CHAPTER 10

WAREHOUSING

Part-II

EXPORT WAREHOUSING
1. Introduction

1.1 In pursuance of sub-rule (1) of rule 20 of the Central Excise (No.2) Rules, 2001(hereinafter referred to as the ‘said Rules’) the Board has issued notification no.46/2001-CE(N.T.), dated 26th June, 2001 which has come into force on 1 st July, 2001,whereby the warehousing provisions have been extended to all excisable goodsspecified in the First Schedule to the Central Excise Tariff Act, 1985 intended for storage ina warehouse registered at such places as may be specified by the Board and exporttherefrom.

1.2 In pursuance of the above-mentioned notification the Board has also specified byCircular No.581/18/2001-CX, dated 29 th June, 2001 the places and class of persons towhom the provisions of the notification No.46/2001-Central Excise (N.T.) dated 26 th June,2001 shall apply. In the same Circular, the Board has specified the conditions (includinginterest), limitations, safeguards and procedures.

1.3 The facility of export warehousing is available to the following exporters andplaces, namely: -

(1) Exporters: The exporters who have been accorded status of Super Star TradingHouse or Star Trading House, the foreign departmental stores of repute and theautomobiles manufacturers who have signed Memorandum of Understandingwith Directorate General of Foreign Trade in the Ministry of Commerce andIndustry.

(2) Places: The warehouses may be established and registered in Ahmedabad,Bangalore, Kolkata, Chennai, Delhi, Hyderabad, Jaipur, Kanpur, Ludhiana, Districtof Pune and Mumbai.

2. Conditions of export warehousing

2.1 The exporter shall furnish a general Bond (B-3) under rule 19 of the said Rules readwith notifications issued thereunder, backed by twenty five per cent security of the bondamount.

2.2 Where any goods are diverted to home consumption from the warehouse,interest shall be charged at the rate of twenty four per cent per annum on the dutypayable, calculated from the date of clearance from the factory of production or anyother premises approved by the Commissioner, till the date of payment of duty andclearances; and

3. Procedure of export warehousing

3.1 Registration

3.1.1 The exporter shall make a written request along with application for registrationunder rule 9 to the Commissioner for being allowed to establish a export warehouseunder this provision. The Commissioner may cause an enquiry to be made in respect ofthe security of the premise for warehouse indicated by the exporter in the application. Iffound in order, the Commissioner will accord his approval subject to such directions,terms and manners as he may specify and forward the application to the jurisdictionalSuperintendent of Central Excise through the jurisdictional Assistant Commissioner ofCentral Excise or Deputy Commissioner of Central Excise (having jurisdiction over thepremise) within seven working days of the receipt of the application.

3.1.2 The registration certificate containing registration number will be issued by thejurisdictional Superintendent of Central Excise immediately on receipt. Procedure relatingto registration will be same as notified in Notification No.36/2001-CE(N.T.), dt. 26.6.2001.

3.2 Execution of bond

3.2.1 Every exporter registered in the aforesaid manner, shall execute before theAssistant Commissioner of Central Excise or the Deputy Commissioner of Central Excisehaving jurisdiction over the warehouse a general bond under Rule 19 of the said Rules forexport of goods from the warehouse in the B-3 Bond (General Security) Format at(Annexure-26). The exporter availing this scheme shall be required to furnish security equalto 25% of the bond amount. In case any bank guarantees are furnished, it shall be thesole responsibility of the exporter to renew its validity from time to time.

3.2.2 A Running Bond Account will be opened in the format specified at (Annexure-27).This register shall be maintained by the exporter in the warehouse and shall be madeavailable to the officer-in -charge or officers of Internal Audit for scrutiny and checking.

3.3 Removal of goods to warehouse

3.3.1 For removal of excisable goods from a factory or any other premise approved bythe Commissioner to a warehouse, procedure laid down in Circular No.579/16/2001-CX,dated 26.6.2001 issued under rule 20 of the said Rules will be applicable. It is clarified thatthe Notification No. 46/2001-CE(NT) dated 26.6.2001 do not cover removal from onewarehouse to another.

3.3.2 The Central Excise Officer in-charge of the warehouse will issue certificate ofremoval in duplicate in the Form CT-2 specified at (Annexure-28) indicating details of thegeneral bond executed by the exporter. The CT-2 shall bear per-printed serial numbersrunning for the whole financial year beginning on the 1st April of each year. The saidofficer will issue twenty five CT-2 certificates at a time, signing each of the leaf with theofficial stamp. More certificates can be issued if it is so requested by the exporter on thegrounds of large number of procurements. The exporter will fill up the relevantinformation in CT-2. After making provisional debit in the Running Bond Account, he willindicate the same in the CT-2. One copy of CT-2 will be forwarded to Officer-in charge ofthe warehouse. One copy will be sent to the consignor and one copy will remain withthe exporter.

3.3.3 The consignor will prepare an application for removal in the Form specified inAnnexure-IV (hereinafter referred to as ARE-3) and an invoice (under rule 8 taking intoaccount CT-2 certificate) and follow the procedure specified in Circular No. 579/16/2001-CX dated 26.6.2001 issued under rule 20. The serial number of the corresponding CT-2shall be mentioned on the top of the each copy of ARE-3. Any nominal variationsbetween the provisional debit indicated in the CT-2 and the actual duty involved in thegoods removed as indicated in ARE-3, can be ignored. Immediately on receipt of goods,the provisional debit shall be converted into actual debit on the basis of the detailsmentioned in ARE-3.

3.3.4 The officer-in-charge of the warehouse will countersign application and despatchto the Range Office having jurisdiction over the factory / other approved premise ofremoval within one working day of receipt of the application. He will make suitable entryin his own record accordingly.

3.3.5 The exporter [warehouse owner] shall maintain private record (WarehousingRegister) containing information relating to details of ARE-3 and invoice, date ofwarehousing certificate, description of goods received including marks and numbers,quantity, value, amount of duty, details of operation in the warehouse and newpackages and their marks and number, clearance from the warehouse for export (ARE-1No., Invoice No., quantity, value, duty) and clearance for home consumption. They shallproduce this Register to the Central Excise Officers in-charge of the warehouse wheneverrequired.

3.4 Receipt and storage of goods in warehouse

3.4.1 Receipt of goods will be governed by the procedure specified Circular No.579/16/2001-CX dated 26.6.2001 issued under rule 20.

3.4.2 Ten percent of the consignments, subject to minimum of two, received in amonth will be randomly selected, spread over the entire month, for verification by officer-in-charge after the receipt of the written intimation.

3.4.3 Goods brought under the cover of each ARE-3 shall be stored separately orproper accountal shall be maintained, till these are exported or diverted for home-consumption.

3.5 Packing, re-packing, labelling or re-labelling within the warehouse

3.5.1 The operations of Packing, re-packing, labelling or re-labelling in relation toexcisable goods received and stored in the warehouse will be governed by theprocedure specified under rule 20. Suitable entries must be made in the Export-Warehouseregister. In case of non-reconciliation of quantity, after adjusting anywastage or refuse, the differential quantity shall be treated as unaccounted and actionfor recovery of duty will be initiated.

3.5.2 The exporter may procure packing or labeling material and bring the same intothe warehouse under the warehousing procedure itself. No duty paid goods will bepermitted to be brought into the warehouse.

3.5.3 Where the process of packing, repacking, labelling or relabelling amounts tomanufacture in terms of the provisions of the Central Excise Tariff Act, 1985, the goodspermitted for clearance for home consumption shall be assessed accordingly.

4. Goods supplied by an SSI Unit exempted from Registration

4.1 An SSI Unit exempted from registration under rule 9 of the said rules will alsoprepare ARE-3 against CT-2 in the same manner as mentioned in Para 5.3 above exceptthat he will use his own invoice. Registration under rule 9 shall not be insisted. TheWarehousing Certificate forwarded to the Range Office having jurisdiction over such SSIUnit shall be retained in the office and will be tallied with the details submitted by the SSIUnit in the quarterly statement. The procedure to be followed is based on Boards CircularNo.212/46/96-CX, dated 20th May, 1996, which continues to be applicable under thesaid Rules. The clearances on those ARE-3 in respect of which Warehousing Certificate isnot received within ninety days of removal or such extended period as the Commissionermay allow, will be treated as clearances for home-consumption. If the WarehousingCertificate is subsequently produced, the clearances, which were treated as "clearancefor home consumption" as aforesaid, shall be expunged.

5. Clearance of goods for export outside India

5.1 For the export of goods from the warehouse, the procedure relating topreparation of application for export (ARE.1), examination and sealing, acceptance ofproof of export etc. shall be governed by Notification No.42/2001-CE(N.T.), dt. 26.6.2001 and instructions applicable for this notification.

5.2 The requisite copies of application will be filed with the Deputy Commissioner orAssistant Commissioner having jurisdiction over the warehouse and with whom the Bondwas executed, for acceptance of proof of export and issue of a certificate to this effect.

5.3 The credit in Running Bond Account shall be made by the exporter on the basis ofthe application (ARE.1) duly endorsed by Customs at the place of export evidencingthat the goods have actually been exported. The exporter will submit list of ARE.1 alongwith the date of export for the goods exported in each month, within six months of theremoval from the warehouse and the original copies of the respective ARE.1 dulycertified by Customs authorities that the goods have actually been exported [containingPass for Shipment Order]. The exporter shall be liable to pay duty with interest where suchproof of export is not available with him within six months from the date of removal fromthe warehouse.

5.4 The Superintendent in-charge of the warehouse is empowered to issue certifiedattested copies of ARE.1 [more than one copies may be required by exporter as oneapplication (ARE.1) may consist of goods of several ARE-3s] and hand over to theexporter for forwarding to the factory whose goods were exported so that such factoriescan avail other export benefits, such as refund of CENVAT credit accumulated onaccount of export in terms of the CENVAT Credit Rules, 2001. This refund will be given onlyafter goods covered on an ARE-3 is entirely exported. In case of any diversion to home-consumption,refund will be reduced on pro-rata basis. For the sake of clarification, it isstated that the removal from the factory of production to export warehouse on ARE-3 is‘removal under bond for export’. Thus, the manufacturer shall not be asked to reverseCENVAT Credit @ 8% of price of the said goods.

5.5 On request from exporter, copies of proof of export may be sent directly, by postto the Range Office having jurisdiction over the factory or handed over to the exporter insealed cover for delivery to such Range Office.

5.6 Photocopies of the Shipping Bill/ Export Application and Bill of Lading dulyattested by the Superintendent in-charge of the Warehouse along with certificate ofproof of export should be accepted as valid documents for the purposes of refund ofaccumulated credit under the CENVAT Credit Rules, 2001 on account of exports withoutpayment of duty. The proof of export received directly or in official sealed cover from theSuperintendent in-charge of the warehouse may be used to verify the authenticity.

5.7. Where neither the duplicate copy of ARE.1 nor the original copy of ARE-1 dulyattested at the port of export, are made available within the time stipulated period of sixmonths, it shall be presumed that export of goods cleared from warehouse has not takenplace. The demand shall be raised by the Deputy/Assistant Commissioner havingjurisdiction over the warehouse for non-fulfilment of the conditions of bond executed bythe exporter.

6. Diversion of goods for home-consumption

6.1 Goods can be diverted for home-consumption from the warehouse with thepermission of the jurisdictional Deputy/Assistant Commissioner of Central Excise. Theclearance shall be effected on invoice prepared under rule 8 on payment of duty,interest and any other charges on TR-6 Challans and after making necessary entries inthe export warehouse register maintained by the exporter in the warehouse. Credit willbe permitted in the Running Bond Account equivalent to the duty involved in the goodsso diverted, which shall not exceed amount of duty debited on the basis of ARE-3 onwhich such goods were received in the warehouse. If entire quantity is not diverted,calculation shall be done on pro-rata basis.

6.2 Goods can be diverted for home-consumption even after the clearance from thewarehouse on ARE.1. For cancellation of documents, provisions of Notification No.46/2001-CE(NT) dated 26.6.2001 shall be followed. The intimation shall be given toDeputy/Assistant Commissioner having jurisdiction over the warehouse. Credit in RunningBond Account will be permitted in the same manner as mentioned above.

6.3 Where the goods are diverted for home-consumption in full or in part the exportershall be liable to pay interest @24% per annum on the amount of duty payable on suchgoods from the date of clearance from the factory of production or any other premisesapproved, till the date of payment of duty and clearance.

7. Waiver of physical warehousing in case of exigency

7.1 The officer- in-charge of the warehouse may permit waiver from physicalwarehousing (i.e. permitting export without physically storing the goods in thewarehouse) where exporter so requests in writing provided all the formalities relating torecord-keeping shall be completed in usual manner with suitable record in theWarehousing Register: warehousing waived. This permission will be given in exceptionalcases where delay occurred due to delayed supply from the factory or longer transit-periodor requirement of immediate export or any other genuine reasons, provided theentire consignment is entered for export in the original packing. Such cases of permissiongranted will be reported to Superintendent-in-charge of the warehouse at the earliest.

8. Providing of accommodation for the Officer

8.1 The exporter shall provide adequate office accommodation and furniture for theOfficer deployed for examination and supervision, in the warehouse. Where the exporteris willing to bear the cost of the posting of Officers on “cost recovery basis”, theCommissioner, depending upon the administrative feasibility, may consider thedeployment.

8. Providing of accommodation for the Officer

8.1 The exporter shall provide adequate office accommodation and furniture for theOfficer deployed for examination and supervision, in the warehouse. Where the exporteris willing to bear the cost of the posting of Officers on “cost recovery basis”, theCommissioner, depending upon the administrative feasibility, may consider thedeployment.

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