WAREHOUSING - CBEC Manual (OLD) - Central Excise

CHAPTER 10 WAREHOUSING PART-I GENERAL 1. Introduction 1.1 In pursuance of sub-rule (1) of rule 20 of the Central Excise Rules, 2002 (hereinafter referred to as the 'said Rules') the Board has issued notification no. 46/2001-Central Excise (N.T.) dated 26th June, 2001 as amended vide Lion No. 30/2003-CE (N.T.) dated 4.4.2003, which has come into force on 2001, whereby the warehousing provisions have been extended to all goods specified in the First Schedule to the Central Excise Tariff Act, 1985 intended for storage in a warehouse registered at such places as may be specified by the Board and export there from. 1.2 Facility of warehousing of excisable goods without payment of duty been provided in respect of the specified commodities by Notification 17/2004-C.E. (NT) dated 4th September, 2004. The Central Board of Excise and has also specified detailed procedure including the conditions, limitations and safeguards for removal of excisable goods sub-rule (2) of Rule 20 Central Excise Rules, 2002 (hereinafter referred to as the said Rules). It be noted that warehousing facility to specified petroleum products as per earlier notification No. 47/2001-C.E. (N.T.) dated 26th June, 2001 has been withdrawn w.e.f 6th September, 2004. 1.3 Any goods warehoused may be left in the warehouse in which they are deposited, or in any warehouse to which such goods have been removed, till the expiry of three years from the date on which such goods were first warehouse. 2. Place of registration of warehouse 2.1 Commissioner of Central Excise will specify the places under his jurisdiction where warehouse can be registered, by issuing Trade Notice. Any person desiring to have warehouse will get himself registered under the of Rule 9 of the said Rules. 3. Procedure for warehousing of excisable goods removed from a factory or a warehouse 3.1 The consignor (i.e. the manufacturer or the registered person of the warehouse) shall prepare an application for removal of goods from a factory or a warehouse to another warehouse in quadruplicate in the specified Form (See Annexure-25 in Part-7). 3.2 The consignor shall also prepare an invoice in the manner specified in Rule 11 of the said Rules in respect of the goods proposed to be removed from his factory or warehouse. 3.3 The consignor shall send the original, duplicate and triplicate application and duplicate invoice along with the goods to the warehouse of destination. 3.4 The consignor shall send quadruplicate copy of the application to the Superintendent—in-charge of his factory or warehouse within twenty-four hours of removal of the consignment. 3.5 On arrival of the goods at the warehouse of destination, the consignee (i.e. the registered person of the warehouse who receives the excisable goods from the factory or a warehouse) shall, within twenty-four hours of the arrival of goods, verify the same with all the three copies of the application. The consignee shall send the original application to the Superintendent-in-charge of his warehouse, duplicate to the consignor and retain the triplicate for his record. 3.6 The Superintendent-in-charge of the consignee shall countersign the application received by him and send it to the Superintendent-in-charge of the consignor. 3.7 The consignor shall retain the duplicate application duly endorsed by the consignee for his record. 4. Failure to receive a warehousing certificate 4.1 The consignor should receive the duplicate copy of the warehousing certificate, duly endorsed by the consignee, within ninety days of the removal of the goods. If the warehousing certificate is not received within ninety days of the removal or such extended period as the Commissioner may allow, the consignor shall pay appropriate duty leviable on such goods. 4.2 If the Superintendent-in-charge of the consignor of the excisable goods does not receive the original warehousing certificate, duly endorsed by the consignee and countersigned by the Superintendent-in-charge of the consignee, within ninety days of the removal of the goods, weekly reminders must be issued by him to the Superintendent-in-charge of the consignee. If despite such reminders the original warehousing certificate is not received within a further period of sixty days of the expiry of the ninety days period, the Superintendent- in-charge of the consignor shall inform his Assistant Commissioner /Deputy Commissioner who shall either secure a satisfactory proof of the goods having been duly received by the consignee or ensure that the duty of excise due on the goods not received at destination is recovered from the consignor. 5. Accountal of goods in a warehouse 5.1 The registered person of the warehouse shall maintain a register showing all entries in to and removals of the goods from his warehouse and shall indicate the value, quantity of the goods removed, their marks and numbers as well as the rate of duty and amount of duty involved. The processes carried out on the warehoused goods, if any, shall also be recorded. 5.2 The first and last pages of the register should be pre-authenticated by the owner of the warehouse or his authorised agent. 6. Responsibility of the registered person 6.1 The registered person of the warehouse shall be responsible for due reception of the goods in to the warehouse and delivery there from including their safety during the period they are lodged in the warehouse. 6.2 The registered person shall be responsible for the payment of penalty or interest leviable in respect of-the goods which are warehoused as per the provisions of the Central Excise Act, 1944 and the rules made there under. 7. Revoked or suspended registration of a warehouse 7.1 If the registration of a warehouse is revoked or suspended, the excisable goods lodged therein shall either be cleared for home consumption on payment of duty. 8. Warehouse to store goods belonging to the registered person 8.1 Warehouse shall be used solely for storing excisable goods belonging to the registered person of the warehouse alone. He shall not admit or ra any excisable goods on which duty has been paid; 8.2 The Commissioner of Central Excise having jurisdiction over the warehouse may permit storage of excisable goods along with the excisable goods belonging to another manufacturer; 8.3 The Commissioner of Central Excise having jurisdiction over the permit the registered person of the warehouse to store duty paid excisable goods or duty paid imported goods along with non-duty paid excisable goods in the warehouse. 8.4 The facility of storage of duty paid goods belonging to another manufacturer along with non-duty paid goods in the warehouse has been - the permission of the Commissioner of Central Excise having jurisdiction over the warehouse. [No. 632/23/2002-CX. Dated 1.4.2002]. 9. Registered person right to deal with the warehoused goods 9.1 The owner of the warehouse may sort, separate, pack or re-pack the goods and make such alterations therein as may be necessary for the sale or disposal thereof. 10. Special procedure for movement of Petroleum Products through Pipeline For the procedure to be followed by the assesses when the goods are cleared through pipelines, the procedure laid down in the Board's circular No663/54/2002-CX dated 23.9.2002 be followed. The procedure in brief is as under: (a) The refineries can generate one ARE-3 on Quarterly basis for one product for one destination at the end of each quarter within fifteen days of the end of the quarter. In other words, if 'N' no. of the petroleum products are sent to 'N' no. of destinations, in each quarter there shall be N X N in each quarter. (It is felt that at the end of the quarter, the refinery should be able to know the destination product-wise). (b) The receiving Commissionerate at the tapping off points can issue the re-warehousing certificate ARE-3 wise as per the receipt at their end. These re-warehousing certificates should be acceptable to jurisdictional Central Excise Officer at refinery end in the first instance, though provisionally. (c) At the end of the year, when annual pipeline accountal takes place in the oil companies, the reconciliation can be carried out by way of a statement to be submitted by oil companies having refineries showing the actual quantity dispatched, the quantity re-warehoused and the gain and loss in respect of each product and each destination. (d) The annual account should be submitted by the oil companies within 60 days from the end of the financial year which should be certified by a firm of practicing Chartered Accountants. The necessary assessment order may be issued within 60 days of the receipt of the annual account. (e) The requirement of D-3 intimation and consignment-wise AR 3A/Annexure-A/ARE-3 (See Annexure 25 and 59 in Part 7) may be dispensed with. (f) The limit of transit loss to be condoned shall be 0.25 percent as per the existing guidelines. (g) Wherever the imported and indigenous products are involved, the annual reconciliation statement should give the details separately for the purpose of reconciliation. (h) Wherever, shortages occur, the assessment may ordinarily be carried out on the basis of highest value and highest rate of duty applicable for the particular product during the quarter/ period under consideration unless the assessee establishes that the shortages relate to a particular batch for which the value and rate of duty is not in dispute. The above procedure shall be applicable to new as well as existing pipelines. It may be seen that for the purpose of filing ER-1, the quantity cleared without payment of duty is required to be mentioned which should be available with the refineries in terms of total quantity dispatched without payment of duty. Therefore, there should not be any difficulty in filing monthly return with this procedure. Similarly, the duty demand for the shortage assignable to a particular quarter can be raised at the end of the quarter. For all other shortages not assignable to a particular period, demands may be raised if necessary, at the end of the year when the annual reconciliation statement is available. Regarding the limit of condonation of losses, this is the maximum limit to which the losses can be condoned. If it is felt that there is improper accountal of the goods or the condonation which is claimed by the assessee is not supported by the documents, the person is lible to pay duty on such losses. It may be noted that warehousing facility to specified petroleum products has been withdrawn w.e.f 6th September, 2004. Therefore, any such procedure shall be applicable for past period only. PART-II EXPORT WAREHOUSING 1. Introduction 1.1 In pursuance of sub-rule (1) of rule 20 of the Central Excise Rules, 2002 (hereinafter referred to as the 'said Rules') the Board has issued notification no. 46/2001-Central Excise (N.T.) dated 26th June, 2001 as amended vide Notification No. 30/2003-CE (N.T.) dated 4.4.2003, which has come into force on 1st July, 2001, whereby the warehousing provisions have been extended to all excisable goods specified in the First Schedule to the Central Excise Tariff Act, 1985 intended for storage in a warehouse registered at such places as may be specified by the Board and export there from. For Nepal, the export from Export Warehouse has also been allowed on payment of duty. For such removals, the regular procedure of clearance of goods on payment of duty may be followed. 1.2 In pursuance of the above-mentioned notification the Board has also specified by Circular No. 581/18/2001-CX dated 29th June, 2001 the places and class of persons to whom the provisions of the notification No. 46/2001- Excise (N.T.) dated 26th June, 2001 shall apply. In the same Circular, the Board has specified the conditions (including interest), limitations, safeguards and procedures. 1.3 The facility of export warehousing is available to the following and places, namely:- 1.Exporters : The exporters who have been accorded status of Super Star Trading House or Star Trading House, the foreign departmental stores of repute and the automobiles manufacturers who have signed Memorandum of Understanding with Directorate General of Foreign Trade in the Ministry of Commerce and Industry. 2. Places : The warehouses may be established and registered in Ahmedabad, Bangalore, Kolkata, Chennai, Delhi, Hyderabad, Jaipur, Kanpur, Ludhiana, Mumbai, Districts of Pune and Raigad in the state of Maharashtra, District of East midnapore in the state of West Bengal District of Kanchipuram in the state of Tamil Nadu, and the district of indore in the state of Madhya Pradesh. 3. Petroleum products : The export warehousing facility is applicable to all exporters for petroleum products. The warehouses for the purpose of export of petroleum products falling under Chapter-27 of the First Schedule to the Central Excise Tariff Act, 1985 may be established and registered at any place within the territory of India. (Circular No. 798/31/2004-CX dated 8th September, 2004) 2. Conditions of Export Warehousing 2.1 The exporter shall furnish a general Bond (B-3) under rule 19 of the said Rules read with notifications issued there under, backed by twenty five per cent security of the bond amount. 2.2 Where any goods are diverted to home consumption from the warehouse, interest shall be charged at the rate of twenty four per cent per annum on the duty payable, calculated from the date of clearance from the factory of production or any other premises approved by the Commissioner, till the date of payment of duty and clearances. 3. Procedure of export warehousing 3.1 Registration 3.1.1 The exporter shall make a written request along with application registration under rule 9 to the Commissioner for being allowed to establish a export warehouse under this provision. The Commissioner may cause enquiry to be made in respect of the security of the premise for warehouse r by the exporter in the application. If found in order, the Commissioner will accord his approval subject to such directions, terms and manners as he may specify and forward the application, to the jurisdictional Superintendent of Central Excise through the jurisdictional Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise (having jurisdiction over the premise) within seven working days of the receipt of the application. 3.1.2 The registration certificate containing registration number will be used by the jurisdictional Deputy or Assistant Commissioner of Central Excise immediately on receipt. Procedure relating to registration will be same as notified in Notification No. 35/2001-Central Excise (N.T.) dated 26.6.2001 as amended. 3.2 Execution of bond 3.2.1 Every exporter registered in the aforesaid manner, shall execute before the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise having jurisdiction over the warehouse a general bond under Rule 19 of the said Rules for export of goods from the warehouse in the B-3 Bond (General Security) Format at Annexure-26 (See Part 7). The exporter availing this scheme shall be required to furnish security equal to 25% of the bond amount. In case any bank guarantees are furnished, it shall be the sole responsibility of the exporter to renew its validity from time to time. 3.2.2 A 'Running Bond Account' will be opened in the format specified at Annexure-27 (See Part 7). This register shall be maintained by the exporter in the warehouse and shall be made available to the officer-in -charge or officers of Internal Audit for scrutiny and checking. 3.3 Removal of goods to warehouse 3.3.1 For removal of excisable goods from a factory or any other premise approved by the Commissioner to a warehouse, procedure laid down in Circular No. 579/16/2001-CX dated 26.6.2001 issued under rule 20 of the said Rules will be applicable. It is clarified that the Notification No. 46/2001-C.E. (N.T.), dated 26.6.2001 do not cover removal from one warehouse to another. 3.3.2 The Central Excise Officer in-charge of the warehouse will issue certificate of removal in duplicate in the Form CT-2 specified at Annexure-28 (See Part 7) indicating details of the general bond executed by the exporter. The CT-2 shall bear per-printed serial numbers running for the whole financial year beginning on the 1st April of each year. The said officer will issue twenty five CT-2 certificates at a time, signing each of the leaf with the official stamp. More certificates can be issued if it is so requested by the exporter on the grounds of large number of procurements. The exporter will fill up the relevant information in CT-2. After making provisional debit in the Running Bond Account, he will indicate the same in the CT-2. One copy of CT-2 will be forwarded to Officer-in charge of the warehouse. One copy will be sent to the consignor and one copy will remain with the exporter. 3.3.3 The consignor will prepare an application for removal in the Form specified in Annexure-25 (See Part 7) (hereinafter referred to as ARE-3) and an invoice (under rule 8 taking into account CT-2 certificate) and follow the procedure specified in Circular No. 579/16/2001-CX dated 26.6.2001 issued under rule 20. The serial number of the corresponding CT-2 shall be mentioned on the top of the each copy of ARE-3. Any nominal variations between the provisional debit indicated in the CT-2 and the actual duty involved in the goods removed as indicated in ARE-3 can be ignored. Immediately on receipt of goods, the provisional debit shall be converted into actual debit on the basis of the details mentioned in ARE-3. 3.3.4 The officer-in-charge of the warehouse will countersign application and despatch to the Range Office having jurisdiction over the factory/other approved premise of removal within one working day of receipt of the application. He will make suitable entry in his own record accordingly. 3.3.5 The exporter [owner] shall maintain private record (Warehousing Register) containing information relating to details of ARE-3 and invoice, date of warehousing certificate, description of goods received including marks and numbers, quantity, value, amount of duty, details of operation in the warehouse and new packages and their marks and number, clearance from the e for export (ARE-I No., Invoice No., quantity, value, duty) and clearance for home consumption. They shall produce this Register to the Central Officers in-charge of the warehouse whenever required. 3.4 Receipt and storage of goods in warehouse 3.4.1 Receipt of goods will be governed by the procedure specified 'circular No. 579/16/2001-CX dated 26.6.2001 issued under rule 20 with the modification that in case of Aviation Turbine Fuel intended for supply of foreign going s and other petroleum products i.e. FO/LDO/HSD intended for supply as Bunker fuel to foreign going vessels, the goods may also be received through dedicated tanks in intermediate storage of goods cleared for export warehouse. For the removal of doubts, it is clarified that mixed bonding of duty paid goods with non-duty paid goods is not permitted at such intermediate storage installations. [804/1/2005-Cx dated 4 th January, 2005.) 3.4.2 Ten percent of the consignments, subject to minimum of two, received in a month will be randomly selected, spread over the entire month, for verification by officer-in-charge after the receipt of the written intimation. 3.4.3 Goods brought under the cover of each ARE-3 shall be stored separately or proper accountal shall be maintained, till these are exported or diverted for home-consumption. 3.4.4 The Commissioner of Central Excise having jurisdiction over the warehouse may permit the registered person of the warehouse to store duty paid able goods or duty paid imported goods along with non-duty paid excisable pods in the warehouse subject to conditions, procedure arid manner of payment f duty prescribed by him {Circular 804/1 /2005-Cx dated 4th January, 2005) 3.5 Packing, re-packing, labelling or re-labelling within the warehouse 3.5.1 The operations of Packing, re-packing, labelling or re-labelling in relation to excisable goods received and stored in the warehouse will be governed by the procedure specified under rule 20. Suitable entries must be made in the Export-Warehouse register. In case of non-reconciliation of quantity, after adjusting any wastage or refuse, the differential quantity shall be treated as unaccounted and action for recovery of duty will be initiated. 3.5.2 The exporter may procure packing or labeling material and bring the same into the warehouse under the warehousing procedure itself. No duty paid goods will be permitted to be brought into the warehouse. 3.5.3 Where the process of packing, repacking, labelling or re-labelling amounts to manufacture in terms of the provisions of the Central Excise Tariff Act, 1985, the goods permitted for clearance for home consumption shall be assessed accordingly. 4. Goods supplied by an SSI Unit exempted from Registration 4.1 An SSI Unit exempted from registration under rule 9 of the said rules will also prepare ARE-3 against CT-2 in the same manner as mentioned in Para 3.3.5 above except that he will use his own invoice. Registration under rule 9 shall not be insisted. The Warehousing Certificate forwarded to the Range Office having jurisdiction over such SSI Unit shall be retained in the office and will be tallied with the details submitted by the SSI Unit in the quarterly statement. The procedure to be followed is based on Boards Circular No. 212/46/96-CX dated 20th May, 1996, which continues to be applicable under the said Rules. The clearances on those ARE-3 in respect of which Warehousing Certificate is not received within ninety days of removal or such extended period as the Commissioner may allow, will be treated as clearances for home- consumption. If the Warehousing Certificate is subsequently produced, the clearances, which were treated as 'clearance for home consumption" as aforesaid, shall be expunged. 5. Clearance of goods for export outside India 5.1 For the export of goods from the warehouse, the procedure relating to preparation of application for export (ARE.1), examination and sealing, acceptance of proof of export etc. shall be governed by Notification No. 42/2001- Central Excise (N.T.) dated 26.6.2001 as amended vide Notification. No. 45/2003- CE (N.T.) dated 14.5.2003 and instructions applicable for this notification. 5.2 The requisite copies of application will be filed with the Deputy Commissioner or Assistant Commissioner having jurisdiction over the warehouse and with whom the Bond was executed, for acceptance of proof of export and issue of a certificate to this effect. 5.3 The credit in Running Bond Account shall be made by the exporter on the basis of the application (ARE.1) duly endorsed by Customs at the place of export evidencing that the goods have actually been exported. The exporter will submit list of ARE.1 along with the date of export for the goods exported in each month, within six months of the removal from the warehouse and the original copies of the respective ARE.1 duly certified by Customs authorities that the goods have actually been exported [ Pass for Shipment Order]. The exporter shall be liable to pay duty with interest where such proof of export is not available with him within six months from the date of removal from the warehouse. 5.4 The Superintendent in-charge of the warehouse is empowered to issue certified attested copies of ARE.1 [more than one copies may be required by exporter as one application (ARE.1) may consist of goods of several ARE-3s] and hand over to the exporter for forwarding to the factory whose goods were exported so that such factories can avail other export benefits, such as refund of CENVAT credit accumulated on account of export in terms of the CENVAT Credit Rules, 2002. This refund will be given only after goods covered on an ARE-3 is entirely exported. In case of any diversion to home-consumption, refund will be reduced on pro-rata basis. For the sake of clarification, it is stated that the removal from the factory of production to export warehouse on ARE-3 is 'removal under bond for export'. Thus, the manufacturer shall not be asked to reverse CENVAT Credit @8% (now 10%) of price of the said goods. 5.5 On request from exporter, copies of proof of export may be sent directly, by post to the Range Office having jurisdiction over the factory or handed over to the exporter in sealed cover for delivery to such Range Office. 5.6 Photocopies of the Shipping Bill! Export Application and Bill of Lading duly attested by the Superintendent in-charge of the Warehouse along with certificate of proof of export should be accepted as valid documents for the purposes of refund of accumulated credit under the CENVAT Credit Rules, 2004 on account of exports without payment of duty. The proof of export received directly or in official sealed cover from the Superintendent in-charge of the warehouse may be used to verify the authenticity. 5.7. Where neither the duplicate copy of ARE.1 nor the original copy of ARE-1 duly attested at the port of export, are made available within the time stipu1ated period of six months, it shall be presumed that export of goods cleared from -as not taken place. The demand shall be raised by the Deputy/Assistant Commissioner having jurisdiction over the warehouse for non-f u1filment of the conditions of bond executed by the exporter. 5.8 Procedure for export directly from warehouse to Nepal when the transaction is in Indian rupees if the goods are cleared for export on payment of duty, same is allowed in respect of all countries subject to following the procedure laid down in the relevant notification. Further, the facility of clearances (for export) from export warehouse to Nepal on payment of duty is also available when the transaction is in Indian Rupees. Normally, such removals would be treated as domestic clearances and subject to payment of interest as per paragraph 10 of the said Circular No.581 / 18/2001-CX. However, since the goods are ultimately exported and. the rebate of duty is given to HMG Nepal, it has been decided to relax this condition and allow the exporter to clear the goods on payment of duty without interest. Accordingly, exports may be allowed directly from the export warehouses to Nepal on payment of duty even when the transactions are done in Indian Rupees and no interest is liable to be paid on the duty paid on such export transactions. 5.9 Direct export of goods after further processing by merchant exporters The denial of facility of clearance of goods directly from the premises of job worker in the case of merchant exporters increases the cost of transactions. In this connection, as in terms of rule 4 (6) of Cenvat Credit Rules, 2002, the clearance of finished goods for export directly from the job workers' premises has already been provided. The same facility can be extended to merchant exporters who procure goods for export from the export warehouse on the strength of CT-I certificate furnished by the exporter. Accordingly, goods can be cleared directly from the job workers' premises to export warehouses of merchant exporters for export subject to fulfillment of procedure prescribed by the Commissioner. (Circular No.676/67/2002-CX 25th November, 2002). 6. Diversion of goods for home-consumption 6.1 Goods can be diverted for home-consumption from the warehouse with the permission of the jurisdictional Deputy/Assistant Commissioner of Central Excise. The clearance shall be effected on invoice prepared under rule 8 on payment of duty, interest and any other charges on TR-6 Challans and after making necessary entries in the export warehouse register maintained by the exporter in the warehouse. Credit will be permitted in the Running Bond Account equivalent to the duty involved in the goods so diverted, which shall not exceed amount of duty debited on the basis of ARE-3 on which such goods were received in the warehouse. If entire quantity is not diverted, calculation shall be done on pro-rata basis. 6.2 Goods can be diverted for home-consumption even after the clearance from the warehouse on ARE.1. For cancellation of documents, provisions of Notification No. 46/2001-CE (NT) dated 26.6.2001 as amended vide Notification. No. 30/2003-CE (N.T.) dated 4.4.2003 shall be followed. The intimation shall be given to Deputy/Assistant Commissioner having jurisdiction over the warehouse. Credit in Running Bond Account will be permitted in the same manner as mentioned above. 6.3 Where the goods are diverted for home-consumption in full or in part the exporter shall be liable to pay interest © 24% per annum on the amount of duty payable on such goods from the date of clearance from the factory of production or any other premises approved, till the date of payment of duty and clearance. 7. Waiver of physical warehousing in case of exigency 7.1 The officer-in-charge of the warehouse may permit waiver from physical warehousing (i.e. permitting export without physically storing the goods in the warehouse) where exporter so requests in writing provided all the formalities relating to record-keeping shall be completed in usual manner with suitable record in the Warehousing Register: 'warehousing waived'. This permission will be given in exceptional cases where delay occurred due to delayed supply from the factory or longer transit-period or requirement of immediate export or any other genuine reasons, provided the entire consignment is entered for export in the original packing. Such cases of permission granted will be reported to Superintendent-in-charge of the warehouse at the earliest. 8. Providing of accommodation for the Officer 8.1 The exporter shall provide adequate office accommodation and furniture for the Officer deployed for examination and supervision, in the warehouse. Where the exporter is willing to bear the cost of the posting of Officers on "cost recovery basis", the Commissioner, depending upon the administrative feasibility, may consider the deployment.