No Security for Govt Imports
· Insurance Cover for Transit Goods
· No Security for One Year in
Warehoused Goods, Liquor in Public Bonded Warehouse
· Security to be Furnished in Import
Port
· New Guidelines for Security of
Perishable Goods
·
Verification
of Security only in Exceptional Cases
[CBEC Circular No. 21 dated 31st
May 2016]
Sub: Security under section 59 (3)
of the Customs Act
Section 59 of the Customs Act, 1962 (as amended
by Finance Act 2016) requires an importer of goods filing a bill of entry for
warehousing to submit a Bond in a sum equal to thrice the amount of duty
assessed on the goods to be warehoused. The bond can be:
(a) for a single consignment; or
(b) a general bond to cover multiple imports by an importer
within a specified period.
The format of the bonds has been
prescribed under circular no. 18/2016 – Cus dated
14.5.2016.
2. Sub-section
(3) of section 59 prescribes that the importer, shall, in addition to the
execution of a bond, furnish a security. The Board has reviewed the extant
circulars regarding furnishing of security for transit as well as for storage
of goods in the warehouse. In supersession of earlier instructions, the Board
has approved the following:
3. Having
regard to certain categories of importers / industries with long gestation /
goods of strategic importance, the Board has decided that the requirement for
security under section 59 (3) shall be dispensed in the following cases:
(i) Imports by the Central Government, State
Government or a Union Territory administration or their undertakings;
(ii) Machinery,
equipment and raw-materials imported for manufacture and installation of power
generation units;
(iii) Project
imports;
(iv) Petroleum
products;
(v) Machinery,
equipment and raw materials imported for building and fitment to ships;
(vi) Goods
used in the units operating under manufacture-in-bond
scheme (section 65);
(vii) Goods
warehoused for supply to diplomats;
(viii) Goods
warehoused and sold through duty free shops;
(ix) Goods
warehoused for supply as ship stores / airlines stores;
3.1 Importers
under Accredited Clients Program or approved as Authorised Economic Operators
shall be required to provide security as per circulars issued in their regard.
4. In
all other cases, security shall be obtained as follows:
Security for transit
The importer shall obtain comprehensive
transit risk insurance policy to cover the transit of goods, equal in sum to
the duty involved on the goods, in favour of the President of India. Transit
will refer to movements from:
(i) the customs station
of import to the warehouse; or
(ii) a warehouse to another warehouse; or
(iii) a warehouse to a customs station for export.
However, in certain cases, such as, liquid
bulk cargo being transported through pipelines, the requirement of transit
insurance may be waived.
For storage
(a) Goods,
other than sensitive goods mentioned in para (b) below, permitted to be
warehoused, will be subject to the following requirement of security under
section 59 (3):
(i) for the initial
period of one year, there shall be no requirement of furnishing any security;
(ii) any
extension in warehousing period beyond one year will be subject to the importer
or owner furnishing a security by way of a bank guarantee for an amount
equivalent to 25% of the sum of duty plus interest accrued thereon during the
preceding period;
(iii) any
extension in warehousing period exceeding two years will be subject to the importer
or owner furnishing a security by way of a bank guarantee for an amount
equivalent to 50% of the sum of duty plus interest accrued thereon during the
preceding period;
(iv) any
extension in warehousing period exceeding three years will be subject to the
importer or owner furnishing a security by way of a bank guarantee for an
amount equivalent to the duty involved and interest accrued thereon during the
preceding period;
(b) For
the purposes of obtaining security to be furnished under section 59, the following
goods shall be regarded as sensitive:
(i) wines, spirits,
liquors, whiskeys, brandy, beer, other alcoholic beverages etc.; and
(ii) cigars, cigarettes & manufactured products of tobacco;
(c) Sensitive
goods to be warehoused in a public bonded warehouse will be subject to the
following requirement of security under section 59(3):
(i) for the initial
period of one year, there shall be no requirement of furnishing any security;
(ii) any
extension in warehousing period beyond one year will be subject to the importer
or owner furnishing asecurity by way of a bank
guarantee for an amount equivalent to 50% of the sum of duty plus interest
accrued thereon during the preceding period; and
(iii) any
extension in warehousing period beyond two years will be subject to the
importer or owner furnishing a security by way of a bank guarantee for an
amount equivalent to the duty involved and interest accrued thereon during the
preceding period;
(d) However,
if the sensitive goods are proposed to be stored in the importer’s private
bonded warehouse:
(i) the importer shall
furnish a security by way of a bank guarantee equivalent to the duty involved
at the customs station of import before removal of the goods from the customs
station of import. The importer shall therefore not require to furnish a
transit insurance policy since the transit will be covered under the bank
guarantee valid for transit and storage of the goods;
(ii) if any sensitive goods are proposed to be removed from a
public warehouse to an importer’s private bonded warehouse, the importer shall
furnish a security by way of a bank guarantee, as applicable, at the customs
station of import;
(iii) If
any extension in the period of warehousing is sought, the importer shall
furnish a security by way of a bank guarantee equivalent to the duty involved
and interest accrued thereon during the preceding period.
4. Nothing
contained in this circular shall apply to imports by 100% Export Oriented
Units, EHTP Units & STPI Units. Extant circulars / conditions mentioned in
the Foreign Trade Policy shall govern the same.
5. The
Board has further decided that henceforth the period of warehousing shall be
extended by the Principal Commissioner / Commissioner of Customs at the port of
import. Accordingly, 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 filed.
5.1 In
terms of the first proviso to clause (c) of subsection (1) of Section 61, the
Principal Commissioner or Commissioner of Customs, as the case may be, has been
empowered to extend the period of warehousing, beyond the initial period of one
year, for up to a year at a time. The second proviso provides that while
extending the period of warehousing he may consider curtailing such period
depending upon the likelihood of deterioration of the warehoused goods. In this
connection, it may be noted that in cases referred in para 4, a security has to
be obtained while granting extension. Alongside the security, a declaration
that the goods shall not deteriorate during the period of extension being
sought should also be obtained from the importer or owner.
5.2 However,
where the Principal Commissioner or Commissioner of Customs is of the opinion
that the goods are likely to deteriorate during the period for which extension
is being sought, he can seek a report from the bond officer or ask the importer
to produce from an expert in the particular field of relevance to the goods, a
report regarding the condition of goods. Before seeking such a report, the
Principal Commissioner or Commissioner of Customs may evaluate the following:
(i) the nature of goods;
(ii) their usual shelf life;
(iii) their manner of storage; and
(iv) the period for which the goods have already been warehoused.
5.3 In
view of the importer providing security and a declaration, such a verification
should be resorted to only in exceptional cases.
6. Difficulties,
if any, may be brought to the notice of the Board.
F. No. 484/03/2015 – LC (Vol II)