is one year in the case of non-consumable stores and five years in case of Capital goods intended for use in any 100% Export Oriented unit. These limits may be extended by the Collector of Customs by 6 months and by the Chief Commissioner for any further period.
Warehoused goods are subject to the control of the Customs Department. The proper officer shall have access to every part of the warehouse and the power to examine the goods therein. The owner of the goods may with the permission of the Bond Officer, inspect the goods, separate damaged or deteriorated goods, change the packing, show the goods for sale to prospective buyers and take samples.

Section 67 permits transfer of warehoused goods from one warehouse to another. For this purpose the owner applies in a prescribed form for the permission of the Asst. Commissioner. If both the warehouses are situated in the same town, the goods are required to be transferred under the supervision of the Customs Officer (Escort Officer). If they are situated in different towns, owner is required to furnish a bond for the amount of duty involved and undertaking to produce a certificate from the proper officer at destination about the due arrival and warehousing of goods there, in order to get it discharged.

The Importer (or owner) may clear the warehoused goods for home consumption on payment of duty, warehouse rent, interest etc. (if any). For this purpose he is required to file an ex-Bond (green) Bill of Entry under Section 68. After assigning admission number and date it is transferred to the Bonds Department where the Bond Clerk verifies the declared particulars with the particulars already entered in the Warehouse Register from the ‘Into-Bond Bill of entry’. Thereafter the green Bill of Entry is assessed by the Appraising Group. The Importer pays the duty and obtains out of charge order on the reverse of the duplicate Bill of Entry from the Office Superintendent of the Cash & Accounts Department. He then produces this duplicate Bill of Entry to the Bond Officer or Warehouse Keeper and clears the consignment from the warehouse. Under Sec. 15(1) (b) the rate of duty applicable in the case of goods cleared from a warehouse under section 68, on the date on which a bill of entry for home consumption in respect of such goods is presented under that section.

The warehoused goods may also be exported out of India by presenting a Shipping Bill and after payment of export duty, rent, interest etc., if any, but no import duty is chargeable on the imported warehoused goods so exported (Section 69 Customs Act).

When all the imported goods warehoused have been cleared for home consumption on payment of duty or exported or otherwise duly accounted for, the bond furnished by the Importer under Section 59 is cancelled and returned to the Importer.

The Taxation Laws (Amendment) Act, 2017 provides for inclusion of ‘a warehouse’ in the definition of Customs area’, to ensure that an importer would not be required to pay the IGST at the time of removal of goods from a Customs station to a bonded warehouse. On clearance of goods from a warehouse for home consumption Integrated Tax would be leviable in place of CVD and SAD today.

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