Removal of mandatory warehousing requirements for EOUs, STPIs, EHTPs etc,.

[R.S. Mangal]

As a part of Ease of Doing Business policy of Government of India, CBEC issued the Notification No. 44/2016-Cus dated 29.07.2016 and Notification No. 31/2016-CE dated 24.08.2016 so as to amend the Notification No. 52/2003-Cus dated 31.03.2003 and Notification No. 22/2003-CE dated 31.03.2003 thereby to de-license the EOU units as bonded warehouse under the Customs Act, 1962 w.e.f. 13.08.2016. The Customs Circular No. 35/2016-Cus dated 29.07.2016 clarifies that these units stand de-licensed as Warehouses under the Customs Act, 1962 w.e.f. 13.08.2016.

DGFT issued Public Notice No. 25/2015-2020 dated 13.08.2016 whereby the warehousing requirement under FTP for EOU’s have been dispensed with and thereby amendments in relevant Paras i.e., 6.06, 6.20 and 6.40 of Hand Book of Procedures(HBP) 2015-2020; and (ii) Appendix 6E, 6G, 6H, 6M, 5C and ANF 6A, ANF 6B of Appendices and Aayat Niryat Forms of FTP 2015-2020 have been made.

As per our understanding of above changes in the EOU Scheme now the EOU units need not to have bonded warehouse license under Section 58 & the permission under Section 65 of the Customs Act, 1962. In effect these units need not to comply with various warehousing provisions. Thus the Warehoused Goods (Removal) Regulations, 2016, The Warehouse (Custody and Handling of Goods) Regulations, 2016 and Public Warehouse Licensing Regulations, 2016 will no longer be applicable to 100% EOU’s, STPIs, EHTPs.

As per our understanding now the EOUs, STPIs, EHTPs unit need not to comply the following warehousing provisions :

1.       No need for application to Principal Commissioner for private bonded warehouse under Section 58 & permission under 65 of Customs Act, 1962. The existing EOU get de-licensed w.e.f. 13.08.2016.

2.       No need to provide various undertakings to Principal Commissioner

3.       No need to appoint warehouse keeper and obtain digital signature of such person

4.       No need to provide all insurance risk policy to Principal Commissioner

5.       No need to obtain warehouse code from jurisdictional Customs officer

6.       Bill Entry for Home Consumption will be required at the clearance from Port of Import instead of Bill of Entry for warehousing. The Exemption of duty will be claimed under Notification Number 52/2003-Customs.

7.       No re-warehousing is required to be done by these units after 13th August 2016.

8.       No permission is required to be obtained for supply of goods from one unit to other.

9.       No inspection of seal/goods on duty free  procurement by proper officer.

10.    No need to file ex-bond bill of entry at the time of removal of goods from premises of EOU/EHTP/STP/BTP units.

However, as per the requirement of amended Notification No. 52/2003-Cus the 100% EOU need to maintain the digital record of imported goods in the digital form as per  Form ‘A’ appended with  Customs Circular 35/2016-Cus dated 29.07.2016. The software for maintenance of digital records must incorporate the feature of audit trail which means a secure, computer generated, time-stamped electronic record that allows for reconstruction of the course of events relating to the creation, modification, or deletion of an electronic record and includes actions at the record or system level, such as, attempts to access the system or delete or modify a record. While the data elements contained in the Form A are mandatory, the unit will be free to add or continue with any additional data fields, as per their commercial requirements. The above requirement of maintaining digital records, in the prescribed Form, is applicable from 13th August 2016. Record of imported goods received on or after 13th August 2016 shall be maintained as per the prescribed Form. The information regarding the stock of goods lying with the unit need to be integrated into the digital record prescribed under this circular. However, data relating to goods already processed and/or cleared need not be updated in the digital records. The warehoused goods register maintained hitherto shall suffice for the purpose.

Further the EOU unit are not required to send the re-warehousing Certificate but they shall continue to obtain procurement certificate for duty free import and on receipt of goods the copy of relevant B/E shall be provided to the jurisdictional CE office.  

Inter-unit transfer of capital goods and manufactured goods the following procedure shall be followed:

(i) Any procurement by one unit from another should be supported by a procurement certificate or pre-authenticated procurement certificates, as applicable;

(ii) The supply of the goods from one unit to another shall be based upon the usual commercial documents, such as, invoice & delivery challan;

(iii) Upon receipt of goods, copies of documents shall be provided to the jurisdictional office of the sending and receiving unit by way of intimation

But there is no clarity on the following points :-

1. Whether the B-17 Bond will continue or not ?
2. If not then the EOU would be required to export under LUT or any other Bond.
3. What bond would be required for duty free procurement of the goods.
4. It is also not clear as to in which format the duty free procurement of indigenous goods will be maintained as the Form ‘A’ has been  prescribed for duty free imported goods vide NTFN No. 52/2003-Cus as amended by NTFN No. 44/2016-Cus read with Customs Circular 35/2016.

We hope the CBEC will clarify the position soon for completing the requirement of the law  and smooth operation of the  EOU Scheme by units with due legal compliance.