Page 54 - ELT_1st September 2020_Vol 373_Part 5

T64 EXCISE LAW TIMES [ Vol. 373

under section 65, provision of execution of the bond and security by the licensee,
receipt, storage and removal of goods, maintenance of accounts, conduct of audit
etc.
3. Further, the Special Warehouse (Custody and Handling of goods)
Regulations, 2016, which were hitherto governing the procedure for custody and
handling of goods deposited in and removed from a Special Warehouse have
been amended, vide Notification No. 77/2020-Customs (N.T.), dated 17th
August, 2020, to exclude their application for such warehouses operating under
section 65. The said regulations will continue to be applicable for special
warehouses, not operating under Section 65.
4. An applicant desirous of manufacturing or carrying out other
operations on specified goods in a bonded warehouse under section 65, must
have the premises licensed as a special warehouse under section 58A of the
Customs Act. The applicants can seek a license under section 58A and
permission to operate under section 65 synchronously, or request for permission
under section 65, if they already have a warehouse licensed under section 58A.
5. For the sake of uniformity, ease of doing business and exercising due
diligence in 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 as in Annexure A. The form of
application has been so designed that the process for seeking grant of license as a
Special Warehouse as well as permission to carry out manufacturing or other
operations stands integrated into a single form. The declaration to be made to
satisfy regulation 5 of Special Warehouse Licensing Regulations, 2016, and the
undertaking to be made by the applicant as per regulation 4 of MOOSWR, 2020,
is included in the application format (Part II). The warehouse in which section 65
permission is granted shall also be declared by the licensee as the
principal/additional place of business for the purposes of GST.
6. It has also been decided that the licensees manufacturing or carrying
out other operations in a bonded warehouse shall be required to maintain
records as per the form prescribed under this circular (Annexure B). Regulation 4
of the MOOSWR, 2020, provides that the applicant under section 65 shall
undertake to execute a bond in such format as specified. Further, Section 59 of
the Customs Act requires the importer of the warehoused goods to furnish
security and execute a triple duty bond for the warehoused goods. Thus, the
bond prescribed under this Circular as per Annexure C serves the requirements of
both MOOSWR, 2020 and Section 59 of the Customs Act. Additionally, the
licensee will furnish security by way of a bank guarantee equivalent to the duty
involved on the warehoused goods.
7. To the extent that the resultant product manufactured or worked
upon in a bonded warehouse 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.
8. 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 Services Tax Act, 2017 (hereinafter
EXCISE LAW TIMES  1st September 2020  54