- To provide the facility of a customs bonded warehouse, primarily
for Small and Medium Enterprises (SME) and Indirect Exporters (IDE),
a scheme of Common Bonded Warehouse (CBW) has been put in place in
terms of the Common Bonded Warehouse (Conventional) Rules 1998, notified
as SRO-843(I)/98 dated 23.7.98 (App:8.1). The facility under these
rules can be availed by both direct and indirect exporters. SME is
defined as an export unit having export quantum upto US$2.5 million
per annum. Indirect exporter means a manufacturer or supplier of
goods to be used as input for export.
- The CBW rules are, in essentials and in accounting procedures,
almost the same as are applicable in the case of Customs Manufacturing
Bonds under the Manufacturing in Bond Rules notified as SRO-1140(I)/97
dated: 6.11.97 (App:6.1). The crucial variations are described below:
- The license for a Common Bonded Warehouse is issued for a period
of three years and is automatically revalidated for successive periods
of three years without further application by the licensee.
- The licensee has to provide proper accommodation to the officer
incharge of the CBW and all expenses are borne by the licensee.
- Removal of input goods from the CBW to the SMEs, indirect and direct
exporters is made as per procedure prescribed by the Collector of
- Both direct and indirect exporters are eligible to avail the CBW
Rules subject to documentary requirements as under:
(a) Direct Exporter (DE): against export L/C or order on collection
basis, both on D/A basis (Documents against acceptance) or on D/P
basis (Document against Payment) or past year’s export performance
certificate issued by the Export Promotion Bureau.
(b) Indirect Exporter: against back to back ILC (Inland L/C) or past
year’s indirect export performance certificate issued by the Export
(c) Output Supplying Indirect Exporter: for supply of finished goods
to a trading company or commercial exporter, against back to back
ILC opened by a trading company based on a master L/C received by
- The Export House or DE or IDE or SME, on filing of Bill of Entry
submits a bank guarantee for the leviable duties and taxes except
those falling in either the GOLD or SILVER categories as envisaged
SRO-905(I)/98 dated 12.8.98 and SRO-906(I)/98 dated 12.8.98. However,
the bank guarantee has to be provided by DEs on non-L/C based export
orders or on past year’s direct export performance, IDEs on past year’s
indirect export performance or against ILCs based on non-L/C based
export orders or past year’s direct or indirect export performance.
- The amount of duty and taxes and the indirect tax-free imported
input quantity is calculated by multiplying the export L/C or ILC
value with the input to output ratio as determined by the concerned
Collector of Customs. However, when the standard IOCs are issued
by the IOCO, the duties and taxes and the indirect tax-free imported
quantity would be calculated on the basis of IOCs as per IOCO Pass
- The exporters guarantee is released when exports have been effected
and proceeds realized in foreign exchange as per Bank Credit Advice.
- The SMEs, DEs and IDEs are liable to pay a CBW fee.
- The retention period for the procured input goods is three years
from the date of importation during which period warehousing surcharge,
payable under Section 98 of the Customs Act 1969, is not payable.
- The IDE submits to the licensee of the CBW, in the form as in Append
II to SRO-843/98, for procuring input goods for further manufacturing
or processing. The licensee issues four copies of which the first
is for SME or IDE, the second goes to Customs, the third is issued
to SME or IDE to attach the same with the Shipping Bill or delivery
order and the fourth is retained by the licensee for his record. After
goods have been exported by SME or DE, the third copy is authenticated
as exported and sent to the licensee and to the Customs.