Circular No. 38/2018-Customs
F. No: 484/03/2015-LC
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes & Customs
************
Room No. 49, North Block,
New Delhi, Dated the 18th October 2018
To,
All Principal Chief Commissioners/Chief Commissioners
All Principal Commissioners/Commissioner of Customs
Subject: Procedure to be followed in cases of manufacturing or other operations
undertaken in bonded warehouses under section 65 of the Customs Act-reg.
Madam/Sir,
Section 65 of the Customs Act, 1962 (hereinafter referred to as, "the Customs Act")
provides for manufacturing as well as carrying out other operations in a bonded warehouse.
2. Under section 65, the Board has prescribed "Manufacture and Other Operations in
Warehouse Regulations, 1966" (MOOWR, 1966). These regulations provide for an application
seeking permission under section 65, conditions of the bond to be executed by the licensee,
maintenance of accounts, conduct of special audit and cancellation / suspension of permission
etc.
3. While Regulation (3) provides for the data elements to be obtained from the applicant
seeking permission "to undertake any manufacturing process or other operations", no form has
been prescribed. 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.
3.1 It is to be noted that an applicant desirous of manufacturing or carrying out other
operations in a bonded warehouse under section 65 read with MOOWR, 1966 must also have the
premises licensed as a private bonded warehouse under section 58 of the Customs Act. As part of
ease of doing business and in order to avoid duplication in the process of approvals, the form of
application (Annexure A) 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. 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.
4. Post the Finance Act, 2016 effecting amendments to Chapter IX of the Customs Act,
1962, the Warehouse (Custody and Handling of Goods) Regulations, 2016 were notified on 14 th
May 2016 and Circular No. 25/2016-Cus dated 8th June 2016 was issued, which collectively
enjoins that licensees shall maintain accounts of receipt and removal in prescribed formats in
digital form and furnish the same to the bond officer on monthly basis digitally. Therefore, a
licensee carrying out manufacturing or other operations in a bonded warehouse under section 65
becomes obligated to maintain accounts as per MOOWR, 1966 and at the same time also
maintain records as private bonded warehouse. For the ease of doing business, it has been
decided that a licensee operating under section 65, shall not be required to maintain two sets of
records. Henceforth, 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), which combines data elements required under MOOWR, 1966 and Warehouse
(Custody and Handling of Goods) Regulations, 2016. Sub-section (2) of Section 59 of the
Customs Act requires the owner of the warehoused goods to execute a triple duty bond for the
warehoused goods. Such bond shall be executed in the form prescribed under this Circular as
per Annexure C.
5. 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 follow the procedure
prescribed under the Warehoused Goods (Removal) Regulations 2016 for transport of goods
from the warehouse to the customs station of export. 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 Customs Act.
6. 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 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.
7. 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 shall be paid as per clause (b) to sub-section (2) of
section 65.
8. For waste or refuse arising out of manufacture and other operations in relation to the
resultant products cleared for export, where import 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.
9. It may be noted that units operating under section 65 read with section 58 of the Customs
Act, are entitled to import capital goods, machinery, inputs etc. by following the provisions
under Ch IX. In so far as domestic procurement is concerned, applicable rates of taxes shall be
payable and exemptions, if any, can also be availed. By virtue of simply being a unit operating
under section 65, they shall not be entitled to procure goods domestically, without payment of
taxes. The records in respect of such domestically procured goods shall be indicated in the form
for accounts (Annexure B).
9. Since the warehouse operating under section 65 also functions as a warehouse licensed
under section 58, the licensees can import goods and clear them as such, under section 68 or
section 69 of the Act, on payment of import duties, along with interest as per sub-section (2) of
section 61 of the Act. The licensees shall also be required to maintain to submit monthly returns
in "Form B" as prescribed under Circular No. 25/2016-Cus dated 8th June 2016 for such
purposes.
10. Clarification required, if any, may be sought from the Board
11. Hindi version follows.
(Temsunaro Jamir)
Joint Commissioner (ICD)
Annexure- A
Application for License for a private bonded warehouse under section 58 and permission for
manufacturing and other operations under section 65 of the Customs Act 1962.
Part I
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
1. Address of the proposed site or building:
2. Boundaries of the warehouse:
(a) North
(b) South
(c) West
(d) 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:
Tel:
Fax
email
Website, if any
5. Details of warehouse license issued earlier to the applicant, if any:
(i) Date of issue of licence.
(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:
(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?
(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 remodeled? 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)
FINAL PRODUCT
Description of resultant goods out of Classification as Customs Tariff
manufacture or other operations
INTERMEDIATE PRODUCT
Description of goods Classification as Customs Tariff
GOODS PROPOSED TO BE IMPORTED
Description of goods Classification as Customs Tariff
GOODS PROPOSED TO BE DOMESTICALLY PROCURED
Description of goods HSN Classification
DETAILS OF WASTE & SCRAP
Description Classification as Briefly detail, input- out ratio and attach any
Customs Tariff supporting publication /document, if available.
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. DECLARATION:
We are a registered or incorporated entity in India.
1. I/We undertake to comply with such terms & conditions as may be specified by the
Principal Commissioner of Customs or the Commissioner of Customs.
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. 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 licence granted to me/us shall be liable to be cancelled and I/we shall be
liable for action under Customs Act, 1962.
(Signature of the applicant/authorized signatory)
Stamp
Date:
Place:
Part III
(For Use by Customs Only)
1. Verification of the applicant:
[Result of reference made for verification of Declaration at serial no. 11 of Part -1I of the
application) (verification to be conducted from DRI / DGGI; grant of licence may not be held
up pending verification)]
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, area available for examination of goods, if
required etc.
4. Is the Premises recommended for issue of license as a warehouse / permission to manufacture
or other operation under Bond?
Signature:
Name:
Designation:
Date:
Part IV
(For use by Customs Only)
1. Details of Warehouse keeper appointed by the Licensee:
(i) Name:
(ii) Address (residential)
(iii) Tele: (office)
(iv) Tele: (mobile)
(v) E-mail id:
2. Whether digital signature has been obtained by the warehouse keeper (as per guidance
available on ICEGATE website)?
3. Has the IT based record keeping requirement been fulfilled by the Licensee?
4. Details as per regulation 4 of Private Warehouse Licensing Regulations, 2016:
(i) Insurance Policy
(ii) Undertaking under section 73A
(iii)Indemnity undertaking
5. Whether specimen seal, signature, and contact details of the authorized signatories have been
submitted?
6. Licence No.:
7. Warehouse Registration Code on ICEGATE:
8. Date of operationalization of the warehouse:
Signature:
Name:
Designation:
Date:
Part V
(For use by Customs only)
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 38 /2018-Customs dated 18.10.2018
Signature:
Name:
Designation:
Date:
Annexure-B
Form to be maintained by a unit operating under section 65 of the Customs Act for the receipt, processing and removal of goods.
Name and address of the Unit: IEC:
GSTIN: Commissionerate:
RECEIPTS (IMPORTS)
Bill of Customs Duty assessed One-time Date and time of
Details of Details of Description of Invoice No. Quantity Assessable Registration No. of
Entry No. Station of Comp. Lock receipt at the
Bond insurance goods and date with UQC Value BCD IGST means of transport
and date import cess no. warehouse
1 2 3 4 5 6 7 8 9 10 11 12 13 14
RECEIPTS (DTA)
Tax paid
Quantity
GST Invoice No. Date and time of receipt at the
Description of goods with Value E-way bill number (if applicable)
and date GST Comp. warehouse
UQC
cess
15 16 17 18 19 20 21 22
PROCESSING
Goods issued for manufacturing or other Returns to unit after job - work
Removal for job-work
operations
Details of Job worker
Date and Quantity Delivery Date and
Date of Description of Quantity Description of GSTIN Description of Quantity value
Value time of with Value Challan Name & time of Delivery
issue goods with UQC goods (if goods with UQC
removal UQC No. address return Challan No.
applicable)
23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
RESULTANT PRODUCTS ( CLEARANCE FOR EXPORT )
Quantity of warehoused goods contained in so much of the resultant products
Resultant products exported exported
GST Tax paid (if
Duty involved
Date and time Shipping Bill Invoice No. Description of Quantity Assessable Export applicable) Description of Quantity Assessable
of removal No. and date and date goods with UQC Value duty Comp. goods with UQC Value
IGST BCD IGST Comp. cess
cess
39 40 41 42 43 44 45 46 47 48 49 50 51 52 53
RESULTANT PRODUCTS (CLEARANCE FOR HOME CONSUMPTION)
Resultant products cleared for home consumption Warehoused goods contained in so much of the resultant products cleared for home consumption
Tax
Quantity Quantity Duty paid
Date and time of GST Invoice No. and Description of paid Bill of Entry No. and Description of Assessable
with Value with
removal date goods GST Comp. date goods Value
UQC UQC BCD IGST Comp. cess
cess
54 55 56 57 58 59 60 61 62 63 64 65 66 67
IMPORTED GOODS CLEARED AS SUCH
Imported goods cleared as such for home consumption Imported goods exported as such
Duty paid Duty involved
Bill of entry No. and Description of Quantity with Assessable Shipping Bill No. and Description of Quantity with Assessable
Comp. Comp.
date goods UQC value BCD IGST date goods UQC Value BCD IGST
cess cess
68 69 70 71 72 73 74 75 76 77 78 79 80 81
TREATMENT OF WASTE OR REFUSE ARISING OUT OF MANUFACTURE OR OTHER OPERATIONS WHERE THE RESULTANT PRODUCT IS
EXPORTED
Quantity of waste or refuse destroyed Duty paid on waste or refuse Duty to be remitted on the quantity of warehoused goods contained
in so much of the waste or refuse ( destroyed or cleared as such)
Duty involved Details of Duty paid Duty involved
Quantity Quantity
Description Assessable Description Description Quantity Assessable
with Comp. with value Challan Comp. Comp.
of goods value BCD IGST of goods BCD IGST of goods with UQC value BCD IGST
UQC cess UQC no. cess cess
82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100
TREATMENT OF WASTE OR REFUSE ARISING OUT OF MANUFACTURE OR OTHER OPERATIONS WHEN THE RESULTANT PRODUCT IS REMARKS
CLEARED FOR HOME CONSUMPTION (if any)
Duty paid on warehoused goods contained in so much of the waste or refuse
Duty paid
Bill of Entry No. and date Description of goods Quantity with UQC Assessable Value
BCD IGST Comp. cess
101 102 103 104 105 106 107 108
Annexure-C
General Bond
(To be executed under sub-section (2) of Section 59 of the Customs Act, 1962 by a unit operating under section 65 of the
Customs Act1962)
KNOW ALL MEN BY THESE PRESENTS THAT we M/s
having our office located at and holding
Import Export Code No. , hereinafter referred to as the
"importer", (which expression shall include our successors, heirs, executors, administrators
and legal representatives) hereby jointly and severally bind ourselves to the President of India
hereinafter referred to as the "President" (which expression shall include his successors and
assigns) in the sum of Rs. (please fill amount in words) to
be paid to the President, for which payment well and truly to be made, we bind ourselves, our
successors, heirs, executors, administrators and legal representatives firmly by these presents.
Sealed with our seal(s) this day of 20 .
WHEREAS the Principal Commissioner or Commissioner of Customs, has granted license to
operate a warehouse under Section 58 of the Customs Act;
AND WHEREAS the Principal Commissioner or Commissioner of Customs, has granted
permission for carrying out manufacture and other operations in the warehouse under Section
65 of the Customs Act vide letter dated ______________;
AND WHEREAS the Assistant/ Deputy Commissioner of Customs has given permission to
enter into a General Bond for the purpose of sub-section (2) of Section 59 of the Customs Act,
in respect of warehousing of goods to be imported by us during the period from to
(both days inclusive).
NOW THE CONDITIONS of the above written bond is such that, if we:
(1) comply with all the provisions of the Customs Act, 1962, 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 and the rules and regulations made thereunder
in respect of such goods;
(2) pay in the event of our failure to discharge our obligation, the full amount of duty
chargeable on account of such goods together with their interest, fine and penalties
payable under section 72 of the Customs Act, 1962 in respect of such goods;
(3) pay all penalties and fines incurred for contravention of the provisions of the Customs
Act, 1962, 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 and the rules or regulations made thereunder, in respect of such goods;
Then the above written bond shall be void and of no effect; otherwise the same shall remain in
full force and virtue.
IT IS HEREBY AGREED AND DECLARED that:
(1) the Bond shall continue in full force notwithstanding the transfer of goods to any other
premises for job work;
(2) the President through the Deputy/Assistant Commissioner of Customs or any other
officer may recover any amount due under this Bond in the manner laid down under
sub-section (1) of section 142 of Customs Act, 1962, without prejudice to any other
mode of recovery.
IN THE WITNESS WHEREOF, the importer has herein, set and subscribed his hands and
seals the day, month and year first above written.
SIGNED AND DELIVERED by or on behalf of the importer at (place) in
the presence of:
(Signature(s) of the importer/authorised signatory)
Witness:
Name and Signature Address Occupation
1.
2.
Accepted by me this ____ day of 20 , for and on behalf of the President of
India.
(Assistant/Deputy Commissioner)
Signature and date
Name:
Schedule to the General Bond to be executed by the importer under sub-section (2) of
Section 59 of the Customs Act, 1962 for the purpose of warehousing of goods to be
imported by them.
Bill Duty Bond value to Debit Credit Balance Remarks Signature of
(Warehousing/ assessed on be debited or of bond the officer
Home the goods credited value along with
consumption/ (Thrice the full name and
/Export) No. and amount of designation
date duty)
(1) (2) (3) (4) (5) (6) (7) (8)
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