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04 October 2019

Manufacture and other operations in warehouse under Customs s.65 clarified

CBIC has issued Circular No. 34/2019-Cus. and the Manufacture and Other Operations in Warehouse (No. 2) Regulations, 2019 to cover the procedures and documentation for units operating under Section 65 of the Customs Act, 1962 in a comprehensive manner, including application for seeking permission under Section 65, provision of execution of the bond by the licensee, receipt, storage and removal of goods, maintenance of accounts, conduct of audit etc.

Consequently, the Warehouse (Custody and Handling of Goods) Regulations, 2016 and Warehoused Goods (Removal) Regulations, 2016 have been amended by notifications dated 1-10-2019 to exclude their application for warehouses operating under Section 65.

While the form for application under Section 65 is prescribed in Annexure A of the Circular, licensees manufacturing or carrying out other operations in a bonded warehouse shall be required to maintain records as per form prescribed in Annexure B. The application form is 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.

The Circular issued on 1-10-2019 also clarifies that imported goods that are exempt from duty or are chargeable to nil rate of duty, may be brought into the warehouse, upon filing a bill of entry for home consumption and clearance, at the customs station of import. The Circular also talks about payment of GST on clearance of resultant product for domestic consumption and non-availability of any exemption in respect of domestic procurement just by virtue of working under Section 65.

To facilitate timely clearances for continuous nature of operations in warehouse, it is provided that while the licensee shall file the due documentation and pay duties due and prior permission of proper officer is not an essential condition for the removal of warehoused goods.