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Circular No. 68/95
dated 15/6/95
F. No. 473/61/94- LC
Government of India
Ministry of Finance
Department of Revenue, New Delhi

Subject : Public / Private bonded warehouses procedure liberalised

I am directed to state that a review of the existing policy with regard to appointment of public bonded warehouses and licensing of private bonded warehouses has been conducted by the Board. Consequently, it has been decided to liberalise the procedure on the lines indicated in the succeeding paragraphs.

2.0 Appointment of Public Bonded Warehouses :-

2.1 The existing policy of appointing only Central Warehousing Corporation and State Warehousing corporations as the customs of the public bonded warehouses, formulated in 1980, will undergo a change in the context of liberalisation of the economy. Considering that fact that the management of CFSs and ICDs has been entrusted to private operators, in line  with the existing policy of privatisation and with a view to raising the efficiency of warehousing services, private operators would now be allowed to be appointed as custodians of the public bonded warehouses. This relaxation may pave the way for more number of public bonded warehouses coming up in interior locations where these are needed.

2.2 The concerned Commissioner should, however, ensure that while appointing any private operator as a custodian for public bonded warehouse, the application submitted by the latter is very carefully scrutinised and factors such as the feasibility and financial viability of the warehouse operator, his credibility, his financial status, his past record to comply with Customs & Excise Laws, his expertise in warehousing field, etc. should be given due consideration. Besides, operational requirements such as, suitability and security of the premises, availability of customs expertise, proximity to the users, etc. are also to be taken into account while appointing the custodians for the public bonded warehouses. The applicant should agree to take the services of the customs officers on cost-recovery basis, if the services of the officer are required on a continuous basis (i.e. 9 AM to 6 PM), or on payment of MOT / Supervision charges, as the case may be.

3. Private Bonded Warehouse :-

Furthermore, it has been decided that the requests for grant of licences for private bonded warehouses will be considered and decided at the level of the Commissioners without making any reference to the Board. The private bonded warehouse licences may be allowed without any restrictions regarding the type of goods to be warehoused. Hitherto, private bonded warehouse licences were allowed only in respect of goods which required specialised storage/ handling facilities, e.g., liquid in bulk, hazardous goods, explosive goods, goods requiring controlled temperature conditions, etc. From now onwards, irrespective of whether the goods fall in the above categories or not, the private bonded warehouse licences may be granted. The existing practice of allowing only industrial raw-materials/ components to be warehoused in inland areas is also being relaxed. The Commissioners may carefully scrutinise the applications for grant of privet bonded warehouse licences and if the applicant is financially sound, has goods credibility, and has not been involved in custom or excise duty evasion in the preceding 5 years, in the normal course, a private bonded warehouse licence may be granted. This would, of course, be subject to the condition that the premises are suitable and adequately secured and the applicant agrees to take the services of the customs officers on cost-recovery basis, if the services of the officer are required on a continuous basis (i.e. 9 AM to 6 PM) or on payment of MOT/ Supervision charges, as the case may be.

4. All pending applications forwarded to the Board with recommendations from the Commissioners of Customs are being processed in the Board. Other pending applications will be sent to the respective Commissioner and the same may be disposed of in the light of the above instructions.

5. Any difficulties likely to be faced as a sequal to the above liberalisation may be brought to the notice of the Board. The contents of this letter may be circulated to the public by issue of a public notice.

(Vinay Chhabra)
Deputy Secretary to the Govt. of India

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