What is a CUSTOMS NOTIFIED BONDED warehouse? What are the licensing requirements/procedures to start one?

An image of Customs bonded warehouse.

Bonded Cargo for which the duty is to be paid.

Today, I shall be tutoring you about the types of CUSTOMS NOTIFIED BONDED WAREHOUSES under different sections of the Customs Act 1962 as per New & Amended Warehousing Provisions, 2016.

After the landing of import goods inside the Indian territory and the importer faces paucity of funds to pay import duty, to do ease of business for you-like Importers, Government of India has given provisions to store entire customs dutiable cargo at Customs Bonded Warehouses under Customs Act 1962. For this, the importer shall execute customs bond thrice the duty amount and store their import value-assessed goods in the Customs notified Public Bonded Warehouses of your choice and pay rent as per warehouse tariff. Main advantage of the Customs Bonded warehouse is, here you can take part clearance of part goods by paying requisite customs duty for the part cargo.

1. Licensing of Public Bonded warehouse - section 57 of Customs Act 1962:

• This license is issued by the Principal Commissioner of Customs or Commissioner of Customs.
• The applicant should be an Indian citizen.
• The applicant to submit an undertaking to comply with such terms and conditions as may be specified by The Principal Commissioner or Commissioner of Customs.
• The applicant should submit a solvency certificate from a scheduled bank for Rs.2Cr.
• The applicant to provide an all-risk insurance policy.
• The applicant to provide an undertaking to pay any duties, interest, fine and penalties payable in respect of warehoused goods under sub-section (3) of section73A of CA 1962
• The applicant to indemnify the Principal Commissioner of Customs or Commissioner of Customs from any liability arising on account of loss suffered to warehoused goods due to theft, accident, damage, deterioration, destruction while under customs bond.
• This license shall remain valid until or unless it is cancelled in terms of section 58B.

Salient features of the proposed warehouse to operate Public Bonded Warehouse:

There should be good access for road connectivity to the warehouse.
The warehouse to be housed within a 14feet compounded wall with barbed wire on top.
The warehouse should have sufficient number of flood lights to be ON during night.
The warehouse should 5 feet high above the ground level.
There should not be HT electric wire running above warehouse space.
There should be separate wash rooms for custom officers, staff and workers.
The warehouse should have security point at warehouse the entry gate.
There should be sufficient open space to position and place the trailer-laden containers at the ramp point and for loading onto the lorries as well.
The warehouse compound entry gate should be preferably 24 feet wide with steel gates.
The warehouse main shutter with ramp facility should be 14-16 ft wide and 18-20ft high.
The warehouse should have sufficient grilled ventilators, rooftop exhaust fans with sunlight transparent roof sheets.
There should CCTV cameras fitted on all entry and exit points of warehouse shutters besides main compound entry gate.
The warehouse should be installed with hydrant pipes and equipped with foam and dry fire extinguishers to put out the fire.
A separate office room to be available for documenting the IN and OUT of the bond cargo movements.

2. Licensing of Private Bonded warehouse: Section 58 of Customs Act 1962:

This license is issued by the Principal Commissioner of Customs or Commissioner of Customs.
The applicant should be an Indian citizen.
The applicant to submit an undertaking to comply with such terms and conditions as may be specified by The Principal Commissioner or Commissioner of Customs.
The applicant furnishes a solvency certificate from a scheduled bank for an amount to be specified by the Principal Commissioner of Customs or Commissioner of Customs.
The applicant to provide an all-risk insurance policy.
The applicant to provide an undertaking to pay any duties, interest, fine and penalties payable in respect of warehoused goods under sub-section (3) of section73A of CA 1962
The applicant to indemnify the Principal Commissioner of Customs or Commissioner of Customs from any liability arising on account of loss suffered to warehoused goods due to theft, accident, damage, deterioration, destruction while under customs bond.
This license shall remain valid until or unless it is cancelled in terms of section 58B.

Note : Mostly manufacturers apply for Private Bonded warehouse license to store critical dutiable stock in their factory itself and operate under the supervision of Custom Officials. This type of warehouses reduce the transportation time (from port/public bonded warehouses) and supply the critical materials to their factory immediately by paying the customs duty.

3. Licensing of Special Bonded warehouse: Section 58A of Customs Act 1962:

This license is issued by the Principal Commissioner of Customs or commissioner of Customs.
The applicant should be an Indian citizen.
The applicant to submit an undertaking to comply with such terms and conditions as may be specified by The Principal Commissioner or Commissioner of Customs.
The applicant furnishes a solvency certificate from a scheduled bank for an amount to be specified by the Principal Commissioner of Customs or Commissioner of Customs.
The applicant to provide an all-risk insurance policy.
The applicant to provide an undertaking to pay any duties, interest, fine and penalties payable in respect of warehoused goods under sub-section (3) of section73A of CA 1962
The applicant to indemnify the Principal Commissioner of Customs or Commissioner of Customs from any liability arising on account of loss suffered to warehoused goods due to theft, accident, damage, deterioration, destruction while under customs bond.
This license shall remain valid until or unless it is cancelled in terms of section 58B

Note: Following class of goods shall be deposited in a special warehouse:-

Gold, Silver, other precious metals and semi-precious metals and articles thereof;
Goods warehoused for the purpose of –
Supply to duty-free shops in a customs area;
Supply as stores to vessels or aircrafts under Chapter XI of the Customs Act, 1962.
Supply to foreign privileged persons in terms of the Foreign Privileged Persons (Regulation of Customs Privileges) Rules, 1957.