1. Introduction

1.1. An Inter-Ministerial Committee (IMC) under ministry of Commerce and Industry was constituted in 1992 to act as a single window for clearance of proposals to set up Inland Container Depots (ICDs), Container Freight Stations (CFSs) and Air Freight Stations (AFSs). The Ministry of Commerce and Industry Guidelines, 1992 prescribed the requirements for setting up of the ICDs and CFSs. The matters relating to setting up of ICDs/CFSs/AFSs were brought under CBIC in 2018. Accordingly, the Board had reconstituted the Inter-Ministerial Committee vide order issued under F.No. 434/04/2018-Cus.IV dated 20.06.2018.

1.2. In the last two decades, both the cargo volumes and capacities of ICDs/CFSs have increased manifold. A few key initiatives transforming the manner of trade in recent years, such as implementation of the Authorized Economic operator (AEO) programme, rising penetration of the Direct Port Delivery(DPD) and Direct Port Entry(DPE) initiatives, Self-Sealing (RFID seals), Self-Assessment, Electronic Cargo Tracking System (ECTS) and RMS based facilitation have completely changed the operation of Export-Import logistics. The CBIC is also targeting higher DPD, DPE numbers with minimum but more effective Customs interventions aided by technological measures.

1.3. Similarly, physical infrastructure has undergone exponential improvements with the development of expressways, national highways connecting ports to hinterland. Many new private ports & terminals within the existing ports have come up on both Western and Eastern coasts of the country. The operationalisation of Western and Eastern Dedicated Freight Corridors in near future is expected to completely change the dynamics of cargo movement.

1.4. At present, majority of CFSs are located up to 50 kms away from the port and are concentrated in high numbers in the western and southern India. ICDs on the other hand are concentrated in the northern hinterland. Similarly, the traffic across ICDs is also not distributed evenly, only 25 ICDs cater 83% of the total volume (in terms of Shipping Bills and Bills of Entries).

1.5. Therefore, on account of plethora of changes in the policy, technology landscape and the logistics ecosystem over the time, there is a need for revising the policies and procedure for setting up of new ICDs/CFSs/AFSs to meet the requirement of the changing paradigm and the aspirations of the trade.

1.6. Accordingly, the new policy:

i. takes into account the present capacity, future growth potential and regional imbalances and also addresses the need for bringing uniformity, transparency and seamless approval process;

ii. addresses the identified regulatory and logistics concerns associated with the hard and soft infrastructure of ICDs/CFSs/AFSs in India;

iii. establishes a framework of functional requirements pertaining to the design and operation of dry ports, as well as establish certain processes to enable sustainable growth of the sector; and

iv. aims to lay down appropriate institutional, administrative and regulatory frameworks for development and smooth operation of ICDs/CFSs/AFSs, including procedures for regulatory inspection and the execution of applicable customs control and formalities.

2. Distinction between ICD, CFS and AFS

2.1. Inland Container Depot (ICD)

2.1.1. An off seaport (or port) facility having such fixed installations or otherwise, equipment, machinery etc. providing services for handling / clearance of laden import, export containers for home use, warehousing, temporary admissions, re-export etc under customs control and with storage facility for customs bonded or non-bonded cargo.

2.1.2. An ICD is a “self contained Customs station” like a port or air cargo unit where filing of Customs manifests, Bills of Entries, Shipping Bills and other declarations, assessment and all the activities related to clearance of goods for home use, warehousing, temporary admissions, reexport, temporary storage for onward transit and outright export, transshipment, etc., take place. An ICD would have its own automated system with a separate station code (such as INTKD 6, INSNF6 etc.) being allotted by Ministry of Commerce and with in-built capacity to enter examination reports and enable assessment of documents, processing of manifest, amendments, etc.

2.2. Container Freight Station (CFS)

2.2.1. An off seaport (or port) facility having such fixed installations or otherwise, equipment, machinery etc., providing services for handling / clearance of laden import, export containers for home use, warehousing, temporary admissions, re-export etc under customs control and with storage facility for customs bonded or non-bonded cargo.

2.2.2. Though by definition, both ICD and CFS are similar, a CFS is only a Customs area notified under section 8 of the Customs Act, 1962, located in the jurisdiction of a Commissioner of Customs exercising control over a specified Customs port, airport, LCS/ICD while an ICD is notified under section 7 of the Customs Act, 1962. A CFS cannot have an independent existence and has to be linked to a Customs station within the jurisdiction of the Commissioner of Customs. It is an extension of a Customs port set up with the main objective of decongestion. In a CFS only a part of the Customs processes mainly the examination of goods is normally carried out by Customs besides stuffing/de-stuffing of containers and aggregation/ segregation of cargo. Thus, Custom’s functions relating to processing of manifest, import/ export declarations and assessment of Bill of Entry/Shipping Bill are performed in the Custom House/Custom Office that exercises jurisdiction over the parent port/airport/ICD/LCS to which the said CFS is attached. In the case of Customs Stations having facility of automated processing of documents, terminals are provided at such CFSs for recording the result of examination, etc. In some CFSs, extension Service Centers are available for filing documents, amendments etc. However, the assessment of the documents etc. is carried out centrally.

2.2.3. An ICD may also have several CFSs attached to it within the jurisdiction of the Commissioner of Customs just as in the case of a port.

2.3. Air Freight Station (AFS)

2.3.1. An off-airport common user facility equipped with fixed installations of minimum requirement and offering services for handling and temporary storage of import and export cargo etc.

2.3.2. While CFS handles maritime cargo, an AFS is meant to handle air cargo.

2.4. Important centers of activity relating to ICDs/CFSs/AFSs

2.4.1. Rail Siding (in case of a rail-based terminal): The place where container trains are received, dispatched and handled in a terminal. Similarly, the containers are loaded on and unloaded from rail wagons at the siding through overhead cranes and / or other lifting equipment.

2.4.2. Container Yard: Container yard occupies the largest area in the ICD/CFS. It is stacking area where the export containers are aggregated prior to dispatch to port, import containers are stored till Customs clearance and where empty containers await onward movement. Likewise, some stacking areas are earmarked for keeping special containers such as refrigerated, hazardous, overweight/over- length etc.

2.4.3. Warehouse: Public warehouse appointed under section 57 or private warehouse licensed under section 58 is a covered space/shed where export cargo is received and import cargo stored/delivered; containers are stuffed/stripped or reworked; LCL exports are consolidated and import LCLs are unpacked; and cargo is physically examined by Customs. Export and import consignments are generally handled either at separate areas in a warehouse or in different nominated warehouses/sheds.

2.4.4. Gate Complex: The gate complex regulates the entry and exits of road vehicles carrying cargo and containers through the terminal. It is place where documentation, security and container inspection procedures are undertaken.

3. Functions and benefits of ICDs/CFSs/AFSs

3.1. The primary functions of ICD/CFS/AFS include receipt and dispatch/delivery of cargo, stuffing and stripping of containers, transit operations by rail/road to and from serving ports; customs clearance, consolidation and desegregation of loose Container Load (LCL) cargo, temporary storage of cargo and containers, reworking of containers; and maintenance and repair of container units.

3.2. ICD/CFS/AFS, inter alia, offer the following benefits to the trade, namely, serving as concentration points for long distance cargo movement and transit facility, making available customs clearance facility available near the centers of production and consumption free movement of cargo at gateway ports and decongesting the ports, reducing the costs of transport, inventory, demurrage and level of pilferage; enabling intermodal transshipments & repositioning of containers for shipping lines.

4. Criteria for new ICDs/CFSs/AFSs

4.1. Geographical Criteria for approvals

4.1.1. It has been seen in the past that the tendency of developers to set up facilities in few selected areas led not only to proliferation at those centers but also has resulted in investments being made near big cities/ports, far from the manufacturing/exporting units. Moreover, such distorted penetration results in higher costs for inland units apart from creating manpower issues for the departments.

4.1.2. Therefore, it has been decided to group the country in three types of areas for the purposes of opening of new ICDs/CFSs as under following:

    • Green Zone: States low on ICD/CFS infrastructure. These will be open for proposals (Assam, Arunachal Pradesh, Bihar, Himachal Pradesh, Jharkhand, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Telengana, Tripura and West Bengal, and Union territories of Jammu and Kashmir and Ladakh);
    • Blue Zone: States where the proposals can be accepted only for specific trade generating locations with no existing facilities or with over utilized facilities (Andhra Pradesh, Chattisgarh, Goa, Karnataka, Kerala Odisha, Uttarakhand, and Uttar Pradesh and Union Territories of Diu and Daman, Pudhucherry); and
    • Red Zone: The identified states have adequate ICD/CFS infrastructure. These may be closed for any new CFSs development indefinitely. However, in exceptional cases IMC may approve the setting up of ICDs in trade generating locations with high export & import potential and need of new facilities (all the states and union territories not listed in Green and Blue Zones).

4.1.3. Distance of ICD from ports – Rail transport is price competitive with road transport when the lead distance is more than 200 kms. Rail connected ICDs are favored at hinterland locations with lead distances up to 1,500 kms in north India. The development of ICDs within 200 kms of a connecting/Nearest serving seaport shall be discouraged. The measure is expected to further encourage DPD & DPE movement between hinterland & ports. For calculation of distance, the chargeable route by rail and shortest road (National Highway / State Highway) from serving port shall be considered. This rule shall be applicable across all geographical zones.

4.1.4. Distance between ICDs – No Greenfield ICD shall be permitted to be established within 100kmsdistance from existing ICD. Distance will be referred as chargeable railways route (both directions) between ICDs and shortest road distance (National Highway / State Highway, both directions) in case of road linked ICD. This rule shall be applicable across all Geographical zones.

4.1.5. Development in States with low Logistics Infrastructure – To support infrastructure development in states with limited logistics infrastructure, priority should be given to Identifying and promoting ICD/CFS/AFS facilities where presence of such facilities is limited. These are clustered in Green Zone as proposed above. IMC can give relaxation on Distance rules in Green Zone.

4.1.6. National Logistics Action Plan/Policy – The approval and notification of all new ICD/CFS, including existing and new MMLPs will be processed in consonance with the national logistics action plan/policy.

4.1.7. Inland National Waterways – Development of ICDs based on Inland National Waterways as mode of transportation will be encouraged with relaxation being given on Geographical Zone& Distance rules.

4.1.8. Railways Freight Corridors – Approval of Greenfield ICDs directly along/Linked with DFCs (Eastern & Western DFCs and any new operationalized railways freight corridor) will be accorded with no more than one ICD directly connected with these corridors within chargeable distance of 100 kms in both directions. It is expected that some of existing ICDs will get connected directly to freight corridors and while some will operate in Hub & Spoke model in future. With priority of increasing utilization of Freight corridors as they operationalize and lowering the logistics costs, IMC can accord approvals to these facilities in any zone while maintaining distance rules on the corridors.

4.1.9. Exceptions – IMC can approve creation of additional facilities near existing ICDs (all 3 zones) if the demand exceeds the existing capacity of ICDs/CFSs in trade generating location/area. This can be determined by analyzing the existing utilization of ICDs in designated trade generating location/area.

4.1.10. In no case a new CFS shall be set up which is linked to an ICD. Only CFSs connected to ports in the permissible Zones (as mentioned above) shall be allowed after considering existing capacity and utilization parameters.

4.1.11. AFSs are relatively new to India, hence, in the case of AFSs, the IMC while considering the application, will only take into account the demand-supply gap and take appropriate decision.

4.2 Volume

4.2.1. The facility must be economically viable to manage and attractive to the users, to the railways for full train load movements; to other transport operators; seaports; shipping lines; freight forwarders etc. and must operate at certain minimum amount of traffic. The applicants must therefore study carefully the viability of the project from the point of view of the TEU traffic availability.

4.2.2. In the time of growing international trade, the creation of any infrastructure facility must commensurate with the generation of demand in actual terms. This is particularly important as such facilities have a long gestation period for being fully operationalized. Accordingly, the minimum threshold performance shall be 7200 TEUs/consignments0F1 per year (two way) for an ICD and 1200 TEUs/consignments per year (two way) for a CFS. However, no such threshold performance is prescribed for an AFS.

4.3 Land

4.3.1. The minimum area requirement is seven hectares for ICD having minimum area of four hectares as Customs Notified Area and minimum one hectare nominated for DPD & DPE nominated space. For states in Green Zone, ICD with three hectares for customs notified area and one hectare for DPD & DPE may be considered. The minimum area requirement shall be two hectares for a CFS. For AFS 1000 Sq. meters of covered area each for imports and exports respectively shall be made available.

4.3.2. Ownership of Land – The applicant must have the legal rights over the land which is proposed for ICD/CFS construction. If the land is not owned and the land is leased, the lease agreement with lessor must be for period of 30 years. Change of Land Use certificate, wherever required shall accompany the application and land should be free from acquisition proceeding at date of application. The land parcels should be contiguous with only exception for setting up nonbonded storage facility.

4.4 Other Criteria

4.4.1. Legal entity- The applicant must be a legal entity in India under applicable law. The entity must possess a valid GST registration and should have been operating for a minimum period of three years.

4.4.2. Prior experience – The applicant must have prior experience of operating as CCSP or should have other trans-border logistics experience such as logistics service provider including customs brokers, transporters, freight forwarders, shipping lines and port terminal operators.

5. Application and Approval Procedures

5.1 Setting up of new ICD/CFS/AFS

5.1.1. The application for setting up of new ICD/CFS/AFS shall be submitted to the Member (Customs), CBIC, Office of the Commissioner (RI&I), 5th floor, Hudco Vishala Building, Bhikaji Cama Place, New Delhi 110066, email: mgt.valavan@nic.in, in the format provided in Appendix-I. Application shall also accompany a Detailed Project Report (DPR) in format provided in Appendix-II. The application should be submitted in six copies with one advance copy to jurisdictional Commissioner of Customs for his recommendation on feasibility and five copies to Member (Customs), CBIC. No application fee will be charged from the applicants. Without waiting for the report from jurisdictional Commissioner, the other copies of the application shall be sent by office of the Commissioner (RI&I) to all the members of IMC for their comments.

5.1.2. Applicants shall familiarize themselves with statutory Customs requirements in relation to bonding, transit bond, security, insurance, other necessary procedural requirements and cost recovery charges payable before filing the application.

5.1.3. The jurisdictional Commissioner of Customs, upon receipt of the advance copy, will examine the feasibility of the proposal and send his recommendations, along with reasons thereof, to Member (Customs), CBIC, within 30 days of receipt of the application. The recommendations of jurisdictional Commissioner shall take into account manpower availability, existing ICD/ CFS capacity and its utilization, future projections, reduction in logistics cost and the impact on local trade stakeholders of the new proposed facility in lines with policy. The jurisdictional Commissioner shall do his own analysis based on historical data and existing facilities working in the vicinity. The jurisdictional Commissioner while forwarding his recommendation shall make a categorical statement whether an application merits consideration or rejection.

5.1.4. On receipt of the proposal, the members of the IMC will furnish their comments within 30 days.

5.1.5. Proposals for setting up ICD/CFS/AFS will be considered on merits by the IMC. Normally, the IMC meetings will be held twice in a year. The committee may approve or refuse to grant approval for setting up of ICD/CFS/AFS. The recommendations of the jurisdictional Commissioner will be a relevant factor but not necessarily binding on the IMC. The IMC can independently decide about approval/rejection of any project based on the valid considerations.

The applicant shall not make any investment before obtaining the approval from IMC. The “in principle” approval from the jurisdictional Customs Commissioner regarding the feasibility of the proposed facility shall not be considered as final. Any investment made by the prospective developer before the approval of IMC shall be at the risk of developer and as a result would not constitute a relevant factor for approval of the facility.

5.1.6. On approval of a proposal, a Letter of Intent (LOI) will be issued to the applicant with conditions as may be considered necessary, which will enable applicant to initiate steps to create infrastructure. The applicant would be required to set up the infrastructure within one year from the date of approval.

5.1.7. The LOI will have a validity of 12 months. It will be further extendable by a maximum of 12 months once only. Only in exceptional cases, IMC would further extend it by 6 months in one go for maximum 2 terms. Therefore, no extension after this time will be provided and proposal will be deemed as rejected. Once rejected, new proposal must be submitted afresh.

5.1.8. The IMC has right to suspend or revoke the approval granted in the following cases:

i. on breach of any conditions of applicable law or contained herein; or

ii. the setting up/continuance of the ICD/CFS/AFS would be prejudicial to public interest; or

iii. if the ICD/CFS/AFS entity or any of its promoters is convicted of an offence under the provision of any Act in force.

5.2 Applications for other purposes

5.2.1. Change of CFS to ICD and vice versa and notification of AFS in Existing ICD – When a CFS operator wants to upgrade the facility to ICD or convert the ICD to CFS, he shall approach the IMC for approval for such change. Such applications shall be processed in the similar manner as that of a new facility.

5.2.2. Change in Ownership – Jurisdictional Commissioner of Customs can approve the change of custodian of existing facilities under section 45 of the Customs Act, 1962 and the change may be informed to the Commissioner (RI&I). There will be no need to approach IMC for change in ownership provided the residual entity meets turnover and other requirements established within the framework of this policy. However, any pre­condition prescribed in this policy which the original developer is required to fulfill, shall be met by the new owner as well. The new owner shall ensure and confirm that all the liabilities under the Customs Act, 1962 and regulations thereof, payable by the existing operator are duly discharged before such change of ownership.

5.2.3. Change in Location – For change of location of an existing facility, the operator of the facility shall approach IMC. If the new location is in the same locality of the existing cluster of CFSs/AFSs, and serves to the same gateway port, the IMC after consulting the jurisdictional Commissioner of Customs, may approve such request. However, in case such change of location involves substantial geographical change (outside existing District or involves change of port to which the CFS serves), it should be treated as closure of the existing facility and setting up of a new facility.

6. Post Approval Obligations

6.1. Operationalising the facility

6.1.1. The applicant shall take all necessary actions to operationalise the facility within the validity period of the LOI. The applicant must put up the required infrastructure and meet the regulatory requirements in compliance with applicable law to become functional. The Check list for various requirements is given at the Appendix-III.

6.1.2. The applicant, after receipt of LOI, shall send monthly progress report to jurisdictional Commissioner of Customs in the proforma as may be prescribed by him. Failure to submit progress report would have an adverse effect in cases where extension is to be sought. Noncompliance to send reports shall be a valid ground for rejection of request for extension.

6.1.3. After development of infrastructure as per requirements, applicant shall apply to CBIC for notification of facility as ICD or AFS under Section 7(aa) of Customs Act, 1962 through the jurisdictional Commissioner of Customs.

6.1.4. Further, applicant will approach jurisdictional Commissioner of Customs to issue notifications under section 8 of the Customs Act 1962 for approving landing place and specifying limits of Customs area and under Section 45(1) of the Customs Act, 1962 for declaration as “Custodian”

6.1.5. These notifications will be issued only if the Board or the jurisdictional Commissioner of Customs, as the case may be, is fully satisfied with the readiness of the facility and fulfillment of compliances under the Handling of Cargo in Customs Areas Regulations (HCCAR), 2009.

6.1.6. Further, after the issuance of LOI and before the issuance of the notifications as mentioned above, the jurisdictional Commissioner of Customs shall coordinate with the Directorate General of Human Resource Development (DGHRD) for creating the required numbers of cost recovery posts.

6.1.7. The jurisdictional Commissioner of Customs while forwarding the recommendation for issuance of notification shall:

a. satisfy himself about the readiness of the facility including fulfillment of the requirements listed at Annexure-III;

b. ensure that the required number of cost recovery posts are created; and

c. confirm that once the facility is notified the Commissionerate will be able to deploy the officers.

6.2. Regulatory and other compliances

6.2.1 The facility operator who is appointed as custodian of the goods meant for import and export shall be required to comply with provisions of the Customs Act, 1962, rules and regulations thereof and circulars/instructions issued from time to time by the Board in relation to the custody, storage, handling and disposal of cargo including the Handling of Cargo in Customs Area Regulations, 2009.

6.2.2 The operator shall comply with the laws relating to Indian Railways (for safety of siding and smooth rake operations in the facility), labor, environment (including the laws relating to the storage of hazardous goods, legal metrology (certification for installed weighing instruments including weight bridges etc.) food safety (certification of facility by FSSAI for storage) etc.

6.2.3 The operator shall also comply with the circulars/instructions issued by the Board on cost recovery charges from time to time for the officers deployed. The payment of cost recovery charges for the officers and staff deployed and exemption from such payment shall be governed by the extant rules, policy and circulars in this regard.

6.2.4 No alteration of the plan of the ICD / CFS shall be made without the concurrence of the jurisdictional Commissioner of Customs. Further, no reduction in minimum prescribed physical area shall be allowed.

6.2.5 For Rail linked ICDs, investors will be required to provide at their own cost all infrastructure facilities including land, track, and maintenance of assets including track, rolling stock, etc. as per extant railway rules applicable to such sidings. The cost of the railway staff would be governed as per the prevailing Indian Railways policy.

6.2.6 The custodians should strictly follow any guidelines/directions issued on account of force-majeure of Government of India from time to time.

6.3. Record keeping handling, receipt and storage

6.3.1 For the proper discharge of duties, the custodian shall execute a Bond covering the value of the goods stored in the ICD/CFS with the Assistant/Deputy Commissioner of Customs. The custodian shall ensure that all goods held in the ICD/CFS are adequately covered as per extant circulars issued by the Board.

6.3.2 The custodian shall provide safe, secure and spacious place for loading, unloading and storage of the cargo.

6.3.4 The custodian shall also provide sufficient modern handling equipment in operating condition for handling the cargo in the notified area.

6.3.5 The custodian shall be responsible for the proper receipt, handling, storage and shall be accountable for the loss of imported goods after the landing and before clearance, and also for goods meant for export/transshipment. They shall also maintain proper records of all such goods including the records of goods which are cleared with the permission of the Customs or disposed of, under section 48 of the Customs Act 1962 or otherwise. Further, custodians shall share available data with the Government Departments/Agencies ensuring reasonable commercial and individual privacy.

6.3.6 If any imported goods are pilfered or lost after unloading in the customs area while in the custody of the custodian, then in terms of provisions of section 45(3) of the Customs Act 1962, they shall be liable to pay the duty on such pilfered goods.

6.4. Infrastructure and other facilities

6.2.1 The custodian shall also take steps to bring about necessary improvements in the infrastructural facilities and other amenities required to be provided to the trade and to Customs staff, as may be necessitated from time to time, consequent upon the growth in the volume of Import and Export Trade handled at the ICD/CFS.

6.2.2 In case the custodian wants to sublet any of the functions inside the customs area or connected with the customs area, the same should be done with prior approval of the Commissioner of Customs and the custodian shall remain responsible for the omissions and commissions of the said agency.

6.5. Performance Monitoring

6.2.1 The Commissioner of Customs shall ensure that annual audit/inspection of the notified facilities are conducted in terms of the circulars/ instructions issued in this regard.

6.2.2 The jurisdictional Commissioner of Customs shall, based on the findings of the annual inspection report or otherwise, take necessary remedial action including penal action, for any contravention, under the Customs Act, 1962 read with HCCAR, 2009. It may be noted that each violation shall be treated as separate for the purpose of initiating penal actions.

6.2.3 The jurisdictional Commissionerates must list out functional, non-functional and approved count of ICDs on their websites, latest figures of volume handled, Infrastructure profiles, compliance with HCCAR 2009 rules to be maintained on month on month basis on the Comissionerate’s web-portal.

7. Term, renewal and de-notification of the facility

7.1. The duration of the award for the operation of the facility shall be governed by HCCAR 2009 unless otherwise mentioned in any other guidelines. The applicant shall get the award renewed by the jurisdictional Commissioner of Customs.

7.2. At the time of renewal, the jurisdictional Commissioner of Customs shall satisfy himself about the functioning of the facility including the minimum volume projected at the time of initial proposal.

7.3. The ICDs not meeting the minimum prescribed threshold performance for four consecutive financial years will be considered for de-notification by the Board based on the recommendation of the jurisdictional Commissioner of Customs. As regards CFSs, jurisdictional Commissioner can de-notify the facility if it failed to meet the prescribed minimum threshold performance for four consecutive financial years. In the case of AFSs, the Board may analyze the performance of the facility and may consider the de-notification wherever necessary, based on the recommendation of the Jurisdictional Commissioner of Customs.

7.4. The jurisdictional Commissioners of Customs can order for closure of a facility when requested by a custodian. Such requests should be approved within 6 months subject to clearance of dues of Cost Recovery Charges, disposal of detained/Seized cargo & cases against CCSP if any. Jurisdictional Commissioner will take no dues certificate thereafter commissioner may denotify any CFS/AFS and in the case of ICD he shall forward the proposal for de-notification to the Board.

8. Scope and applicability

8.1. The policy and guidelines prescribed here will be applicable to all the new proposals that are submitted to IMC after the date of issue of this circular. The proposals already submitted but are yet to be considered by the IMC shall also be governed by these guidelines. As regards the existing facilities and the proposals for which Letter of Intent has already been issued but the facilities are yet to commence their operations, shall also be governed by these guidelines to the extent to which they are applicable (such as post approval obligations, term, renewal and denotification etc). The proposals which have been approved by IMC will be scrutinized under old policy.

[Refer CBIC Circular No. 50/2020-Customs]

9. Inspection of ICDs/CFSs/AFSs

9.1. It is necessary that each ICD/CFS is closely monitored by way of some sort of audit /visits to ensure that the performance of ICDs/CFSs is of desired standards and requested to put a system in place and take necessary action in a time bound manner.

9.2. Therefore, Board has decided to put in place a proper system for regular inspection for ICDs/CFSs. Such a system would ensure better functioning of ICDs/CFSs in future and would be of great benefit to the importers and exporters using these facilities. Periodical inspections and remedial actions would also avoid these kinds of audit objections. It will bring accountability, standardization and better facility for cross-border trading and in turn improve case of doing business.

9.2.1 The jurisdictional Commissioner at the beginning of every financial year shall chalk out an action plan to conduct inspection of ICDs/CFSs in their jurisdiction, by an officer of the rank of Deputy / Assistant Commissioner or above (who is not in-charge of such ICD/CFS) once every financial year probably in the first quarter of the financial year.

9.2.2 A report on the inspection conducted shall be submitted to the jurisdictional Commissioner of Customs with copy to Chief Commissioner concerned in the proforma given as per Appendix IV.

9.2.3 The jurisdictional Commissioner of Customs upon receipt of the inspection report shall take remedial action wherever deficiencies arc noticed including penal action on the defaulting ICDs/CFSs.

9.2.4 Normally the operations and records in respect of the previous financial year shall be covered in the inspection.

9.2.5 For the ICDs/CFSs, which have not been inspected/audited so far, the initial inspection shall be for the period of last five years or from the date of commencement whichever is earlier.

9.2.6 The Directorate General of Performance Management during the inspections of field commissionerates, done by them shall also examine the records relating to the inspections of ICDs/CFSs.

[Refer Circular No. 44/2020 dated 08.10.2020]

10. Denotification of ICDs/CFSs/AFSs

10.1. ICDs and CFS play a vital role in the exim trade as they store and clear import and export goods. These facilities are notified under the Customs Act, 1962 and are administered by the Customs authorities. However, at times a custodian may like to close (de-notify) the facility. The disposal of un-cleared, seized and confiscated goods import/export are prerequisites for the de-notification. Noting that this process was taking a long time which caused difficulties for the custodians, a Circular No. 20/2021-Customs dated 16.08.2021 has been issued to streamline the procedure of closure of these facilities.

10.2. Circular No. 20/2021-Customs dated 16.08.2021 requires a custodian intending to wind up the operation to submit an application to jurisdictional Principal Commissioner/Commissioner of Customs for de-notifying the ICD/CFS. A Nodal Officer at the level of Deputy/Assistant Commissioner of Customs would then facilitate the de-notification by coordinating the disposal of the goods lying at the facility in a time bound manner.

10.3. In case of ICD/AFS, the Board is the competent authority for de-notification of ICDs/AFSs and the jurisdictional Principal Commissioner/Commissioner of Customs can revoke the approvals granted under Sections 8 and 45 of the said Act for these facilities.

10.4. In the case of CFSs, the Inter-Ministerial Committee (IMC) gives the approval for setting up of the facility. Thereafter, the jurisdictional Principal Commissioner/Commissioner of Customs grants approvals under Sections 8 and 45 of the said Act. Therefore, these approvals which would be akin to de-notification can be revoked by the jurisdictional Principal Commissioner/Commissioner of Customs without referring to the Board. However, post revocation of these approvals, an intimation shall be sent to the Board in this regard within a week of such revocation.

10.5. There can be two situations where de-notification of an ICD/AFS can be initiated namely, (a) on application from the custodian and (b) on the report of the jurisdictional Principal Commissioner/Commissioner of Customs in terms of the para no. 7.3 of Circular No. 50/2020-Customs dated 05.11.2020. Likewise, the custodian of a CFS can seek de-notification or the jurisdictional Principal Commissioner/Commissioner of Customs can de-notify such facility Customs in terms of the said para no. 7.3.

10.6. A custodian intending to wind up the operation shall submit an application to jurisdictional Principal Commissioner/Commissioner of Customs in the format prescribed in the Annexure-I of Circular No. 20/2021-Customs dated 16.08.2021. Where a facility has not been exempted from payment of Cost Recovery Charges in terms of Circular No. 02/2021-Customs dated 19.01.2021, all pending payments, if any, of Cost Recovery Charges shall be paid upto the date of de-notification. Also, in terms of relevant guidelines prescribed vide Circular No. 02/2021-Customs dated 19.01.2021 jurisdictional Principal Commissioner/ Commissioner of Customs are required to assess the workload and accordingly deploy the required number of officers/staff and the payment of Cost Recovery Charges shall be for such number of officers/staff only. This guideline may be especially relevant to facilities to be de-notified due to the reduction in the work load. The application for de-notification should clearly mention that the payment of Cost Recovery Charges is up-to-date as on the date of application as well as for the subsequent period till the date of de-notification, as it is prescribed in general that such payment must be made in advance.

10.7. On the date of de-notification, there shall be no pending consignment of un-cleared cargo in the facility beyond the time stipulated under the said Act. Thus, the custodian should have taken all the efforts to dispose of the un-cleared cargo by following the procedure prescribed vide Circular No. 49/2018–Customs, dated 03.12.2018. However, it may so happen that the un-cleared cargo could not be disposed for want of no-objection certificates (NOC) from Customs or for any other reasons including impending auctions as per the extant guidelines. Further, there may be goods detained, seized or confiscated by various agencies lying in the facility. Even Customs office equipment, records etc. may be present in the facility. Thus, the application for de-notification shall be accompanied by three lists of goods that may be present in the facility, as per the format in Annexure-II of Circular No. 20/2021-Customs dated 16.08.2021.

i. List 1: Uncleared goods pending disposal for want of Customs NOCs;

ii. List 2: Uncleared goods pending disposal for completion of required number of auctions; and

iii. List 3: Goods detained, seized or confiscated by various agencies and pending disposal.

10.8. Upon receipt of an application for de-notification, which shall be duly acknowledged, the jurisdictional Principal Commissioner/Commissioner of Customs would nominate a nodal officer of the rank of a Deputy/Assistant Commissioner of Customs to facilitate the de-notification exercise. Such nodal officer shall act as single point of contact for the custodian during the entire process of de-notification.

10.9. The nodal officer, who could also be the officer in-charge of the facility, shall tally the lists of goods aforementioned with the records maintained in the facility in terms of Handling of Cargo in Customs Areas Regulations, 2009 (HCCAR). S/he shall also actively coordinate with all the agencies concerned for speedy disposal of the uncleared, detained, seized or confiscated goods, if any. S/he shall also ensure, to the extent possible, that all the goods that are ripe for disposal are disposed of by following due procedure within four months from receipt of the application. S/he shall immediately bring any difficulty or lack of response from any agency to the notice of the jurisdictional Principal Commissioner/Commissioner of Customs for taking remedial action.

10.10. The nodal officer shall take stock of other goods such as goods detained, seized or confiscated by any agency of CBIC, samples, office equipment, furniture, office records etc. that are to be removed from the premises to be de-notified. The jurisdictional Principal Commissioner/Commissioner of Customs shall make necessary arrangements for disposal/removal of these items expeditiously.

10.11. The custodian shall, take all steps to speedily dispose all uncleared goods as per law. The facility shall not be de-notified till the disposal is completed in terms of the Circular No. 49/2018-Customs dated 03.12.2018. However, if for any substantive reason the goods are not disposed even by the end of third month of application for de-notification, the custodian would have the option to apply to the Principal Commissioner/Commissioner of Customs to allow the shifting of these uncleared goods to its own or some other facility (ICD/CFS/AFS) within the same jurisdiction. This option would be available only in exceptional cases as ordinarily the goods should be disposed after maximum four auctions. This option would be available subject to the conditions that the custodian shall get a ‘no objection’ in this regard from the custodian receiving the consignments; the receipt of goods by the receiving facility shall be acknowledged and accounted properly; the safe transfer and receipt of goods shall be the sole responsibility of the custodian of the facility being de-notified; and the legal responsibility of disposal of the said uncleared goods shall remain with the custodian of the facility being de-notified unless it is legally and wholly transferred to the custodian of the transferee facility with the latter’s explicit acceptance to the satisfaction of the jurisdictional Principal Commissioner/Commissioner of Customs.

10.12. The jurisdictional Principal Commissioner/Commissioner of Customs shall make best efforts to ensure removal/disposal of goods detained, seized or confiscated by any agency of CBIC, samples, office equipment, furniture, office records etc. If for some reason the disposal is not possible, steps would be taken to transfer these goods to some other secure location. Such transfer of location shall be carried out by taking all the precautions to ensure that all the relevant laws are complied with, interest of revenue is safeguarded and prosecution cases, if any are not jeopardized. The disposal/transfer shall be timed such that the facility is vacated before the end of four months from the receipt of the application. It is emphasized that the de-notification of a facility shall not be held up on account of delay on the part of the Customs to dispose/remove the goods for which it is responsible including goods detained, seized or confiscated by any agency of the CBIC.

10.13. Thus, to sum up, a facility will become ripe for de-notification if the following conditions are met, namely,

i. The application for de-notification is complete in all respects,

ii. There are no dues, including the duties on the uncleared goods that are eventually sold, pending to be recovered from the custodian,

iii. All the uncleared goods lying at the facility have been cleared from the facility by disposal and/or shifting to any other facility in the jurisdiction of the Commissionerate,

iv. All the detained/seized/confiscated goods lying at the facility are disposed and/or shifted out of the facility to another location for safe custody, and

v. All the other items belonging to Customs such as office records, furniture etc. are removed from the facility.

10.14. In order to ensure undue cost overruns are avoided and the custodian intending to get the facility de-notified is not put to hardship, the jurisdictional Principal Commissioner/Commissioner of Customs, shall facilitate the de-notification of a facility within maximum of four months from the date of receipt of application or from the date of de-notification requested by the custodian, whichever is later. Also, it shall be ensured that there shall be no disruption in the Exim operations, if any, at the facility while the while the formalities of de-notification are being completed.

10.15. The jurisdictional Principal Commissioner/Commissioner of Customs shall, after satisfying herself/himself that the facility is ripe for de-notification shall:

i. revoke the approvals granted under Sections 8 and 45 of the said Act;

ii. forward a proposal to Director General of Human Resource Development (DGHRD), CBIC so that the sanctioned/regularized posts are surrendered in time; and

iii. forward (in the case of ICD and AFS) a proposal to the Board for de-notification of the facility at least two weeks before the expiry of four months from the date of application.

10.16. The custodian’s bond and security (such as bank guarantee), if any, shall be kept live by the Customs till the resolution of disputes (show cause notice, adjudication, appeal or court case or any other liability), if any, against the custodian. Further, before cancellation of the bond and return of the security, it must be ensured that all the goods for which the custodian has taken responsibility to dispose are duly disposed as per law.

[Refer Circular No. 20/2021-Customs dated 16.08.2021]

Refer Annexure -I of CBIC Circular No. 50/2020-Customs for Appendix -I Format of Application for Setting up of an Inland Container Depot/Container Freight Station/Air Freight Station

Refer Annexure -II of CBIC Circular No. 50/2020-Customs for Appendix -II Instruction for submission of the Detailed Project Report for setting up of ICD/CFS/AFS

Refer Annexure -III of CBIC Circular No. 50/2020-Customs for Appendix -III Checklist for the infrastructural requirements and regulations compliance.

Refer Circular No. 44/2020 dated 08.10.2020 for Appendix -IV PROFORMA FOR INSPECTION OF ICD/CFS/AFS

Notes: 1 Consignments here refers to Shipping Bill/ Bill of Entry

Source – Custom Duty Manual 2023

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