Procedure in respect of discharge and clearance of Liquid Cargo in Bulk for Home Consumption/Warehousing in bonded warehouse as per New Warehousing Licensing Regulations, 2016, issued by the Board vide F. No. 473/20/2013-LC(Vol. II) and for determining duty liability as per CBEC Circular No. 34/2016 dated 26.07.2016. - Customs - 29/2017

OFFICE OF THE PR. COMMISSIONER OF CUSTOMS (IMPORT-II) NEW CUSTOM HOUSE, BALLARD ESTATE, MUMBAI -400 001 F. No. S/6-Gen -1248/2016-17/BOND NCH Dated: 09.03.2017 Public Notice No. 29/2017 Sub :- Procedure in respect of discharge and clearance of Liquid Cargo in Bulk for Home Consumption/Warehousing in bonded warehouse as per New Warehousing Licensing Regulations, 2016, issued by the Board vide F. No. 473/20/2013-LC(Vol. II) and for determining duty liability as per CBEC Circular No. 34/2016 dated 26.07.2016. Consequent upon the issuance of New Warehousing Licensing Regulations, 2016 for New Warehousing Procedures and CBEC Circular No. 34/2016 dated 26.07.2016 for determining duty liability to give effect to the Judgement of the Hon'ble Supreme Court in the case of Mangalore Refinery and Petrochemicals Limited vs. Commissioner of Customs, Mangalore dated 02.09.2015 [2015(323) E.L.T. 423 (S/C.)], it has become imperative to review the existing procedure of discharge, transportation, storage and clearance of all types of imported Liquid Cargo in Bulk and procedure for determining duty liability. 2. In the light of the above said Judgement, the Board has reviewed the Circular No. 96/2002- Customs dated 27.12.2002 Circular No. 06/2006 dated 12.01.2006 and it has been decided to rescind both these Circulars. The Board has issued Circular No. 34/2016 dated 26. 07. 2016 for determining duty liability to give effect to the above Judgement of the Hon'ble Supreme Court. 3. In case of all liquid cargo imports discharged through pipelines, whether for home consumption or for warehousing, the shore tank receipt quantity i.e. the quantity ascertained by dip measurement in tanks on shore into which such cargo is pumped from the tanker, should be taken as the basis for levy of Customs Duty irrespective of whether Customs Duty is leviable at a specific rate or on ad-valorem basis [including cases where tariff value is fixed under Section 14(2) of the Customs Act, 1962]. 4. Further, where bulk liquid cargo is cleared directly on payment of duty without being pumped in a shore tank i.e. loaded in barges or tank lorries, assessment may continue to be done as per ship s ullage survey report at the port of discharge. 5. The quantity shown in the Bill of Lading reflected in the Import General Manifest should prima facie be accepted as the cargo on board the vessel brought for unloading at the Port of discharge i.e. Mumbai Port. 6. On arrival, the vessel should be permitted to discharge liquid cargo only after completing the Boarding formalities and after completing the ullage survey which is to be carried out under the supervision of the Customs Officer. After conducting the ullage survey, the report should be prepared and signed by the surveyors, Master/Chief Officer of the Vessel and Representatives of the Consignees and the same should be countersigned by the Customs Boarding Officer. 7. After the discharge of the liquid cargo from the vessel, a fresh survey should be carried out in the presence of the Customs Officer and this discharge completion survey report should be signed by the surveyors, Master/Chief Officer of the Vessel, Representatives of the Consignees and Customs Officer. 8. In case of difference between the Manifested quantity and the discharge port ullage survey report quantity, such difference shall be considered as short landed quantity for which the Person In-charge of the conveyance should be held responsible under provisions of Section 116 of the Customs Act, 1962. 9. The quantity shown in the Bill of Lading reflected in the Import General Manifest should be prima facie, accepted as the cargo on board the vessel brought for unloading at this port. The importers of the liquid bulk cargo would be free to file a Bill of Entry for Home Consumption or a Bill of Entry for Warehousing as per their own convenience. In case, where the cargo is being discharged from the ship into a shore situated tank, the assessment would be for the quantity received in the concerned shore tank. In case of an advance/prior Bill of Entry covering the liquid cargo in bulk, the same shall be assessed to duty for the quantity as declared in the Manifest/Bill of Lading by the concerned Assessing Group in usual manner. On the Bills of Entry, the dealing Appraiser will give the following examination order:- a. Before allowing discharge, please inspect and verify whether the person-in-charge of the vessel or his agent has produced the ullage survey report prepared at the Port of Loading and certified by an Independent Surveyor. If so, please state the quantity mentioned in the ullage survey report. b. Please inspect the cargo. Before allowing discharge, please inspect and certify the ullage survey report prepared at this port and state the quantity mentioned therein. Thereafter allow discharge through the pipeline/tank Lorries and forward samples in duplicate to Dy. Chief Chemist's laboratory for test, if applicable. Please ensure that FSSAI sampling is done in case of edible oils. c. After discharge, certify the fresh survey to ascertain the quantity discharged and record shortage/excess, if any. d. Allow samples for consignee's laboratory (wherever necessary). 8. Immediately on arrival of the vessel, the concerned Steamer Agent shall arrange for the ullage survey before discharge of liquid cargo and shall apply to the Preventive Superintendent of the Boarding Office where the vessel has taken the berth for supervising the survey. The cost of such survey will be borne by the Steamer Agents. In case of the failure on the part of the Steamer Agents to arrange for such ullage survey, the Steamer Agents will be liable under Section 116 of the Customs Act, 1962 for the loss of duty on account of short landed liquid cargo. In case of liquid petroleum products, the Boarding Officer who is normally posted round the clock at the point of discharge shall attend the survey. 9. If any excess quantity is reported on the basis of shore tank out turn report, the importer for the time being will file a manual Bill of Entry for the excess quantity over and above the Bill of Lading/Manifested quantity. A request would be made to DG, Systems to prepare an extra field for the shore out turn quantity so that the present system of filing manual Bill of Entry for excess quantity can be done away with. 10. In case, short quantity is received at shore tank and a warehouse Bill of Entry has been filed for the manifested quantity, the last Ex-bond Bill of Entry will be filed adjusting the less quantity reported by the shore tank out turn report. In case, short quantity is reported as per shore tank out turn report, the short quantity over and above 0.5% of the manifested quantity may be subjected to investigation by department. 11. In case of goods intended to be cleared for Home Consumption, there can be two situations. If the importer has filed a prior Bill of Entry for the entire manifested quantity and if there is shortage of cargo as per the out turn report of shore tank, such Bills of Entry will be referred back to the Assessing Group for the purpose of re-assessment to give effect to the short quantity. If it becomes a case of refund, the same will be dealt with in terms of the relevant statutory provisions of the Customs Act, 1962. However, there may be circumstances where importer has opted for filing the Home consumption Bill of Entry in a piece meal manner, in such situation, the importer would be at liberty to adjust the quantity in respect of the last Bill of Entry as per findings of the shore tank out turn report. In case of shortage of cargo reported by Out Turn Report (OTR), the situation may arise where importers will face difficulties while making remittance to their suppliers on account of mis-match of the suppliers invoice value and the invoice value mentioned in the Bill of Entry. The Bankers are advised to take note of the CBEC Circular No. 34/2016 dated 26.07.2016 which has been issued to give effect to the judgement of Supreme Court as cited above. 12. In case of edible grade oil in bulk, it is a long pending demand of the trade that only one sample per vessel, per grade, per shipper, should be drawn and forwarded to FSSAI and DYCC for testing purpose. The matter has been examined and as a trade facilitation measure, it has been decided that the goods of same description brought by a particular vessel from the same overseas supplier, from the same source port, may be extended the facility of single sampling each for DYCC and FSSAI. A practical difficulty may arise that if multiple Bills of Entry have been filed by the importers covered by the same IGM, the single window may mandate more than one Bill of Entry for FSSAI NOC. In such cases, the officer giving out of charge will verify from the hard copy of the FSSAI NOC report and will give out of charge for the remaining Bills of Entry of the same grade and same IGM. However, in case of non edible liquid cargo, samples will be forwarded to only DYCC. 13. The trade has been reporting undue delay in receipt of DYCC test reports which at one hand enhances the transaction cost of the importer and on the other hand it increases the dwell time. Therefore, the DYCC is directed to give test reports within a time frame of 3 to 4 working days. Any difficulty in this regard faced by DYCC should be brought to the knowledge of the undersigned. 14. If test reports are not received as aforesaid, on application of the importer, 80% of the cargo will be released without waiting for DYCC test report and the balance cargo will be released only after production of the DYCC Test Report. However, the same will not apply in case of non-receipt of FSSAI NOC. 15. The procedure for provisional and final assessment of the liquid cargo in bulk remains the same except the discharging procedure as indicated above. In case of provisional assessment, as per CBEC Circular No. 38/2016 Para 3.6(b), Bank Guarantee equal to 100% of differential duty is required. However, if the importer gives undertaking to the effect that 20% of the cargo will not be cleared pending the favourable test report, the Group DC/AC may allow provisional assessment without insisting for bank guarantee. In case, if the importer intends to clear the entire cargo on the basis of provisional assessment, the jurisdictional Commissioner may reduce the quantum of BG on case to case basis. 16. Pursuant to the guidelines issued under New Warehousing Licensing Regulations, 2016, the following procedure is prescribed in respect of discharge clearance of liquid Cargo in bulk through pipelines/tank Lorries for home consumption/warehousing in the bonded warehouse. (i) Discharge Permission : - In case of Liquid Bulk Cargo/Petroleum products the importer shall file either personally or through Customs Broker an application to Dy. Commissioner of Customs (Bond) on Importers letter head for permission to discharge prior to arrival of the vessel, if the cargo intended to be warehoused and discharged at the wharfs import area. The permission given as Discharge Allowed shall be collected by the importer or CHA and handed over to the steamer agent to enable the Steamer agent to apply for the expeditious berthing of the vessel. After berthing, the vessel should be permitted to discharge liquid bulk cargo only after completing the Boarding formalities and after completing the ullage survey which is to be carried out under the supervision of the Customs Officer. The liquid bulk cargo will be discharged via the underground pipeline to the offshore tanks or the barges/tanks lorries as the case may be, and samples will be drawn under the existing procedure of supervision of Preventive Officers/Superintendents (Preventive) supervising the discharge of liquid bulk cargo in Docks/Stream. After conducting the ullage survey, the report should be prepared and signed by the surveyors, Master/Chief Officer of the Vessel and Representatives of the Consignees and the same should be countersigned by the Customs Boarding Officer. In case of availment of discharge permission prior to filing of B/E, the quantity ascertained by shore out turn will be final. In case of short receipt of quantity in the out turn report, the same will be shown as net quantity in home consumption bond B/E B/L quantity as gross quantity. This will facilitate noting of B/E. (ii) Out Turn Report : - (OTR) Once the entire quantity has been received in the shore situated tanks, an OTR for the received quantity should be prepared and signed by the surveyors of the tank owners, importers and the same should be countersigned by the Bond Officer of Customs posted at the said Bond. Ideally, the goods covered by Warehousing Bill of Entry should be stored in a shore situated Customs Bonded Tank whereas, the goods intended to be cleared under Home Consumption Bill of Entry, should be stored in a shore situated tank, the owner of which has been appointed as a custodian under Section 45 of the Customs Act, 1962 in respect of the said tank. (iii) Warehousing : Bonding procedure for all kind of liquid bulk cargo shall be carried out in the bond section. The necessary bond register for this purpose shall be maintained in the bond section. Superintendent/Bond shall carry out all the necessary formalities like entry of bond and all other particulars in the bond register, generate the bond number for warehouse B/E, accept the warehousing bond. The bond will then be submitted to AC/DC Bond for acceptance. (iv) Bond to Bond Transfer : - Notification No. 68/2016 dated 14/05/2016 point No. 6. Transfer of goods to another warehouse, which states that, (1) A licencee shall not allow transfer of warehoused goods to another warehouse without the permission of the bond officer under Section 67 on the Form for the transfer of goods from a warehouse. (2) Where an owner of warehoused goods produces the Form for transfer of goods from a warehouse bearing the orders of the bond officer-the licensee shall:- a) allow removal of goods and their loading on to the means of transport. b) In case the transfer is Tank to Tank i.e. from one tank of a warehouse to another tank of another warehouse, where there is a facility of pipeline connectivity, then the transfer takes place through pipelines but all movement of liquid bulk cargo is precisely recorded mentioned in the records submitted to the department. c) In case the transfer is from a tank [in a warehouse] to another tank in another warehouse, through tank lorries, then the tank lorries can be sealed with customs' punch seal. d) take into record removal of goods; and e) cause to be delivered, copies of the retained documents to the bond officer. (v) Security for bonded goods during transit : - As per CBEC Circular No 21/2016, the importer shall submit a comprehensive Transit Risk Insurance Policy to cover the transit goods equal to the sum of the duty involved in favour of the President of India A. Customs Station of import to warehouse....or B. One warehouse to another warehouse....or C. A warehouse to the customs station of export. D. In certain cases, such as liquid bulk cargo being transported through pipelines, the requirement of transit insurance may be waived. It is also clarified that the importer do not need to submit a separate insurance policy if the goods are to be stored in a warehouse which has taken the comprehensive risk cover which covers transit of goods. (vi) Removal of warehoused goods for Export : - Notification No. 68/2016 dated 14/05/2016 point No. 9. States that (1) A licensee shall not remove or caused to be removed any warehoused goods for export except by an order made by the proper officer under Section 69 of the Customs Act, 1962. (2) Upon the bond officer permitting the removal of goods from the warehouse the licensee shall, in the presence of the bond officer, cause the goods to be loaded on to the means of transport and affix a onetime lock to the means of transport. (vii) Removal of warehoused goods for Home Consumption : -Notification 68/2016 dated 14/05/2016 point No. 8:- States that a licensee shall not allow goods to be removed from the warehouse for home consumption unless the bond officer permits the removal of goods. Attention is also invited to the CBEC Circular No. 22/2016 dated 31.05.2016 regarding procedure for filing Ex-Bond Bill of Entry. (viii) Security for Extension : - Any extension of the warehousing period will be subject to the requirement of the security under Section59(3) as stated in the CBEC Circular No. 21/2016 dated 31/05/2016.The security to be furnished by the importer or owner of the goods shall be furnished at the port of import where the bill of entry for warehousing was filled. (ix) Denaturing : - Denaturing of ethyl alcohol in a warehouse would be permitted on the basis of proper permission given by AC/DC Group under Customs supervision only if the licensee of the warehouse holds a licence for manufacturing or other operations under Section 64 or 65 of the Customs Act, 1962 in addition to the warehouse licence. The Notification No. 68/2016 dated 14.05.2016, Point No. 10 states A licensee shall ensure that the warehoused goods are not manipulated, altered, processed or otherwise dealt, except for or during the course of operations permitted under Section 64 or Section 65 of the Customs Act, 1962. (x) Direct Delivery : - The Direct delivery from Ship to Tank Lorries in case of shortage of storage space will depend on case to case basis and assessment may continue to be done as per ship's ullage survey report at the port of discharge. The Permission for direct delivery will be given by AC/DC Bond. This Public Notice shall come into force with immediate effect. Difficulties, if any faced in implementation of this Public Notice, may immediately be brought to the notice of the undersigned. Sd/- (B. BHATTACHARYA) PR. COMMISSIONER OF CUSTOMS, IMPORT II