In-bond Manufacture - New Guidelines

Circular No.132/1995-Cus.date 22/12/95

Subject: Warehousing -Grant of in-bond Manufacture facility under section 65 of the Customs Act, 1962 - Instruction regarding

I am directed to state that a review of the existing policy with regard to grant of in-bond Manufacture facility under section 65 of the Customs Act, 1962 has been conducted by the Board. Consequent to the review, it has been decided that the requests for grant of in-bond Manufacture facility under section 65 of the Act will henceforth be considered and decided at the level of the Commissioners without making any reference to the Board. The following guidelines may, however, be kept inview while deciding such requests.

2. The Board's policy has been to extend the facility mainly to export oriented units so that unnecessary difficulties to pay duty and later claim drawback can be avoided. In order to decide whether an Industrial unit is export-oriented or not, the following figures may be compared:-

a) Total value of goods manufactured by using imported raw materials;

b) Total value of such finished goods exported; and

c) Total value of such finished goods retained for domestic sale.

3. Flexible approach may, however, be adopted in the matter so that there is no instance that the exports have to be less than 50% of imported materials. Further the Manufacture-in-bond operations are required to be carried out under customs supervision on cost recovery basis. The Commissioner may carefully secrutinise the application for grant of in-bond manufacture facility and if the applicant is financially secured, has good credibility, and has not been involved in Customs or Excise duty evasion in the preceding 5 years in the normal course, an in-bond manufacture licence under section 65 may be granted. This would, of course, be subject to the condition that the promises are suitable and adequately secured. While granting the request, the provisions of the Manufacture and other operations in Warehouse Regulations, 1966 have also to be complied with.

Sd/-
(K. Chopra)
Under Secretary to the Govt. of India
F.No.473/61/94-LC

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