The document provides an overview of warehousing under customs in India. Some key points: - Goods can be deposited in public, private, or special warehouses licensed by customs authorities. - Goods remain warehoused for up to one year, though extensions are possible. Interest applies if goods remain over 90 days. - Owners can inspect, sort, manufacture, or deal with warehoused goods with permissions. - Goods can be cleared for home consumption or export upon payment of duties and permissions. - Provisions for transfer between warehouses, allowance for volatile goods, and consequences for improper removal are explained.

1. Warehousing under Customs
CA Divakar Vijayasarathy

2. Credits and Acknowledgement
Harish Kumar
CA Jugal Gala

3. Legends used in the Presentation
Act Customs Act, 1962
CBIC Central Board of Indirect Taxes and Customs
CG Central Government
EOU Export Oriented Units
SG State Government
UT Union Territory

4. Presentation Schema
Introduction
Licensing of
Warehouse
Warehousing Bond
Permission for
Removal of Goods
for Deposit in
Warehouse
Period for which
Goods may Remain
Warehoused
Owner’s Right to
Deal with
Warehoused Goods
Manufacture and
Other Operations in
Relation to Goods in
a Warehouse
Power to Exempt
Imported Materials
used in the
Manufacture of
Goods in Warehouse
Removal of Goods
from One
Warehouse to
Another
Clearance of
Warehoused Goods
for Home
Consumption
Clearance of
Warehoused Goods
for Export
Allowance in Case of
Volatile Goods
Goods Improperly
Removed from
Warehouse
Cancellation of
Warehousing Bond

5. Introduction
Warehousing is a statutory facility for depositing imported goods in a warehouse pending payment of
duty
Goods can be removed in part as and when required by the importers and buyers, and import duty
can be paid in installments
Warehouse means a public warehouse or a private warehouse or a special warehouse licensed under
the Act

6. Licensing of Warehouse

7. Licensing of Public / Private Warehouses –
Sec 57, 58
Upon an application, the Principal Commissioner of Customs or Commissioner of Customs, may
issue a license to an applicant who
is a citizen of India or is an entity incorporated or registered under any law for the
time being in force
submits an undertaking to comply with such terms and conditions as may be
specified by the Principal Commissioner or Commissioner of Customs
furnishes a solvency certificate from a scheduled bank for a sum of Rs. 2 crores
Not applicable to an undertaking of the CG or SG or UT or to
ports notified under the Major Port Trusts Act, 1963
In case of Private Warehouses, amount to be specified by the Principal
Commissioner or Commissioner of Customs
The Principal Commissioner or Commissioner of Customs may, subject to conditions, license
a public warehouse wherein dutiable goods may be deposited
The Principal Commissioner or Commissioner of Customs may, subject to conditions, license
a private warehouse wherein dutiable goods imported by or on behalf of the licensee may
be deposited
Sec 57
Sec 58
Regulations issued with respect to Public/ Private Warehouses
Licensing

8. List of Major Ports Notified under Major Ports
Trust Act
Kolkata Visakhapatnam Chennai
V.O. Chidambaranar
(Tuticorin)
Cochin New Mangalore
Mormugao
Jawaharlal Nehru Port
Trust (JNPT) (Mumbai)
Kandla
Port Blair

9. Major Cases where License shall not be Issued
The Principal Commissioner or the Commissioner of Customs, is satisfied that
the site or building of the proposed public warehouse is not suitable for secure
storage of dutiable goods
the site or building of the proposed public warehouse is not suitable for general
supervision by officers of customs
bankruptcy proceedings are pending against the applicant
criminal proceedings are pending against the applicant and the offences involved
are of such nature that he is not a fit person for grant of license

10. Other Cases where License shall not be Issued
The other cases where license shall not be issued to the applicant, if
he has been declared an insolvent or bankrupt by a Court or Tribunal
he has been convicted for an offence under any law
he has been penalised for an offence under the Act or the Central
Excise Act, 1944
he is of unsound mind
Validity of License The license granted shall remain valid until and unless it is cancelled
Transferability of License A license granted under the Act shall not be transferable

11. Conditions to be Fulfilled
Where after inspection of the premises and conducting such enquires the Principal
Commissioner or Commissioner of Customs is satisfied , he shall require the applicant to
provide an all risk insurance policy, that includes natural calamities, riots, fire, theft, skillful pilferage and
commercial crime, in favour of the President of India, for a sum equivalent to the amount of duty involved
on the dutiable goods proposed to be stored in the public warehouse at any point of time
provide an undertaking binding himself to pay any duties, interest, fine and penalties payable in respect
of warehoused goods
provide an undertaking indemnifying the Principal Commissioner or Commissioner of Customs, from any
liability arising on account of loss suffered in respect of warehoused goods due to accident, damage,
deterioration, destruction or any other unnatural cause
appoint a person who has sufficient experience in warehousing operations and customs procedures as
warehouse keeper

12. Surrender of License
• A licensee may surrender the license granted to him by making a request in writing to the Principal
Commissioner or Commissioner of Customs
• On receipt of the request, the Principal Commissioner or Commissioner of Customs, may cancel the license if,
the licensee has paid all monies due
no warehoused goods remain deposited in the
public warehouse or are deposited in the public
warehouse from the date of request
no proceedings are pending against the licensee

13. Licensing of Special Warehouses – Sec 58A
The Principal Commissioner or Commissioner of Customs may, subject to conditions, license a special warehouse
wherein dutiable goods 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
The CBIC may, by notification in the Official Gazette, specify the class of goods which shall be deposited in the
special warehouse

14. Regulations for Special Warehouses
Upon an application being made to license a special warehouse, the Principal Commissioner or
Commissioner of Customs, as the case may be, may issue a license to an applicant who:
Licensing
is a citizen of India or is an entity incorporated or registered under any law for the time being in force
furnishes a solvency certificate* from a scheduled bank for an amount as may be specified by the
Principal Commissioner or Commissioner of Customs
proposes to store goods notified by the CBIC
submits an undertaking to comply with such terms and conditions as may be specified
undertakes to pay for the services of supervision of the warehouse by officers of customs on recovery
of costs
*Not applicable to an undertaking of the CG or SG or UT or to ports notified under the Major Port Trusts Act, 1963
Cases where License shall not be issued, validity and transferability of License, conditions to be fulfilled and
surrender of license, are similar to the regulations of public/ private warehouses

15. Cancellation of Licence – Sec 58B
Where a licensee contravenes any of the provisions of the Act or the rules or regulations or breaches any
of the conditions of the license, the Principal Commissioner or Commissioner of Customs may cancel the
license
The licensee shall be given a reasonable opportunity of being heard before cancellation of the
license
The Principal Commissioner or Commissioner of Customs may suspend operation of the
warehouse during the pendency of an enquiry
No goods shall be deposited in such warehouse during the period of suspension
However, the provisions of the Act, shall continue to apply to the goods already deposited in the
warehouse
Upon cancellation of license, the goods warehoused shall, within 7 days from the date on which order of
such cancellation is served on the licensee or within such extended period as the Proper Officer may allow,
be removed from such warehouse to another warehouse or be cleared for home consumption or export

16. Warehousing Bond & Removal

17. Warehousing Bond – Sec 59
The importer of any goods in respect of which a bill of entry for warehousing has been presented and assessed to
duty shall execute a bond in a sum equal to thrice the amount of the duty assessed on such goods, binding himself—
to comply with all the provisions of the Act and the rules and regulations
to pay, on or before the date specified in the notice of demand, all
duties and interest payable
to pay all penalties and fines incurred for the contravention of the
provisions of the Act or the rules or regulations
However, the Assistant Commissioner or Deputy Commissioner of Customs may permit an importer to execute a
normal bond in such amount as he deems fit
Any bond executed by an importer in respect of any goods shall continue to be in force even after the transfer of the
goods to another warehouse

18. Permission for Removal of Goods for Deposit in
Warehouse – Sec 60
When the provisions of Sec 59 have been complied with in respect of any goods, the Proper Officer may make an
order permitting removal of the goods from a customs station for the purpose of deposit in a warehouse
Where the goods are removed from the customs station of import to a warehouse or from the warehouse to a
customs station for export, the transport of the goods shall be under one-time lock, affixed by the Proper Officer or
the licensee or the Bond Officer
However, the Principal Commissioner of Customs or Commissioner of Customs
may having regard to the nature of goods or manner of transport, permit
transport of the goods without affixing the one-time-lock.

19. Period for which Goods may Remain Warehoused
– Sec 61
in the case of capital goods intended for use in any 100% EOU or electronic hardware technology park unit or
software technology park unit or any warehouse wherein manufacture or other operations have been permitted
under Sec 65, till their clearance from the warehouse
in the case of capital goods other than capital goods other than above, till their consumption or clearance from
the warehouse
in the case of any other goods, till the expiry of 1 year from the date on which the Proper Officer has made an
order under Sec 60(1) [Permission for removal of goods for deposit in warehouse]
However, the Principal Commissioner or Commissioner of Customs may, on sufficient cause being
shown, extend the period for which the goods may remain in the warehouse, by not more than 1 year

20. Goods Remain Beyond Specified Period
Where any warehoused goods remain in a warehouse beyond a period of 90 days from the date on which
the Proper Officer has made an order under Sec 60(1), interest shall be payable at the specified rate (10% to
36%) as determined by CG, till the date of payment of duty on the warehoused goods
However, if the Board considers it necessary so to do, in the public interest, it may
by order, and under the circumstances of an exceptional nature, to be specified in such order, waive the
whole or any part of the interest payable
by notification in the Official Gazette, specify the class of goods in respect of which no interest shall be
charged
by notification in the Official Gazette, specify the class of goods in respect of which the interest shall be
chargeable from the date on which the Proper Officer has made an order under Sec 60(1) [Permission
for removal of goods for deposit in warehouse]
Note: Sec 62 and Sec 63 have been omitted

21. Owner’s Rights and Manufacturing
Operations

22. Owner’s Right to Deal with Warehoused Goods –
Sec 64
The owner of any warehoused goods may, after warehousing the same, can-
inspect the goods
deal with their containers in such manner as may be necessary to
prevent loss or deterioration or damage to the goods
sort the goods
show the goods for sale

23. Manufacture and Other Operations in Relation to
Goods in a Warehouse – Sec 65
With the permission of the Principal Commissioner or Commissioner of Customs, the owner of any warehoused
goods may carry on any manufacturing process or other operations in the warehouse in relation to such goods
The following persons shall be eligible to apply
a person who has been granted a private warehouse licensing
a person who applies for a private warehouse license, along with permission for
undertaking manufacturing or other operations in the warehouse under Sec 65
An application shall be made along with an undertaking to
maintain accounts of receipt and removal of goods in digital form and furnish the same to the Bond
Officer on monthly basis digitally
execute a bond
inform the input-output norms, wherever considered necessary for raw materials and the final products
and to inform the revised input-output norms in case of change therein

24. Waste Arising from Manufacturing Operations
Where there is any waste or refuse arising in the course of any operations permissible, the
following provisions shall apply
if the whole or any part of the goods resulting from such operations are exported,
import duty shall be remitted on the quantity of the waste or refuse which has arisen
in relation to the goods exported
if the whole or any part of the goods resulting from such operations are cleared from
the warehouse for home consumption, import duty shall be charged on the quantity
of the waste or refuse which has arisen from the operations carried on.

25. Power to Exempt Imported Materials used in the
Manufacture of Goods in Warehouse – Sec 66
If any imported materials are used in the manufacture of any goods and the
rate of duty leviable on the imported materials exceeds the rate of duty
leviable on manufactured goods,
the CG, if satisfied that in the interests of the establishment or
development of any domestic industry it is necessary so to do,
May by notification in the Official Gazette, exempt the imported materials
from the whole or part of the excess rate of duty

26. Removal of Goods

27. Removal of Goods from One Warehouse to Another
– Sec 67
Where the warehoused goods are to be removed from one warehouse
to another warehouse or to a customs station for export, the owner of
the goods shall make such request by filing a form for transfer of goods
Where the goods are removed from one warehouse to another
warehouse the transport of the goods shall be under one-time lock,
affixed by the Proper Officer or the licensee or the Bond Officer

28. Clearance of Warehoused Goods for Home
Consumption – Sec 68
Any warehoused goods may be cleared from the warehouse for home consumption, if –
a bill of entry for home consumption has been presented
the import duty, interest, fine and penalties payable in respect of such goods have been paid
an order for clearance of such goods for home consumption has been made (including
electronically through the customs automated system) by the Proper Officer
The owner of any such warehoused goods shall not be allowed to relinquish his title to such goods regarding
which an offence appears to have been committed under the Act or any other law
The owner of any warehoused goods may, at any time before an order for clearance of goods for home
consumption, relinquish his title to the goods upon payment of penalties that may be payable in respect of
the goods and upon such relinquishment, he shall not be liable to pay duty
Any warehoused goods may be cleared from the warehouse for home consumption, if –
The owner of warehoused goods shall not be allowed to relinquish his title to such goods regarding which
an offence appears to have been committed under the Act or any other law
The owner of any warehoused goods may, at any time before an order for clearance of goods for home
consumption, relinquish his title to the goods upon payment of penalties that may be payable in respect of
the goods and upon such relinquishment, he shall not be liable to pay duty

29. Clearance of Warehoused Goods for Export – Sec 69
Any warehoused goods may 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
the export duty, fine and penalties payable in respect of such goods have been paid
an order for clearance of such goods for export has been made (including electronically
through the customs automated system) by the Proper Officer
If the CG is of opinion that warehoused goods are likely to be smuggled back into India, it may, by notification in the
Official Gazette, direct that such goods shall not be exported to any place outside India without payment of duty or
may be allowed to be so exported subject to such restrictions and conditions as may be specified in the notification

30. Other Miscellaneous Provisions

31. Allowance in Case of Volatile Goods – Sec 70
• When any warehoused goods at the time of delivery from a warehouse found to be
deficient in quantity on account of natural loss, the Assistant Commissioner or
Deputy Commissioner of Customs may remit the duty on such deficiency
• The CG, may by notification in the Official Gazette, specify the volatility and manner
of storage of volatile goods

32. Goods Improperly Removed from Warehouse –Sec
71 & 72
The Proper Officer may demand the owner to pay, the full amount of duty together with interest, fine and
penalties payable, in the following cases (Sec 72)
where any warehoused goods are removed from a warehouse in contravention of Sec 71
where any warehoused goods have not been removed from a warehouse at the expiration of the
period as per Sec 61
where any goods in respect of which a bond has been executed and which have not been cleared for
home consumption or export or are not duly accounted for to the satisfaction of the Proper Officer
If any owner fails to pay any amount demanded, the Proper Officer may, detain and sell, after notice to the
owner, such sufficient portion of his goods
Goods not to be taken out of warehouse – Sec 71
No warehoused goods shall be taken out of a warehouse except on clearance for
home consumption or export, or for removal to another warehouse

33. Cancellation of Bond and Custody & Removal of
Warehoused Goods – Sec 73 & 73A
Cancellation and Return of Warehousing Bond - Sec 73
When all amounts due on account of goods have been paid, the Proper Officer shall cancel the bond as
discharged in full, and shall on demand deliver it, so cancelled, to the person who has executed or is
entitled to receive it
Custody and removal of warehoused goods – Sec 73A
All warehoused goods shall remain in the custody of the person who has been granted a license
until they are cleared for home consumption or are transferred to another warehouse or are
exported or removed as otherwise provided under the Act
Where any warehoused goods are removed in contravention of Sec 71, the licensee shall be liable
to pay duty, interest, fine and penalties without prejudice to any other action that may be taken
against him under the Act or any other law for the time being in force

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