All about Bonded Manufacturing Warehouse Scheme

All about Bonded Manufacturing Warehouse Scheme

– By CA Sonal Jain, CA Shravan Gehlot 

Introduction to the scheme

Objectives of the scheme

• To strengthen the ‘Make in India’ initiative
• To facilitate ‘ease of doing business’
• They promote ‘Foreign Direct Investments’
• To promote ‘India as the manufacturing hub globally’

Other Important factors promoting the Scheme:

• The fate of export-incentive schemes such as Export Promotion Capital Goods (EPCG), Special Economic Zone (SEZ), an Export Oriented Unit (EOU) uncertain due to the dispute at the World Trade Organization (WTO) 
• When compared to other schemes, this scheme can give Competitive Edge.
• Merchant Export for India Scheme, no more attractive now. 
• What new Foreign trade policy will come up with.

Understanding different form of Warehousing

Public Warehouse – (Section 57 of the Customs Act, 1962)

•  A site or building that is licensed as such by the Principal Commissioner or Commissioner of Customs, as the case may be, under Section 57, wherein dutiable goods may be deposited
• Includes licensing of the public warehouse to an undertaking of Central / State government or Union Territory or Ports notified under the Major Ports Trust Act.

Private Warehouse – (Section 58 of the Customs Act, 1962)

• A site or building that is licensed as such by the Principal Commissioner or Commissioner of Customs, as the case may be, under Section 58, wherein dutiable goods imported by or on behalf of the licensee may be deposited

Special Warehouse – (Section 58A of the Customs Act, 1962)

• The Principal Commissioner or Commissioner of Customs may, subject to conditions, license a special warehouse under Section 58A wherein dutiable goods (notified goods by the CBIC) may be deposited and such warehouse shall be caused to be locked by the Proper Officer and no person shall enter the warehouse or remove any goods therefrom without the permission of the Proper Officer

Who can apply for the Scheme

Bonded Manufacturing Warehouse – Section 65 and Section 58

• A customs bonded warehouse is a licensed premise where manufacturing and other operations such as packaging, labeling, and repacking can be carried out on deferred payment of various duties (i.e. BCD, SWS, and IGST) which are levied at the time of import of goods in India
• This Scheme benefits various manufacturers and global online retailers having e-commerce business which envisages for operations such as packaging, labeling, and repackaging.

The following Unit is eligible to apply for this Scheme:

• The Unit that operates under Section 65 or
• The Unit applying for permission to operate under Section 65 of the act,

 in a warehouse licensed under Section 58 of the Act. (amended by notification 76/2020 Customs) *

Moreover Notification 77/2020, specifically says that for specified goods for Warehouse operating under section 58A, MOOWR 2019 will not apply and for Specified goods falling in the category of Special Warehouse notification 75/2020 need to be referred upon.  

*Earlier in MOOWR 2019 regulation, regulation 3 has only one condition of Section 65, however, through notification 76/2020, an additional condition of Warehouse being licensed under Section 58 is added.

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