The CBIC vide Circular No. 34/2019-Customs dated October 01, 2019 has clarified the procedures and documentation for units operating under Section 65 of the Customs Act, 1962 (“the Act”) i.e. undertaking manufacturing and other operations in relation to goods in a warehouse.
This Circular discusses Section 65 in comprehensive manner, including application for seeking permission under section 65, provision of execution of the bond by the licensee, receipt, storage and removal of goods, maintenance of accounts, conduct of audit etc.
Inter alia, following processes as regards application for licencing, maintenance of books, etc, has been provided:
Application Form
For grant of permission under section 65, the form of application to be filed by an applicant before the jurisdictional Principal Commissioner / Commissioner of Customs is prescribed and has been designed in such a manner that the process for seeking grant of license as a private bonded warehouse as well as permission to carry out manufacturing or other operations stands integrated into a single form.
Maintenance of Books of Accounts
The Books of Account to be maintained has been provided in Annexure-B of the Circular and it includes:
- Details of Import Receipts
- Bill of Entry No. and Date
- Custom Station of Import
- Details of Bond
- Details of Insurance
- Assessable Value
- Duty Assessed etc.
- Details of DTA Receipts
- GST Invoice No. and date
- Description of Goods
- Quantity
- Taxes Paid
- E-way bill number (if applicable) etc.
- Processing
- Details of Goods issued for manufacturing and other processes
- Details of Goods removed for and returned after Job-work
- Details of Resultant products cleared for Exports
- Details of Resultant products cleared for Home Consumption
- Imported goods cleared as such
- Treatment of waste or refuse arising out of manufacture or other operations where the resultant product is exported
- Quantity of waste or refuse destroyed
- Duty paid on waste or refuse
- Duty to be remitted on the quantity of warehoused goods contained in so much of the waste or refuse (destroyed or cleared as such)
- Treatment of waste or refuse arising out of manufacture or other operations when the resultant product is cleared for home consumption
- Details of duty paid on warehoused goods contained in so much of the waste or refuse
Supply of Goods manufactured in warehouse
To the extent that the resultant product is exported, the licensee shall have to file a shipping bill and pay any amounts due. A GST invoice shall also be issued for such removal. In such a case, no duty is required to be paid in respect of the imported goods contained in the resultant product as per the provisions of section 69 of the Act.
To the extent that the resultant product (whether emerging out of manufacturing or other operations in the warehouse) is cleared for domestic consumption, such a transaction squarely falls within the ambit of “supply” under Section 7 of the Central Goods and Service Tax Act,2017 (hereinafter referred to as the, “CGST Act”). It would therefore be taxable in terms of section 9 of the CGST Act, 2017 or section 5 of the Integrated Goods and Services Tax Act, 2017 depending upon the supply being intra-state or inter-state.
Domestic procurement of Goods
In so far as domestic procurement is concerned, applicable rates of taxes shall be payable and exemptions, if any, can also be availed. By virtue of simply being a unit operating under section 65, they shall not be entitled to procure goods domestically, without payment of taxes.
Read more at: http://www.cbic.gov.in/resources//htdocs-cbec/customs/cs-circulars/cs-circulars-2019/Circular-No-34-2019.pdf