22 October 2018

In-bond manufacturing – CBIC consolidates forms and clarifies procedures

CBIC has updated procedure for seeking permission for in-bond manufacturing and for maintaining various records. An elaborate Circular No. 38/2018-Cus., dated 18-10-2018 issued for the purpose also prescribes various forms for this purpose and clarifies on duty liability on removal of processed goods from such warehouse.

Consolidation of forms

As part of ease of doing business and to avoid duplication in the process of approvals, the form for seeking permission for in-bond manufacture will also serve the purpose for seeking grant of license as a private bonded warehouse. The prescribed form of application has been so designed that the process for seeking grant of license as a private bonded warehouse as well as permission to carry out manufacturing or other operations stands integrated into a single form.

Further, a separate form to be maintained by a unit operating under section 65 for the receipt, processing and removal of goods, has been prescribed. The new form combines data elements required under Manufacture and Other Operations in Warehouse Regulations, 1966 and Warehouse (Custody and Handling of Goods) Regulations, 2016.

The circular also prescribes a triple duty bond for the warehoused goods which is required to be executed by the owner of the warehoused goods.

Duty liability on removal from warehouse

The circular clarifies that no duty is required to be paid in respect of the imported goods contained in the resultant product in case the resultant product manufactured or worked upon in a bonded warehouse is exported. However, a GST invoice shall be issued for such removal.

However, in case of clearance for domestic consumption, import duties are payable on the imported goods contained in so much of the resultant products. Same are to be paid at the time of supply of the resultant product from the warehouse for which the licensee have to file an ex-bond Bill of entry. Transaction will also be covered under the definition of ‘supply’ and consequently be liable to GST if the resultant product is cleared for domestic consumption.

For waste or refuse arising out of manufacture and other operations in relation to the resultant products cleared for home consumption, import duty on the quantity of the warehoused goods contained in such waste or refuse will be payable.

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