WAREHOUSE

[Mr. M. GOVINDARAJAN]

Section 2(43) of Customs Act, 1962 (‘Act’ for short) defines the term ‘warehouse’ as a public warehouse appointed under section 57 or a private warehouse licensed under section 58.

Warehousing Station

The public or private bonded warehouses can be operated only at places which were declared as warehousing stations under Section 9 of the Act.   The said section provides that the Board may, by notification in the Official Gazette, declare places to be warehousing stations at which alone public warehouses may be appointed and private warehouses may be licensed. Board has vide Notification No. 34/94(NT)-Cus. Dated 1.7.1994 delegated these powers to the Chief Commissioners of Customs or Chief Commissioners of Customs and Central Excise, as the case may be. In respect of setting up of EOUs the powers for declaring places as warehousing stations have been delegated to the jurisdictional Commissioner of Customs or Commissioner of Customs and Central Excise as the case may be.

Vide circular No. 473/232/88-Cus VIII, dated 28.11.1988 and F.No. 473/25/91-Cus IV, dated 30.5.1991guidelines were issued for ensuring uniformity in practice in the declaration of places as warehousing stations:

• The industrial development of the proposed area and the need for warehousing of the imported goods shall be assessed;
• Only those places shall be declared as warehousing stations where adequate facilities are available for appointing public bonded warehouses.   However, this condition shall be relaxed only in case of EOUs;
• Adequate Customs/Central Excise Staff is available in the vicinity of the proposed warehousing stations and arrangements for training of the staff from NACEN or by attachment in the nearest Custom House should be made;
• Requests not fulfilling aforesaid criteria but if it is considered that there is a strong justification for declaring a place as a warehousing station shall be referred to the Board for decision.

Public Warehouses

Section 57 of the Act provides that at any warehousing station, the Assistant Commissioner of Customs or Deputy Commissioner of Customs may appoint public warehouses wherein dutiable goods may be deposited. Due consideration shall be given to the following criterion for their appointment:

• Feasibility and financial viability of the warehouse operator, his financial status and his expertise in warehousing field;
• Past record of the applicant in complying with the provisions of the Customs and Central Excise Laws;
• The operational requirements such as suitability and security of the premises, availability of customs expertise, proximity to the users etc., shall be taken into account;
• The applicant should agree to take the services of the Customs Officer on Cost Recovery basis, if services of the Customs Officers are required on a continuous basis or on payment of Merchant Overtime Supervision Charges, as the case may be.

Private Warehouses

Section 58 of the Act provides that at any warehousing station, the Assistant Commissioner of Customs or Deputy Commissioner of Customs may license private warehouses wherein dutiable goods imported by or on behalf of the licensee, or any other imported goods in respect of which facilities for deposit in a public warehouse are not available, may be deposited. The Assistant Commissioner of Customs or Deputy Commissioner of Customs may cancel a licence granted-

• by giving one month's notice in writing to the licensee; or
• if the licensee has contravened any provision of this Act or the rules or regulations or committed breach of any of the conditions of the licence.

Vide Circular No. 28/96-Cus, dated 14.05.1996 the conditions for granting Private Warehouse licences are laid down as detailed below:

• the applicant is financially sound and credible and the proprietor or partner or any of the Directors have not been involved in any Customs or Central Excise duty evasion causes or smuggling offences and have not been subject to penalty or other action under the Customs Law and similarly under the Central Excise Law.   Where the applicant is involved in such cases (other than technical offences), licences shall be denied even if such offences were committed before five years;
• the premises are suitable and adequately secured against theft, pilferage and other risks, fire fighting equipments shall be installed in the warehouse;
• the premises shall be accessible to the Customs officers for verification;
• the warehouse shall not be located in residential area;
• the goods deposited in the warehouse shall be fully insured against theft, pilferage, fire accident, other natural calamities, risk against rioting etc., by a comprehensive insurance policy drawn in favor of Commissioner of Customs or Central Excise as the case may be.

Cancellation of licence

Before any licence is cancelled the licensee shall be given a reasonable opportunity of being heard. Pending an enquiry whether a licence granted should be cancelled the Assistant Commissioner of Customs or Deputy Commissioner of Customs may suspend the licence.

Warehousing bond

The importer of any goods who wants to store the goods in a warehouse is required to file an info-bond bill of entry at the place of import and get it assessed to duty.   For warehousing the goods in a Public Bonded Warehouse or a Private Bonded Warehouses, the importer is required to execute a bond for a sum equal to twice the amount of the duty assessed on such goods. The terms of the bond are-

• to observe all the provisions of the Act and the rules and regulations in respect of such goods;
• to pay on or before a date specified in a notice of demand;
  • all duties and interest if any payable; and
  • rent and charges claimable on account of such goods under the Act together with interest on the same;
• to discharge all penalties incurred for violation of the provisions of the Customs Act and the rules and regulations in respect of such goods.

Importer may enter into a general bond in such amount as approved in respect of the warehousing of goods to be imported within a specified period.   A bond executed by the importer shall continue even if the goods are transferred to any other person or removed to another warehouse.   If the whole of the goods or any part thereof are transferred to another person, the proper officer may accept a fresh bond from the transferee in a sum equal to twice the amount of duty assessed on the goods transferred and thereupon the bond executed by the transferor shall be enforceable only for a sum mentioned therein less the amount for which a fresh bond is accepted from the transferee.

After assessment of the info-bond Bill of Entry and execution of the bond by the importer the proper officer may make an order permitting the deposit of the goods in a warehouse. The goods should be stored in a bonded warehouse only after the due examination.   Reverse of the Bill of Entry must conform the veracity of the declared description with distinctive identification marks of the subject goods.

Sensitive and non sensitive goods

Whether a product is sensitive or not is to decide by the concerned Commissioner which is depending upon rates of duty, licensing requirements and nature of the commodity. The following are the conditions for Private Warehouses in respect of sensitive and non sensitive goods which have been laid in Circulars No. 99/95-Cus, dated 20.9.1995; 20/96-Cus, dated 4.4.96 and 18/2007-Cus, dated 24.4.2007-

• For sensitive goods the applicant should produce a solvency certificate from a Scheduled Bank for a value not less than Rs.50 lakhs. In case of individual consignments to be warehouse a bond for a sum equal to twice the duty leviable on the goods should be given backed by bank guarantee/cash deposit of 25% of the duty liability for each consignment. If the licencee desires to give bond for a number of consignments, a revolving bond may be taken subject to cash deposit/bank guarantee of 25% of the duty involved on the goods brought for shortage in the warehouse.   This requirement would be applicable not only to private bonded warehouse but to private owned Public Bonded warehouses as well;
• For non sensitive goods the applicants for Private Bonded Warehouses are exempt from requirement of furnishing solvency certificate.   However, they shall be solvent for an amount of Rs.10 lakhs and should possess a good record. The double duty bond as per Section 59 of the Act shall be sufficient for bonding of non sensitive goods without a cash deposit/bank guarantee. However if the concerned Assistant/Deputy Commissioner of Customs is not satisfied about the transactions of a particular licencee, a suitable bank guarantee may be obtained.