Duty Free Shops Operation and Removal of Goods Procedure under
Special Warehouse Regulations 2016 Notified
[CBEC Circular No. 32 dated 13th
July 2016]
Subject: - Procedure regarding Duty
Free Shops.
Please refer to Notification No. 66/2016 –
Customs (N.T.) dated 14th May 2016, Special Warehouse Licensing Regulations,
2016, Special Warehouse (Custody & Handling of Goods) Regulations, 2016 and
Circular no. 20 / 2016 – Customs dated 20th May 2016.
2. It
may be noted that the Special Warehouse (Custody & Handling of Goods)
Regulations, 2016 prescribe maintenance of a computerized system for
accounting. Accordingly, a system of accounting of receipt, storage, operations
and removal of goods with regard to Duty Free Shops is prescribed below:
3. Maintenance
of records of warehoused goods only in digital form:
(a) Every
licensee shall maintain electronic records of receipt, handling, storage and
removal of the warehoused goods based upon data elements contained in Form A
appended to this circular. While the data elements contained in the Form are
mandatory, the licensee will be free to add or continue with any additional
data fields, as per their commercial requirements. It would be necessary for
the data to be maintained as per systems of “stock keeping unit” (SKU).
(b) All licensees are required to enter
data accurately and immediately upon the goods being deposited in or removed
from the warehouse. Such electronic records should be kept updated, accurate,
complete and shall be available at the warehouse at all times so as to be
accessible to the bond officer or any other authorised officer, for
verification.
(c) The
software for maintenance of electronic 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.
4. Filing
of returns in relation to warehoused goods:
(a) The
Regulations also prescribe that,-
(i) a
licensee shall file with the bond officer a monthly return of the receipt,
storage, operations and removal of goods in the warehouse, within ten days
after the close of the month to which such return relates.
(ii) where
the period specified in section 61 of the Customs Act, 1962 for warehousing of
goods is expiring in a particular month, the licensee shall furnish such
information to the bond officer on or before the 10th day of the month
immediately preceding the month in which the period of storage of goods in the
warehouse is expiring.
(b) The
monthly return, as per para 4 (a) (i), containing transactions undertaken
during the month, shall be filed by the licensee in Form A appended to this
circular. The Return may be filed as a paper copy or in digital form, as
preferred by the licensee (digital form means, such as, in a Pen drive or CD).
The Return need not include details of sales to individual international
passengers. These can be verified by the bond officer or any authorised
officer, from the digital records maintained by the licensee.
(c) The
monthly return to be filed by the licensee as per para 4 (a) (ii) shall be
filed in Form B appended to this circular. The Return shall be filed with the
Bond officer as a paper copy.
(d) The
Duty Free Shop Operator shall also maintain digital records of sales to
international passengers as per Form C. The digital file containing these details
shall be integrated with the records maintained for the warehoused goods, every
24 hours, and should be available for inspection as a part of the data
maintained as per Form A. However, filing of returns would not be required for
the record maintained as per Form C.
5. Acknowledgement
of the receipt of goods in the warehouse:
The Licensee shall follow the procedure
contained in Regulation 6 of the Special Warehouse (Custody & Handling of
Goods) Regulations 2016. Upon receipt of the goods in a warehouse, the licensee
shall, send an acknowledgement of such receipt, duly signed by the bond
officer, as follows:
(i) in
case where goods are received from a customs station, to the Assistant/Deputy
Commissioner in charge of the Bond section at the Customs station of import; or
(ii) in case where the goods are received from another warehouse, to the proper
officer of the warehouse from where the goods have been received.
6. Facilities:
In view of the requirement in the
regulations to retain photocopies of documents such as bills of entry,
transport documents and Form for transfer of goods from a warehouse, send
acknowledgement of receipt of goods in the warehouse etc., the licensee shall
maintain facilities such as computer, photocopier, scanner and printer at the warehouse.
7. Effective
Date:
The above requirement of maintaining
digital records, in the prescribed Forms, is applicable from the 14th May 2016.
Thus, the record of any goods received on or after 14th May 2016 shall be
maintained as per the prescribed Forms. However, during the consultations with
Duty Free Shop Operators, it was gathered that they are already maintaining
records in software based systems but due to the requirement of maintaining the
bond register, records are being reduced to manual form to comply with
prescribed columns. Now that a system of computerised record keeping has been
prescribed, the information regarding the stock of goods lying deposited in the
warehouse can be integrated into the digital record prescribed under this
circular. It is clarified that data relating to goods already removed from the
warehouse by 13th May 2016, are not required to be updated in the
digital records. However, the stocks lying for sale in the duty free shops
should be entered in the digital records since their duty liability is not
extinguished till their sale to international passengers. In so far as goods
deposited, removed and already sold through Duty Free Shops before 14th May
2016 are concerned, the information recorded in the extant bond register shall
suffice.
8. Procedure
for removal of goods from the warehouse and accounting thereof:
The Board has approved the following
procedure for accounting of the goods removed from a warehouse licensed under
section 58A of the Customs Act, 1962, without payment of duty:
a. Upon
removal of goods from the warehouse licensed under section 58A, the licensee
shall immediately record the same in the records;
b. The
removal of goods from the warehouse, without payment of duty, is subject to the
condition that the goods are removed to the customs area for sale to passengers
arriving into or departing from India.
c. The
records relating to removal of the goods to the duty free shops at the arrival
area and departure area shall be maintained separately.
d. The
bond officer shall escort the goods from the warehouse to the point of sale
(DFS) in the customs area, whereupon, their subsequent sales to passengers
arriving into or going abroad from India shall be under the general supervision
of the customs officers on duty at the passenger terminals.
e. Every
duty free shop shall record their sales to passengers by a computer generated
invoice, which shall contain the name of the passenger, flight number &
passport number. This data shall be stored digitally, in Form C.
f. The
records of the warehouse shall be updated every 24 hours with the data elements
contained in Form C.
9. Security
and Solvency Requirements:
The Board has dispensed with the
requirement of security to be furnished under section 59 of the Customs Act,
1962 by a DFS operator in respect of his imports (Circular No.21/2016-Customs
refers).
9.1 As
regards requirements of solvency, as provided under clause (b) of regulation 3
of the Special Warehouse Licensing Regulations 2016, the Board has decided that
the Licensee shall furnish a solvency certificate of a value equivalent to the
amount of duty involved on the goods proposed to be stored at any point of
time. In this connection, it may be noted that proviso to the aforesaid clause,
waives the requirements of a solvency certificate in respect of the PSU owned
duty free shops (for example, ITDC).
10. In-flight
duty free shop:
Requests have been received for clarifying
whether the existing business practice of inflight duty free sales can be
continued by Airlines.
10.1 The
removal of goods from the warehouse licensed under section 58A of the Customs
Act, 1962, without payment of duty, is subject to the condition that the goods
are removed to the customs area for sale to passengers arriving into or
departing from India. In other words, as long as the said goods are sold to
passengers arriving from abroad or going abroad, the mode of sale shall not
affect the due accounting of the goods removed from the warehouse.
10.2 Accordingly,
goods removed from a warehouse licensed under section 58A of the Customs Act,
1962 and loaded on a scheduled commercial airline for sale to passengers going
abroad, as inflight duty free shop sales, shall be permitted. In such a case,
the bond officer shall escort the goods up to the aircraft and shall take into
record the copy of the manifest, which must duly reflect the quantity of goods
loaded for in-flight duty free sales. Further, the licensee must have
accounting procedures, in conjunction with the Airlines, to record the inflight
sales with the name of the passenger, passport number and flight number. The
data relating to the inflight sales has to be provided by the Airlines to the
inflight duty free shop operator immediately upon return of the aircraft to
India. In turn, the operator shall update the electronic records to co-relate
with goods removed from the warehouse.
11. Recovery
of costs:
Clause (e) of Regulation 3 of the Special
Warehouse Regulations 2016 and circular no. 20/2016 – Customs dated 20th May
2016 provide that the Licensee of a special warehouse shall undertake to bear
costs of customs supervision on Merchant Over Time basis or on Cost Recovery.
Now, the Board has approved the following guidelines:
a. The
Licensee shall have to indicate the frequency with which the warehouse has to
be operated per day / per week and the expected business hours of such
operation.
b. The
Principal Commissioner / Commissioner shall evaluate the projected requirement
and the distance of the warehouse from the customs office to determine which of
the modes of recovery of costs needs to be applied.
c. Illustratively,
if the requirement of the licensee warrants the operation of the warehouse on a
frequency which is, say, once in a week, the cost of supervision shall be
charged on Merchant Over Time basis. Or, in cases, where the services of the
Customs officer are required once a day, cost of supervision could also be
based upon Merchant Over Time. However, if the warehouse is at such distance
from the nearest customs office or the nature and duration of work is such
that, the visit of the bond officer on every day basis, means his absence from
his office for an entire day or better part thereof, the licensee shall have to
undertake the services on cost recovery basis. Further, in cases where the
licensee requires services of a customs officer for more than once in a day, he
shall have to undertake supervision on cost recovery basis. Similarly, in case
where round the clock services are requested, the licensee will have to bear
charges on cost recovery basis for a suitable number of officers. Basically,
this issue has to be examined on the above lines for deciding the recovery of
costs from the licensee.
12. Administrative
arrangements:
For the purposes of uniformity of
jurisdiction and supervision, the Board has also approved the following:
a. The
duty free shops shall be under the general supervision of the Principal
Commissioner/ Commissioner of the Airport (Passenger Terminal).
b. A
warehouse licensed in the precincts of the Airport complex shall also be in the
jurisdiction of the Principal Commissioner / Commissioner of the Airport
(Passenger Terminal). Accordingly, he shall be the licensing authority.
c. A
warehouse licensed under section 58A, which is located outside the precincts of
the airport shall be under the Principal Commissioner / Commissioner having
jurisdiction over that site. Accordingly, he shall be the licensing authority
and also allot the Bond Officer(s) required.
d. Principal
Commissioners / Commissioners shall ensure a smooth transition to the above
system on or before 13th August 2016.
13. Difficulties,
if any, should be brought to the notice of the Board.
F. No: 473 / 05 / 2015 – LC