Section 59(3) of the Customs Act, 1962 prescribes that an importer, shall, in addition to the execution of a bond, furnish a security for transit as well as for storage of goods in the warehouse.

Central Government vide Circular No. 21/2016-Customs, Dated: May 31, 2016 has amended the security related norms and dispensed the security u/s 59(3) in following cases:

a) Imports by the Central Government, State Government or a Union Territory administration or their undertakings;

b) Machinery, equipment and raw-materials imported for manufacture and installation of power generation units;

c) Project imports;

d) Petroleum products;

e) Machinery, equipment and raw materials imported for building and fitment to ships;

f) Goods used in the units operating under manufacture-in-bond scheme (section 65);

g) Goods warehoused for supply to diplomats;

h) Goods warehoused and sold through duty free shops;

i) Goods warehoused for supply as ship stores / airlines stores

Importers under Accredited Clients Program or approved Authorised Economic Operators will be required to provide security as per circulars issued in their regard.

Security for Transit

A comprehensive transit risk insurance policy equal in sum to the duty involved in the goods, in favour of the President of India needs to be obtained by the Importer to cover the transit of goods i.e. movements from customs station of import to the warehouse or warehouse to another warehouse or warehouse to a customs station for export. However in case of liquid bulk cargo transported through pipelines, the requirement of transit insurance may be waived.

Security for Storage

PERIOD
Particulars 1 Year Beyond 1 Year Exceeding 2 years Exceeding 3 years
Security for Goods, other than sensitive goods no requirement of furnishing any security bank guarantee for an amount equivalent to 25% of the sum of duty plus interest accrued thereon during the preceding period bank guarantee for an amount equivalent to 50% of the sum of duty plus interest accrued thereon during the preceding period bank guarantee for an amount equivalent to duty involved plus interest accrued thereon during the preceding period
Security For Sensitive Goods warehoused in a public bonded warehouse no requirement of furnishing any security bank guarantee for an amount equivalent to 50% of the sum of duty plus interest accrued thereon during the preceding period bank guarantee for an amount equivalent to duty involved plus interest accrued thereon during the preceding period bank guarantee for an amount equivalent to duty  involved plus interest accrued thereon during the preceding period

In case where sensitive goods are to be stored in the importer’s private bonded warehouse, the importer shall

a) furnish a security by way of a bank guarantee equivalent to the duty involved at the customs station of import before removal of the goods from the customs station of import and no transit insurance is required in this case.

b) furnish a security by way of a bank guarantee at the customs station of import if goods are to be brought in from public warehouse

c) furnish a security by way of a bank guarantee equivalent to the duty involved and interest accrued thereon during the preceding period for any extension in the period of warehousing

Provisions of this circular are not applicable to imports by 100% Export Oriented Units, EHTP Units & STPI Units as corresponding provisions of Foreign Trade Policy apply to these units.

Circular No. 23/2016 -Customs

F. No. 473/20/2013-LC

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

New Delhi, the 1st June 2016

To,

All Principal Chief Commissioners Customs,

All Principal Chief Commissioners of Customs & Central Excise,

All Chief Commissioners of Customs,

All Chief Commissioners of Customs & Central Excise,

All Directors General, Chief Departmental Representative,

All Principal Commissioners of Customs,

All Principal Commissioners of Customs & Central Excise,

All Commissioners of Customs,

All Commissioners of Customs & Central Excise.

Sub: Manner of payment of interest on warehoused goods

Section 61 of the Customs Act, 1962 had been amended vide the Finance Act, 1994 whereby the interest payable with respect to warehoused goods was to be calculated with reference to the duty payable at the time of clearance of the goods from the warehouse. This was clarified through Circular no 31/96-Customs dated 07.06.1996.

2. However, noting the high inventory of goods lying in bonded warehouses, with the consequential effect of locking revenue, the Board had vide Circular 47/2002-Customs dated 29th July 2002, prescribed that interest due in terms of Section 61 should be collected before allowing extensions, with a view to encourage early clearances. This led to importers having to deposit interest and seek refunds in the event of interest not being payable, for example in cases where goods were finally exported. In certain industries, the Board had relaxed the above condition for extending the warehousing period but prescribed that a demand notice should be served upon the importer and the same decided upon clearance of the goods, i.e. when the liability became determinable (Para 7 of Circular 10/2006-Customs dated 14th Feb 2006).The extant circulars have been reviewed by the Board with a view towards simplification of processes and promoting the ease of doing business.

3. In order to secure revenue and discourage protracted duty deferment arising due to warehousing, the Board has prescribed conditions for furnishing of security by importers vide circular 21/2016-Customs dated 31.05.2016. The said circular also specifies the amount (which is a percentage of the sum of duty and interest) of bank guarantee that would have to be furnished before allowing an extension in warehousing period. In continuation of the earlier dispensation, certain industries have been exempted from furnishing of such security.

4. In view of having prescribed the requirement of furnishing a bank guarantee as security, it has been decided by the Board that henceforth there would be no requirement of payment of interest prior to allowing extensions of warehousing period nor would there be any need to issue a demand for payment of interest. Interest, if any, shall be paid at the time of ex-bonding of the goods from the warehouse.

5. Difficulties, if any, should be brought to the notice of the Board.

6. Hindi version follows.

(Temsunaro Jamir)

Under Secretary to the Govt. of India

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Category : Custom Duty (6860)
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