CBIC Releases Revised Procedure for Sec 65 Customs Bonded
Manufacture
·
Solvency
Certificate Continues as Key Document in Approval Process but Requirement can
be Waived in Deserving Cases
· Annex A - Application
for License for a special warehouse under section58A and permission for
manufacturing and other operations under section 65 of the Customs Act 1962
·
Annex
B – Form to be maintained by a special warehouse operating under section 65 of
the Customs Act for the receipt, processing and removal of goods
·
Annex
C – General Bond
[CBIC Circular No. 36 dated 17th August 2020]
Subject: Procedure to be followed
in cases of manufacturing or other operations undertaken in special warehouses
under section 65 of the Customs Act.
Manufacture
and Other Operations in Special Warehouse Regulations, 2020 (hereinafter
referred to as the MOOSWR, 2020) have been issued vide Notification No. 75/2020-Customs
(N.T.) dated 17th August, 2020. These regulations
allow manufacturing and other operations in a special warehouse licensed under
section 58A of the Customs Act, 1962, with regard to warehoused goods specified
in clause (1) of Notification No. 66/2016-Customs (N.T) dated 14th May,
2020 (herein after referred to as, “specified goods”).
2
MOOSWR, 2020 and this Circular cover the procedures and documentation for a section
58A warehouse, operating under Section 65 of the Act, in a comprehensive manner
including application for seeking permission under section 65, provision of
execution of the bond and security by the licensee, receipt, storage and
removal of goods, maintenance of accounts, conduct of audit etc.
3.
Further, the Special Warehouse (Custody and Handling of goods) Regulations,
2016, which were hitherto governing the procedure for custody and handling of
goods deposited in and removed from a Special Warehouse have been amended, vide
Notification No.77/2020-Customs (N.T) dated 17th August, 2020, to
exclude their application for such warehouses operating under section 65. The said
regulations will continue to be applicable for special warehouses, not
operating under Section 65.
4. An
applicant desirous of manufacturing or carrying out other operations on
specified goods in a bonded warehouse under section 65,
must have the premises licensed as a special warehouse under section 58A of the
Customs Act. The applicants can seek a license under section 58A and permission
to operate under section 65 synchronously, or request for permission under
section 65, if they already have a warehouse licensed under section 58A.
5. For
the sake of uniformity, ease of doing business and exercising due diligence in grant
of permission under section 65, the form of application to be
filed by an applicant before the jurisdictional Principal Commissioner /
Commissioner of Customs is prescribed as in Annexure A.
The form of application has been so designed that the
process for seeking grant of license as a Special Warehouse as well as permission
to carry out manufacturing or other operations stands integrated into a single
form. The declaration to be made to satisfy regulation
5 of Special Warehouse Licensing Regulations, 2016, and the undertaking to be made
by the applicant as per regulation 4 of MOOSWR, 2020, is included in the
application format (Part II). The warehouse in which section
65 permission is granted shall also be declared by the licensee as the
principal/additional place of business for the purposes of GST.
6. It
has also been decided that the licensees manufacturing or carrying out other operations
in a bonded warehouse shall be required to maintain records as per the form prescribed
under this circular (Annexure
B). Regulation 4 of the MOOSWR, 2020,
provides that the applicant under section 65 shall undertake to execute a bond
in such format as specified. Further, Section 59 of the Customs Act requires
the importer of the warehoused goods to furnish security and execute a triple
duty bond for the warehoused goods. Thus, the bond prescribed under this
Circular as per Annexure
C serves the requirements of both MOOSWR,
2020 and Section 59 of the Customs Act. Additionally, the licensee will furnish
security by way of a bank guarantee equivalent to the duty involved on the
warehoused goods.
7. To
the extent that the resultant product manufactured or worked upon in a bonded warehouse
is exported, the licensee shall have to file a
shipping bill and pay any amounts due. A GST invoice shall
also be issued for such removal. In such a case, no duty is required to be paid in respect of the imported goods
contained in the resultant product as per the provisions of section 69 of the
Act.
8. To
the extent that the resultant product (whether emerging out of manufacturing or
other operations in the warehouse) is cleared for domestic consumption, such a
transaction squarely falls within the ambit of “supply” under Section 7 of the
Central Goods and Service Tax Act, 2017 (hereinafter referred to as the “CGST
Act”). It would therefore be taxable in terms of section 9 of the CGST Act,
2017 or section 5 of the Integrated Goods and Services Tax Act, 2017 depending
upon the supply being intra-state or inter-state. The resultant product will thus be supplied from the warehouse to the domestic
tariff area under the cover of GST invoice on the payment of appropriate GST
and compensation cess, if any. As regards
import duties payable on the imported goods contained in so much of the
resultant products are concerned, same shall be paid at the time of supply of
the resultant product from the warehouse for which the licensee shall have to
file an ex-bond Bill of Entry and such transactions shall be duly reflected in
the accounts prescribed under Annexure B. As per MOOSWR, 2020, the
applicant shall also inform the input-output norms for raw materials and final
products and shall also inform the revised
input-output norms in case of change therein.
8.1
The proper officer should ensure that the goods so cleared are result of
manufacturing or other operations. In case the licensee is unable to carry out
any manufacturing or other operations on warehoused goods, then the goods may
be cleared as such, either for home consumption after the payment of applicable
import duties along with the interest accrued upon such goods in terms of
Section 61 (2) of the Customs Act, 1962 or may be exported. In such case the provisions of clause (b) of Section 61(1) shall not
be applicable.
9. The
waste generated during the course of manufacture or other operations of the resultant
product may be cleared for home consumption as per clause (b) to sub-section
(2) of section 65 of the Customs Act on payment of applicable duties of customs
and GST.
10.
Where the resultant product is exported, and duty on
the waste or refuse is paid as per proviso to clause (a) to sub-section (2) of
section 65, the same shall be deposited manually through a Challan. The records
maintained as per Annexure-B would be sufficient for accountal
of such goods.
11. As
per Regulation 3 (2) (e) (i) of the Special Warehouse
Licensing Regulations, 2016, the Principal Commissioner or Commissioner has to
be satisfied that the site or building of the proposed special warehouse is
suitable for secure storage of dutiable goods. Regulation 8 of MOOSWR 2020, requires the licensee to provide such facilities,
equipment and personnel as are sufficient to control access to the warehouse,
provide secure storage of the goods and ensure compliance to the regulations.
Considering the nature of goods to be warehoused in a special
warehouse, the Principal Commissioner or Commissioner has to ensure that the structure
is fully closed from all sides, gate(s) with access control and personnel to
safeguard the premises. It is also to be ensured that
there is/are CCTV cameras at the gate(s) and there is a provision of accessing
the same by customs officers. The Principal Commissioner/Commissioners should
take into consideration the facilities, equipment and personnel put in place
for secure storage of goods, while considering grant of license. Further,
office space for bond officer and sufficient space for customs officer for
carrying out examination at the time of arrival or removal of goods have to be provided.
12. As
per Regulation 4(2)(i) of
MOOWSR 2020, a licensee is required to maintain accounts of receipt and removal
of goods in digital form in such format as may be specified and furnish the
same to the bond officer on monthly basis digitally. This information shall be communicated from the registered email address of a
licensee to the designation based official email id accessed by the bond
officer. Appointment of any new warehouse keeper should also
be intimated along with the monthly returns. Jurisdictional Commissionerate should ensure that such emails are
functional and details of same are communicated at the
time of issuance of license and also published through public notice.
13. As
per Regulation 18(3), the records should be maintained electronically using software which has inter alia features of audit trail and
with each event being recorded with time stamp. The licensee is also required
to provide details of such software while applying in terms of MOOSWR 2020. At
the time of inspection, the proper officer should, through a demonstration,
check and ensure that the software meets the requirements of Regulation 18(3).
In case licensee wishes to use any other software after issuance of license,
bond officer should be informed in advance along with
similar demonstration. Proper officer should record the observations and
confirm that the new software meets the requirements of Regulation 18(3).
14.
Section 58A provides that the proper officer shall cause a warehouse licensed
under section 58A to be locked and no person shall
enter the warehouse except in his presence. It is clarified that this
requirement shall be applicable for the strong-room
where specified goods are warehoused, in terms of regulation 9 of MOOSWR, 2020.
This will not apply to the remaining licensed premises.
15.
The services of customs officer for supervising various activities prescribed
in the MOOSWR, 2020, shall be chargeable on cost recovery or overtime basis, in
terms of regulation 4(2)(vi). 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, requiring
supervision/presence of the bond officer in terms of MOOSWR, 2020.
15.1
The Principal Commissioner / Commissioner shall evaluate the projected
requirement and also consider the distance of the warehouse from the customs
office to determine which of the modes of recovery of costs needs to be applied
and the amount to be paid by the licensee.
16.
Clarification required, if any, may be sought from the
Board.
Annexure-
A
Application
for License for a special warehouse under section58A and permission for manufacturing
and other operations under section 65 of the Customs Act 1962.
Part I
(to be
filled by the applicant)
1.
Name of the Applicant:
2. PAN
No:
3.
GSTIN:
4.
IEC:
5.
Constitution of business (Tick as applicable and attach copy)
(i) Proprietorship
(ii)
Partnership
(iii)
Limited Liability Partnership
(iv) Registered Public Limited Company
(v)
Registered Private Limited Company
(vi)
Registered Trust
(vii)
Society/Cooperative society
(viii)
Others (please specify)
Note:
Copy of certificate of incorporation along with Memorandum of Objects and
Article of Association in case of companies and partnership deed in case of
partnership firms should be attached.
6.
Registered office:
Address:
Tel:
Fax:
E-mail:
7.
Bank Account details:
Name
of the Bank:
Branch
name:
Account
Number:
8.
Name, Address & DIN (if applicable):
[of Proprietor/Partners/Directors etc.
(Please
attach copies of ID proof)].
9.
Name & Designation of the Authorized Signatory:
(Please
attach copy of Aadhaar Card as proof of ID).
10.
Details of existing manufacturing facilities in India and/or Overseas of the
applicant firm and of each of its directors/partners/proprietor, as the case
may be (please attach separate sheet if required).
Part II
(to be
filled by the applicant)
1.
Address of the proposed site or building:
2.
Boundaries of the warehouse:
(i) North
(ii)
South
(iii)West
(iv)
East
3.
Details of property holding rights of the applicant (please provide supporting
document):
(i) Owner
(ii)
Lease/rent
4.
Contact details at the site/premises:
(i) Tel:
(ii)
Fax:
(iii)Email:
(iv)
Website, if any:
5.
Details of warehouse license issued earlier to the applicant, if any:
(i) Date of issue of license:
(ii) Commissionerate file No.:
(iii) Attach
copy of warehouse license.
6.
Whether the applicant is a Licensed Customs Broker? If yes, please provide details:
7.
Whether the applicant is AEO?
If yes, please provide details.
8. Description
of Premises (fill details as applicable to the premises):
(Please
enclose a ground plan of the site / premises indicating all points of
exit/entry/ area of storage / area of manufacturing / earmarked area of office)
(i) What is floor area?
(ii)
Number of stories?
(iii)
Total area (or cubic capacity) available for storage of
(a) specified goods, and
(b) other goods
(iv)
Identify and
mark area(s), occupied by third parties in the ground plan:
(v)
What is the type of construction of walls and roof?
(vi)
Which year has the
building been built? Has it been recently remodelled?
If so, when?
(vii)
Identify by location and size all accesses to the site / building to pedestrian
and vehicles:
(viii)
Identify by location and size all other accesses to the building including
doors & windows:
(ix)
Please indicate whether the premises have been authorized
for commercial use by local Government authorities?
9.
Goods proposed to be manufactured or other operations
proposed to be carried out (if necessary, additional sheets may be attached).
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Details
of goods: |
Description
of goods |
Classification
as per Customs Tariff |
Briefly
detail, input- out norms Please attach any supporting publication/ document,
if available. |
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proposed
to be imported |
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proposed
to be domestically procured |
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intermediate
product |
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final
product |
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details
of waste & scrap |
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In
case of any change in the nature of operations subsequent to the grant of
permission, the same shall be informed to the
Jurisdictional Commissioner of Customs within 15 days.
10.
SECURITY FACILITIES AT THE PREMISES, EXISTING OR PROPOSED:
(i) Burglar Alarm System:
(ii)
CCTV Facility:
a. Is there a CCTV monitoring system
installed to cover the surrounding area of the site and storage area?
b.
Please indicate the no. of cameras installed:
c. No.
of hours/days of recording accessible at any point of time:
(iii)
Security Personnel:
a.
Details of arrangements for round the clock security provided for the
warehouse:
b.
Name & details of firm contracted for security services:
c. No. of personnel to be deployed on
each shift for round the clock security:
(iv)
Fire Security:
(Please
enclose a fire safety audit certificate issued by a
qualified independent agency)
11. Software which will be used in terms of Regulation 18(3):
11.
DECLARATION:
I/
We declare that:
1.
I/We are a registered or incorporated entity in India.
2. I /
We have not been declared insolvent or bankrupt by a
court or tribunal.
3.
I/We have not been convicted for an offence under any
law.
4.
I/We have neither been penalized or convicted nor are being prosecuted for an offence
under the Customs Act, 1962 or Central Excise Act, 1944 or Finance Act, 1994 or
Central Goods and Services Tax Act, 2017 or Integrated Goods and Services Tax
Act,2017 or Goods and Services Tax (Compensation to States) Act, 2017.
5.
There is no bankruptcy or criminal proceedings pending against me / us.
6.
I/We hereby declare that the information given in this application form is
true, correct and complete in every respect and that I am
authorized to sign on behalf of the Licensee. I further undertake that
if any particulars declared by me/us are proved to be false,
the license granted to me/us shall be liable to be cancelled and I/we shall be
liable for action under Customs Act, 1962.
12.
UNDERTAKING.
I/We
undertake to:
(i) maintain accounts of receipt
and removal of goods in digital form in such format as may be specified and
furnish the same to the bond officer on monthly basis digitally;
(ii) provide facilities, equipment and personnel as required in
the Manufacture and Other Operations in Special Warehouse Regulations, 2020;
(iii) execute a bond in such format as may be specified.
(iv) Furnish a security in form of bank guarantee as may be
specified;
(v) inform the input-output norms, for raw materials and the
final products and to inform the revised input-output norms in case of change
therein;
(vi)
pay for the services of supervision of the warehouse by officers of customs on cost
recovery basis or overtime basis, as may be determined by the Principal Commissioner
of Customs or the Commissioner of Customs; and
(vii) comply with such terms & conditions as may be specified
by the Principal Commissioner of Customs or the Commissioner of Customs.
(Signature of the applicant/authorized
signatory)
Stamp
Date:
Place:
Part III
(For Use by Customs Only)
1.
Verification of the applicant:
[verification to be done of the Declaration made by applicant
as per serial no.11 of Part-II of the application. Verification to be done by DRI / DGGI.]
2.
Date of visit to the premises by the bond officer:
3.
Findings of the bond officer with respect to security, fire protection, IT
enabled inventory management system, type of construction, security and storage
space of the strong-room, area available for examination of goods, software
etc.
4. Is
the Premises recommended for issue of license as a warehouse along with
permission for manufacture or other operations?
Signature:
Name:
Designation:
Date:
Part IV
(For use by Customs Only)
1.
Upon the satisfaction of the Commissioner that the licence
may be granted, the following shall be obtained from
the applicant (Please refer Regulations 3 and 4 of Special Warehouse Licensing
Regulations, 2016):
(i) Solvency certificate, where applicable.
(ii)
Insurance Policy.
(iii)Undertaking
under section 73A.
(iv)
Indemnity
undertaking.
(v)
Bond as per Annexure C to this Circular.
(vi)
Details of Warehouse
keeper appointed by the Licensee:
(a)
Name
(b)
Address (residential)
(c)
Tele: (office)
(d)
Tele: (mobile)
(e)
E-mail id:
(vi)
Confirmation that
digital signature has been obtained by the warehouse keeper (as per guidance
available on ICEGATE website).
2. Licence No. and date of issue:
3.
Warehouse Registration Code on ICEGATE (refer Circular 19/2016 dated 20th May 2016):
Signature:
Name:
Designation:
Date:
Part V
(For
use by Customs only)
(Details
of commencement of manufacture or other operations in the Warehouse)
1.
Date of verification visit to certify commencement of manufacture or other
operations in the Warehouse:
2.
Name of the officials who visited the premises:
3.
VERIFICATION REPORT:
(i) I have verified that the unit has commenced manufacture
or other operations.
(ii) I
have verified that records are being maintained by the licensee as prescribed
under Annexure B of Circular 36/2020-Customs dated 17th
August, 2020.
Signature:
Name:
Designation:
Date:
Annexure-B
Form to be
maintained by a special warehouse operating under section 65 of the
Customs Act for the receipt, processing and removal of goods.
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Name
and address of the Unit: |
IEC: |
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GSTIN: |
Commissionerate: |
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RECEIPTS (IMPORTS) |
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Bill of Entry No. and date |
Customs Station of import |
Details of Bond |
Details of insurance |
Details of security |
Description of goods |
Invoice No. and date |
Quantity with UQC |
Assessable Value |
Duty assessed |
Registration No. of means of transport |
Onetime – Lock no. |
Date and time of receipt at the warehouse |
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BCD |
IGST |
Comp. cess |
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1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11 |
12 |
13 |
14 |
15 |
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RECEIPTS (DTA) |
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GST Invoice No. and date |
Description of goods |
Quantity with UQC |
Value |
Tax paid |
E-way bill number (if applicable) |
Date and time of receipt at the warehouse |
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GST |
Comp. cess |
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16 |
17 |
18 |
19 |
20 |
21 |
22 |
23 |
GOODS
ISSUED FOR MANUFACTURING OR OTHER OPERATIONS FROM STRONG ROOM (to other
location within the warehouse)
|
Date
and time of issue |
Description
of goods |
Quantity
with UQC |
Value |
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24 |
25 |
26 |
27 |
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RESULTANT PRODUCTS (CLEARANCE
FOR EXPORT) |
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Resultant products exported |
Quantity of warehoused goods contained in so much
of the resultant products exported |
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Date
and time of removal |
Shipping
Bill No. and date |
GST Invoice
No. and date |
Description
of goods |
Quantity
with UQC |
Assessable
Value |
Export
duty |
Tax
paid (if applicable) |
Description
of goods |
Quantity
with UQC |
Assessable
Value |
Duty
involved |
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IGST |
Comp.
cess |
BCD |
IGST |
Comp.
cess |
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28 |
29 |
30 |
31 |
32 |
33 |
34 |
35 |
36 |
37 |
38 |
39 |
40 |
41 |
42 |
|
RESULTANT
PRODUCTS (CLEARANCE FOR HOME CONSUMPTION) |
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Resultant
products cleared for home consumption |
Warehoused
goods contained in so much of the resultant products cleared for home
consumption |
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Date
and time of removal |
GST
Invoice No. and date |
Description
of goods |
Quantity
with UQC |
Value |
Tax paid |
Bill
of Entry No. and date |
Description
of goods |
Quantity
with UQC |
Assessable
Value |
Duty
paid |
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IGST |
Comp.
cess |
BCD |
IGST |
Comp.
cess |
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43 |
44 |
45 |
46 |
47 |
48 |
49 |
50 |
51 |
52 |
53 |
54 |
55 |
56 |
INVENTORY
OF SPECIFIED GOODS IN STRONG ROOM
|
S.No |
Description of specified goods |
Classification (CTSH) |
UQC |
Date of deposit/removal |
Opening Balance |
Quantity deposited in Strong Room |
Quantity removal from Strong Room |
Closing Balance |
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|
Import |
Transfer
from another warehouse |
Removed
for manufacturing/ processing |
Removed
as such for export |
Removed
as such for home consumption |
Removal
as such to another warehouse |
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