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India allows manufacturing and other operations in a bonded manufacturing facility.
With the Government’s continuous efforts to promote India as the manufacturing hub globally and the commitment towards ease of doing business, another initiative in this direction by the Central Board of Indirect Taxes (CBIC) is allowing import of raw materials and capital goods without payment of duty for manufacturing and other operations in a bonded manufacturing facility.
When the raw materials or capital goods are imported, the import duty on them is deferred. If these imported inputs are utilised for exports, the deferred duty is exempted. Only when the finished goods are cleared to the domestic market, import duty is to be paid on the imported raw materials used in the production. Import duty on capital goods is to be paid if and when the capital goods are cleared to the domestic market only.
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Who can apply?
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Persons already having a licenced private bonded warehouse under Sec. 58. Others can apply simultaneously under Sec. 58 & Sec. 65.
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Permission can be obtained for any premises. Such premises must be added as an additional place of business under GST.
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The existing factory premises can also be applied for as a warehouse.
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A person who is not at all exporting can also apply.
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The scheme benefits various manufacturers and global online retailers having e-commerce business which also covers operations such as packing, labelling and repacking.
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Benefits
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Imported inputs, can be brought into the warehouse without payment of Customs Duties (BCD and IGST) and stored in the warehouse.
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If the imported goods are exported (either as such, after subjecting to manufacturing or other processes), no need to pay Customs duties on the imported inputs.
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Capital goods can also be imported and brought to the warehouse without payment of Customs Duties, which shall be payable only when the capital goods are removed from the warehouse.
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No need to pay any interest till the permitted warehousing period.
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Paves way for greater cash flow.
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Self-appointed warehouse keeper and no physical control by “Bond officer”.
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Warehousing period
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Capital goods – till they are cleared from the warehouse.
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Other than capital goods (inputs) – till their consumption or clearance from the warehouse.
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(At the time of clearance of the resultant products – Para 8 of Circular 34/2019).
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For trading though warehousing period is one year, interest payable after 90 days.
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Treatment of waste
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Waste attributable to the final products cleared for home consumption.
- Appropriate GST has to be paid on sale.
- Import duties to be paid for the inputs contained in waste (even if destroyed)
- Waste attributable to the final products exported.
- Import duties on inputs need not be paid, if destroyed.
- Otherwise, import duty to be paid, “as if the waste is imported”.
- Upon sale, appropriate GST to be paid.
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Clearance of warehoused goods for home consumption
Warehouse goods can be utlised for home consumption or sold out in the domestic market only if:
a bill of entry for home consumption in respect of such goods has been presented in the prescribed form;
the import duty leviable on such goods and all penalties, rent, interest and other charges payable in respect of such goods have been paid; and
an order for clearance of such goods for home consumption has been made by the proper officer.
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Clearance of warehoused goods for Export
Warehouse goods can be exported to a place outside India without payment of import duty if:
a shipping bill or a bill of export has been presented in respect of such goods in the prescribed form;
the export duty, penalties, rent, interest and other charges payable in respect of such goods have been paid; and
an order for clearance of such goods for exportation has been made by the proper officer
For further details, refer to the Chapter IX – Warehousing
*When goods are transferred from one bonded facility to another, incidence to pay deferred duty is also transferred to the owner of the new facility. The owner of any warehoused goods may, with the permission of the proper officer, remove them from one warehouse to another, subject to such conditions as may be prescribed for the due arrival of the warehoused goods at the warehouse to which removal is permitted.
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Maintenance of records
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Maintain detailed records of receipt, handling, storing and removal of goods into/ from the facility as per Annexure B.
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Keep record of each activity, operation or action taken in relation to the warehoused goods.
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Keep record of drawl of samples from the warehoused goods.
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Keep copies of the following documents:
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Bills of Entry
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Transport documents
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Forms for transfer of goods from warehouse
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Shipping Bills
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Bills of Export
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Any other documents indicating receipt/ removal of goods from the warehouse
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Update records and accounts accurately and preserve for a minimum 5 years from the date of removal of goods from the facility.
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Preserve updated digital copies of records at a place other than the facility to prevent loss of records due to natural calamities.
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File monthly returns within 10 days of closing of the month
Reach to our expert Mr. Kapish @ +91 9971770603