Contents -
  1. Introduction, Meaning and Needs of Warehouse.
  2. Licensing of Private Warehouse and Differences between Public and Private Warehouse.
  3. Warehouse Bond.
  4. Deposit of goods, Period for Goods and Control over Goods.
  5. Payment of Rent and Charges and Owner's Right.
  6. Manufacture and other Operation to Goods.
  7. Exemption of Duty and Removal of Goods from one Warehouse to other Warehouse.
  8. Clearance of Goods for home Consumption and Export of Goods.
  9. Remission of Duty, Removal of goods and Improper Removal.
  10. Cancellation of Bond.
Question : What the meaning of Warehouse ? Discuss the provisions for warehouse under Custom Act.

Introduction -

Importer can store the imported goods in a warehouse without payment of duty under a bond and then clear from warehouse when required on payment of duty. This facility is available to traders as well as to direct importers. Warehousing covered under the Customs Act 1962, basic provisions covered between Section 57 to 73

Meaning of Warehouse -

Section 2(43) of Customs Act, 1962 defined that a public warehouse appointed under section 57 or a private warehouse licensed under section 58. With the explanation of section 2(43), it is clear that there are two type of warehouse i.e. Public Warehouse and Private Warehouse. The section 57 and section 58 are as below.

Needs for Warehousing -
  1. Goods might not be immediately required
  2. Market price fluctuations
  3. Salability issues
  4. Not required in production
  5. Paucity of funds
  6. Goods for supply to EOU/EHTP/STP/SEZ also allowed to be warehoused
  7. Goods for sale in Duty Free shops
Appointment of Public Warehouse : Under Section 57 of the Act :

The Assistant Commissioner of Custom or Deputy Commissioner of Customs may licence the private warehouse for the dutiable goods imported to be deposited if in the respect of goods, the facilities for deposit in public warehouse are not available.
Public warehouses are managed by warehousing corporation. At any warehousing station declared by the CBEC under section 9, the Assistant or Deputy Commissioner of customs may appoint a public warehouse where in dutiable goods may be deposited. 

Licensing of Private Warehouses : Under Section 58 of the Act :

The Assistant Commissioner or Deputy Commissioner of customs may cancel licence already granted if,
1. By giving one month notice in writing to the licensee,
2. If the licensee has contravened any provision of this Act or rule or regulations or committed breach of any of the condition of the licence. The licensee shall be given a reasonable opportunity of being heard.

Difference between Public Warehouse and Private Warehouse -
  1. The board can declare places as Warehousing Stations, but via notification 34/94-Cus.(NT), dated 1/7/1994, powers have been passed to the Chief Commissioner (Commissioner for EOUs).
  2. Only a warehousing station can contain warehouses which can be Public or Private warehouses.
  3. EOU/EHTP/STP etc. are also custom bonded warehouses.

Public Warehouse

Private Warehouse

Managed by the warehousing corporation

Owned by the owner of goods

Appointed by the department

Licensed by the department

No question of cancellation of license

License can be cancelled for violation of warehousing provisions

Goods of any person can be deposited

Owners goods only to be deposited

Warehouse Bond : Under Section 59 :

The importer of any goods which have been entered for warehousing and assessed to duty shall execute a bond binding him in a sum equal to twice the amount of the duty assessed on such goods to observe all the provisions of this Act and Rules and Regulation in respect of such goods.
A bond executed by the importer shall be continue in force unless the transfer of goods to any other person or the removal of the goods to another warehouse.
To pay on or before a date specified in a notice of demand rent and charges claimable on account of such goods with interest not below 10% and not exceeding 36% per annum as is for the time being fixed by the Central Government.(Present rate 13% p.a.) to discharge or penalties incurred for violation of the provision of this act.

1. Into-bond B/E is assessed for Duty (u/s 17 & 18) and importer agrees to (2 x assessed duty) amount bond to.
a) Observe provisions of this Act and goods related rules and regulations.
b) Pay before specified due date.
Duty and interest u/s 61(2).
Rent and charges, along with interest.
c) Discharge all penalties incurred for violation of this Act and goods related rules and regulations.

2. AC/DC may allow a general bond (for purpose of warehousing) for goods imported within specified period.

Deposit of Goods : Section 60 :

When the provisions of the above mentioned section 59 have been complied with in respect of any deposit of goods, the proper officer may make an order permitted the deposit of the goods in a warehouse.

Permission for Deposit of Goods in Warehouse :
1. Proper officer may make order to permit deposit of goods in a warehouse after,
a) After assessment of into-bond bill of entry
b) And execution of bond by importer
c) AC/DC is the proper officer
2. Goods stored in warehouse only after due examination
a) Veracity of description and
b) Identification marks must be conformed

Period for which Goods may remain Warehouse : Section 61 :

Capital goods for use in 100% export oriented undertaking

Till the expiry of 5 years

Goods other than capital goods for use in 100% export oriented undertaking

Till the expiry of 3 years

In other goods

Till the expiry of 1 years

When the licence for any private warehouse is cancelled the owner of the goods warehouse there in shall within 7 days from the date of which notice of such cancelled is given, move from such warehouse to another warehouse or clear them for home consumption or exportation.
List of perishable goods has been issued vide Ahmedabad Commissionerate TN 5/96 DT 7/2/1996(1996) 82 ELT T134. normal warehousing period for these goods will be 45 days.

Control over Warehoused Goods : Section 62 :

The proper officer shall have access to every part of a warehouse and power to examine the goods there in.
All warehoused goods shall be controlled by the proper officer. No person shall remove the warehoused goods without the permission of the officer. The officer may lock the warehouse with the lock of the Custom Department and no person shall remove the lock or break the lock.
  1. All warehoused goods subject to control of Proper Officer (Superintendent / Appraiser).
  2. Without proper officer’s permission, no one can enter a warehouse or remove any goods.
  3. Proper officer can cause warehoused goods to be kept in Customs lock, which no one shall remove.
  4. Proper officer has access to every part of a warehouse and power to examine goods kept.
Payment of Rent and Warehousing Charges : Section 63 :

The owner of any warehoused goods shall pay to the warehouse keeper rent and warehouse charges at the fixed rates under and law or where there are no rates fixed then the rates may be fixed by the Commissioner of Customs.
1. Rent and warehouse charges to be paid to warehouse-keeper by the Owner.
2. If not paid within ten days from due date, the warehouse-keeper may, after notice to owner and with the permission of the proper officer (AC/DC) cause to be sold such sufficient portion of the goods as the warehouse-keeper may select.

Owner's Right to deal with Warehouse Goods : Section 64 :

The owner of any goods may with the sanction of the proper officer.
1. Separate damaged or deteriorated goods from the rest.
2. Sort the goods or change their containers in such manner to prevent.
3. Inspect the goods.
4. Take sample of goods without entry for home consumption and if the proper officer so permits without payment of duty on such samples.
5. Sale export or disposal goods.

Manufacture and other operation in relation to Warehouse Goods : Section 65 :

With the sanction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs and on payment of such fees prescribed, the owner of any warehoused goods may carry on any manufacturing process or other operations in the warehouse in relation to such goods.

1. For manufacturing in bond (including EOU, EHTP, STP etc.) and Import for repairs, reconditioning etc. and re-exporting the same.

2. Manufacture and Other Operations in Warehouse Regulations, 1966.

3. Owner of warehoused goods to apply to AC/DC to provide information on manufacturing operations.
a) Nature of operations.
b) Particulars of imported and other goods required.
c) Detailed plan & description of the warehouse.
d) Data regarding volume of trade expected of the manufacturing process/ other operations.

Exemption of Duty on Imported Materials used Manufacture : Section 66 :

If the imported goods are used in accordance with provision of Section 65, for the manufacture of any goods and the rate of duty leviable on the imported goods exceeds the rate of duty leviable on such goods, The Central Government in the interest of establishment or development of any industry exempt the imported material from the whole or part of excess rate of duty by notification in official gazette.

Removal of Goods from one Warehouse to Another : Section 67 :

The owner of any warehoused goods may, with the permission of the proper officer remove them from one warehouse to another warehouse subject to the condition as may be prescribed for the due arrival of the warehouse goods to which removal is permitted.

Clearance of Warehoused Goods for Home Consumption : Section 68 :

The importance of warehoused goods may clear them for home consumption which the removal is permitted.

1. Proper officer (superintendent/appraiser) to allow clearance after,
a) Ex-bond B/E for home consumption filed
b) import duty and all penalties, rent, interest and other charges paid

2. Both in-bond and ex-bond B/E particulars should be tallied.

3. If the owner relinquishes the title of goods before clearance for home consumption, only duty payment is exempted (not rent, interest, other charges and penalties).

4. Procedure as per Circular 473/291/88-Cus dt 3/10/1988.
a) Countersign of AC/DC required in,
i)\B/E covering products noticed for the first time
iii) Re-assessment done by superintendent
iii) Value of goods exceed Rs. 1 lakh
e) All B/E to be sent for post audit after clearance

Export of Warehoused Goods : Section 69 :

1. If there is likelihood of the exported goods being smuggled back into India, the Government may direct by a notification that such goods are not exported or allowed to be exported under such restrictions and conditions as specified in the notification.

2. The warehoused goods may be exported without payment of duty, to a place outside India on,
a) On the order of clearance for such goods given by the proper officer.
b) On payment of export duty / penalties / interest / rent etc.
c) Presentation of a shipping bill / bill of export in the prescribed form.

Volatile Goods Remission of Duty : Section 70 :

The Central Government having regard to the volatility of the goods and the manner of their storage may, by notification specify the percentage of such loss which could be admitted.
When any warehoused goods are at the time of delivery from the warehouse found to be deficient in quantity on account of natural loss, the Assistant Commissioner/Deputy Commissioner of Customs may remit the duty on such deficiency.

A. When warehoused goods on delivery found,
1. Deficient in quantity due to natural loss
2. AC/DC may remit duty on deficiency

B. Notification 122-Cus dt. 11/5/1963,
1. Specifies the volatile goods
2. Aviation fuel, Motor spirit
3. Mineral turpentine
4. Acetone , Methanol, Naptha
5. Vaporizing Oil, Kerosene, HSD
6. Batching Oil, diesel oil, furnace oil
7. Ethylene dichloride in tanks
8. Liquid helium gas in containers
9. Wine, spirit and beer in casks

Removal of Goods : Section 71 :

No goods can be removed from warehouse except :
1. For home consumption on payment of duty.
2. To another warehouse under bond without payment of duty.
3. Otherwise provided by this act.
4. For re-exportation.

Improper Removal : Section 72 :

If the goods are :
1. Removed as sample without payment of duty.
2. Not accounted properly.
3. Not removed even beyond the period of warehousing period.
4. Removed in the contravention of section 71.

Cancellation of Bond : Section 73 :

When the whole of goods covered under the bond Section 59, have been cleared for home consumption or exported or otherwise accounted for and after all the dues have been discharged in full the bond may be cancelled and delivered to the owner of his request.
Proper officer can cancel the bond if,
1. All amounts due on such goods have been paid
2. Proper officer in this case shall be : Deputy Commissioner or Assistant Commissioner of Customs and Central Excise