Circular No.

36 /2020-Customs

F. No: 473/03/2020-LC
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes & Customs
************
North Block, New Delhi
Dated 17th August, 2020

To,

All Principal Chief Commissioners/Chief Commissioners of Customs

Principal Directors General/Directors General of Customs
Principal Commissioners/Commissioner of Customs

Subject: Procedure to be followed in cases of manufacturing or other operations

undertaken in special warehouses under section 65 of the Customs Act-reg.

Madam/Sir,

Manufacture and Other Operations in Special Warehouse Regulations, 2020

(hereinafter referred to as the MOOSWR, 2020) have been issued vide Notification No.
75/2020-Customs (N.T.) dated 17th August, 2020. These regulations allow manufacturing and
other operations in a special warehouse licensed under section 58A of the Customs Act, 1962,
with regard to warehoused goods specified in clause (1) of Notification No. 66/2016-Customs
(N.T) dated 14th May, 2020 (herein after referred to as, “specified goods”).

2 MOOSWR, 2020 and this Circular cover the procedures and documentation for a
section 58A warehouse, operating under Section 65 of the Act, in a comprehensive manner
including application for seeking permission 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 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. The resultant
product will thus be supplied from the warehouse to the domestic tariff area under the cover
of GST invoice on the payment of appropriate GST and compensation cess, if any. As
regards import duties payable on the imported goods contained in so much of the resultant
products are concerned, same shall be paid at the time of supply of the resultant product from
the warehouse for which the licensee shall have to file an ex-bond Bill of Entry and such
transactions shall be duly reflected in the accounts prescribed under Annexure B. As per
MOOSWR, 2020, the applicant shall also inform the input-output norms for raw materials
and final products and shall also inform the revised input-output norms in case of change
therein.

8.1 The proper officer should ensure that the goods so cleared are result of manufacturing
or other operations. In case the licensee is unable to carry out any manufacturing or other
operations on warehoused goods, then the goods may be cleared as such, either for home
consumption after the payment of applicable import duties along with the interest accrued
upon such goods in terms of Section 61 (2) of the Customs Act, 1962 or may be exported. In
such case the provisions of clause (b) of Section 61(1) shall not be applicable.
9. The waste generated during the course of manufacture or other operations of the
resultant product may be cleared for home consumption as per clause (b) to sub-section (2) of
section 65 of the Customs Act on payment of applicable duties of customs and GST.

10. Where the resultant product is exported, and duty on the waste or refuse is paid as per
proviso to clause (a) to sub-section (2) of section 65, the same shall be deposited manually
through a Challan. The records maintained as per Annexure-B would be sufficient for
accountal of such goods.

11. As per Regulation 3 (2) (e) (i) of the Special Warehouse Licensing Regulations, 2016,
the Principal Commissioner or Commissioner has to be satisfied that the site or building of
the proposed special warehouse is suitable for secure storage of dutiable goods. Regulation 8
of MOOSWR 2020, requires the licensee to provide such facilities, equipment and personnel
as are sufficient to control access to the warehouse, provide secure storage of the goods and
ensure compliance to the regulations. Considering the nature of goods to be warehoused in a
special warehouse, the Principal Commissioner or Commissioner has to ensure that the
structure is fully closed from all sides, gate(s) with access control and personnel to safeguard
the premises. It is also to be ensured that there is/are CCTV cameras at the gate(s) and there
is a provision of accessing the same by customs officers. The Principal
Commissioner/Commissioners should take into consideration the facilities, equipment and
personnel put in place for secure storage of goods, while considering grant of license.
Further, office space for bond officer and sufficient space for customs officer for carrying out
examination at the time of arrival or removal of goods have to be provided.

12. As per Regulation 4(2)(i) of MOOWSR 2020, a licensee is required to maintain

accounts of receipt and removal of goods in digital form in such format as may be specified
and furnish the same to the bond officer on monthly basis digitally. This information shall be
communicated from the registered email address of a licensee to the designation based
official email id accessed by the bond officer. Appointment of any new warehouse keeper
should also be intimated along with the monthly returns. Jurisdictional Commissionerate
should ensure that such emails are functional and details of same are communicated at the
time of issuance of license and also published through public notice.

13. As per Regulation 18(3), the records should be maintained electronically using
software which has inter alia features of audit trail and with each event being recorded with
time stamp. The licensee is also required to provide details of such software while applying in
terms of MOOSWR 2020. At the time of inspection, the proper officer should, through a
demonstration, check and ensure that the software meets the requirements of Regulation
18(3). In case licensee wishes to use any other software after issuance of license, bond officer
should be informed in advance along with similar demonstration. Proper officer should
record the observations and confirm that the new software meets the requirements of
Regulation 18(3).

14. Section 58A provides that the proper officer shall cause a warehouse licensed under
section 58A to be locked and no person shall enter the warehouse except in his presence. It is
clarified that this requirement shall be applicable for the strong-room where specified goods
are warehoused, in terms of regulation 9 of MOOSWR, 2020. This will not apply to the
remaining licensed premises.

15. The services of customs officer for supervising various activities prescribed in the
MOOSWR, 2020, shall be chargeable on cost recovery or overtime basis, in terms of
regulation 4(2)(vi). The licensee shall have to indicate the frequency with which the
warehouse has to be operated per day / per week and the expected business hours of such
operation, requiring supervision/presence of the bond officer in terms of MOOSWR, 2020.

15.1 The Principal Commissioner / Commissioner shall evaluate the projected requirement
and also consider the distance of the warehouse from the customs office to determine which
of the modes of recovery of costs needs to be applied and the amount to be paid by the
licensee.

16. Clarification required, if any, may be sought from the Board

17. Hindi version follows.

(Dr. Swati Bhanwala)

OSD (Land Custom)
 Annexure- A
Application for License for a special warehouse under section58A and permission for
manufacturing and other operations under section 65 of the Customs Act 1962.

Part I
(to be filled by the applicant)
1. Name of the Applicant:

2. PAN No:

3. GSTIN:

4. IEC:

5. Constitution of business (Tick as applicable and attach copy)

(i) Proprietorship
(ii) Partnership
(iii) Limited Liability Partnership
(iv) Registered Public Limited Company
(v) Registered Private Limited Company
(vi) Registered Trust
(vii) Society/Cooperative society
(viii) Others (please specify)

Note: Copy of certificate of incorporation along with Memorandum of Objects and Article of
Association in case of companies and partnership deed in case of partnership firms should be
attached.

6. Registered office:
Address:
Tel:
Fax:
E-mail:

7. Bank Account details:

Name of the Bank:
Branch name:
Account Number:

8. Name, Address & DIN (if applicable):

[of Proprietor/Partners/Directors etc.
(Please attach copies of ID proof)].

9. Name & Designation of the Authorized Signatory:

(Please attach copy of Aadhaar Card as proof of ID).

10. Details of existing manufacturing facilities in India and/or Overseas of the applicant firm and
of each of its directors/partners/proprietor, as the case may be (please attach separate sheet if
required).
 Part II
(to be filled by the applicant)
1. Address of the proposed site or building:

2. Boundaries of the warehouse:

(i) North
(ii) South
(iii)West
(iv) East

3. Details of property holding rights of the applicant (please provide supporting document):
(i) Owner
(ii) Lease/rent

4. Contact details at the site/premises:

(i) Tel:
(ii) Fax:
(iii)Email:
(iv) Website, if any:

5. Details of warehouse license issued earlier to the applicant, if any:

(i) Date of issue of license:
(ii) Commissionerate file No.:
(iii)Attach copy of warehouse license.

6. Whether the applicant is a Licensed Customs Broker? If yes, please provide details:

7. Whether the applicant is AEO? If yes, please provide details.

8.Description of Premises (fill details as applicable to the premises):

(Please enclose a ground plan of the site / premises indicating all points of exit/entry/ area of
storage / area of manufacturing / earmarked area of office)

(i) What is floor area?

(ii) Number of stories?
(iii) Total area (or cubic capacity) available for storage of
(a) specified goods, and
(b) other goods
(iv) Identify and mark area(s), occupied by third parties in the ground plan:
(v) What is the type of construction of walls and roof?
(vi) Which year has the building been built? Has it been recently remodelled? If so, when?
(vii) Identify by location and size all accesses to the site / building to pedestrian and vehicles:
(viii) Identify by location and size all other accesses to the building including doors &
windows:
(ix) Please indicate whether the premises have been authorized for commercial use by local
Government authorities?

9. Goods proposed to be manufactured or other operations proposed to be carried out (if

necessary, additional sheets may be attached).

Details of goods: Description of Classification as per Briefly detail, input- out

goods Customs Tariff norms
Please attach any
supporting publication
/document, if available.
proposed to be
imported

proposed to be
domestically
procured

intermediate
product

final product

details of waste &

scrap

In case of any change in the nature of operations subsequent to the grant of permission, the
same shall be informed to the Jurisdictional Commissioner of Customs within 15 days.

10. SECURITY FACILITIES AT THE PREMISES, EXISTING OR PROPOSED:

(i) Burglar Alarm System:

(ii) CCTV Facility:

a. Is there a CCTV monitoring system installed to cover the surrounding area of the
site and storage area?
b. Please indicate the no. of cameras installed:
c. No. of hours/days of recording accessible at any point of time:

(iii) Security Personnel:

a. Details of arrangements for round the clock security provided for the warehouse:
b. Name & details of firm contracted for security services:
c. No. of personnel to be deployed on each shift for round the clock security:

(iv) Fire Security:

(Please enclose a fire safety audit certificate issued by a qualified independent agency)

11. Software which will be used in terms of Regulation 18(3):

11. DECLARATION:

I/ We declare that:

1. I/We are a registered or incorporated entity in India.

2. I / We have not been declared insolvent or bankrupt by a court or tribunal.
3. I/We have not been convicted for an offence under any law.
4. I/We have neither been penalized or convicted nor are being prosecuted for an
offence under the Customs Act, 1962 or Central Excise Act, 1944 or Finance Act,
1994 or Central Goods and Services Tax Act, 2017 or Integrated Goods and
Services Tax Act,2017 or Goods and Services Tax (Compensation to States) Act,
2017.
5. There is no bankruptcy or criminal proceedings pending against me / us.
6. I/We hereby declare that the information given in this application form is true,
correct and complete in every respect and that I am authorized to sign on behalf of
the Licensee. I further undertake that if any particulars declared by me/us are
proved to be false, the license granted to me/us shall be liable to be cancelled and
I/we shall be liable for action under Customs Act, 1962.

12. UNDERTAKING.

I/We undertake to:

(i) maintain accounts of receipt and removal of goods in digital form in such
format as may be specified and furnish the same to the bond officer on
monthly basis digitally;
(ii) provide facilities, equipment and personnel as required in the Manufacture and
Other Operations in Special Warehouse Regulations, 2020;
(iii) execute a bond in such format as may be specified.
(iv) Furnish a security in form of bank guarantee as may be specified;
(v) inform the input-output norms, for raw materials and the final products and to
inform the revised input-output norms in case of change therein;
(vi) pay for the services of supervision of the warehouse by officers of customs on
cost recovery basis or overtime basis, as may be determined by the Principal
Commissioner of Customs or the Commissioner of Customs; and
(vii) comply with such terms & conditions as may be specified by the Principal
Commissioner of Customs or the Commissioner of Customs.

(Signature of the applicant/authorized signatory)

Stamp
Date:
Place:
 Part III
(For Use by Customs Only)

1. Verification of the applicant:

[verification to be done of the Declaration made by applicant as per serial no.11 of Part -
II of the application. Verification to be done by DRI / DGGI.]

2. Date of visit to the premises by the bond officer:

3. Findings of the bond officer with respect to security, fire protection, IT enabled inventory
management system, type of construction, security and storage space of the strong-room,
area available for examination of goods, software etc.

4. Is the Premises recommended for issue of license as a warehouse along with permission
for manufacture or other operations?

Signature:
Name:
Designation:
Date:
 Part IV
(For use by Customs Only)

1. Upon the satisfaction of the Commissioner that the licence may be granted, the
following shall be obtained from the applicant (Please refer Regulations 3 and 4 of Special
Warehouse Licensing Regulations, 2016):

(i) Solvency certificate, where applicable.

(ii) Insurance Policy.
(iii)Undertaking under section 73A.
(iv) Indemnity undertaking.
(v) Bond as per Annexure C to this Circular.
(vi) Details of Warehouse keeper appointed by the Licensee:
(a) Name
(b) Address (residential)
(c) Tele: (office)
(d) Tele: (mobile)
(e) E-mail id:
(vi) Confirmation that digital signature has been obtained by the warehouse keeper (as per
guidance available on ICEGATE website).

2. Licence No. and date of issue:

3. Warehouse Registration Code on ICEGATE (refer Circular 19/2016 dated 20th May 2016):

Signature:
Name:
Designation:
Date:
 Part V
(For use by Customs only)
(Details of commencement of manufacture or other operations in the Warehouse)

1. Date of verification visit to certify commencement of manufacture or other operations in

the Warehouse:

2. Name of the officials who visited the premises:

3. VERIFICATION REPORT:
(i) I have verified that the unit has commenced manufacture or other operations.
(ii) I have verified that records are being maintained by the licensee as prescribed under
Annexure B of Circular 36/2020-Customs dated 17th August, 2020.

Signature:
Name:
Designation:
Date:
 Annexure-B
Form to be maintained by a special warehouse operating under section 65 of the Customs Act for the receipt, processing and removal of goods.

Name and address of the Unit: IEC:

GSTIN: Commissionerate:

RECEIPTS (IMPORTS)
Bill of Details of Details Duty assessed One- Date and
Customs Invoice
Entry Details insurance of Quantity Registration time time of
Station Description No. Assessable
No. of security with Comp. No. of means – receipt at
of of goods and Value BCD IGST
and Bond UQC cess of transport Lock the
import date
date no. warehouse
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

RECEIPTS (DTA)
Tax paid
GST Invoice No. and Description of Quantity with E-way bill number (if Date and time of receipt at the
Value
date goods UQC GST Comp. applicable) warehouse
cess
16 17 18 19 20 21 22 23

GOODS ISSUED FOR MANUFACTURING OR OTHER OPERATIONS FROM STRONG ROOM (to other location within the warehouse)
Date and time of issue Description of goods Quantity with UQC Value
24 25 26 27

RESULTANT PRODUCTS (CLEARANCE FOR EXPORT)

Quantity of warehoused goods contained in so much of the
Resultant products exported resultant products exported
Date GST Tax paid (if
Shipping Quantity Quantity Duty involved
and time Invoice Description of Assessable Export applicable) Description Assessable
Bill No. with with
of No. and goods Value duty Comp. of goods Value
and date UQC IGST UQC BCD IGST Comp. cess
removal date cess
28 29 30 31 32 33 34 35 36 37 38 39 40 41 42
 RESULTANT PRODUCTS (CLEARANCE FOR HOME CONSUMPTION)
Resultant products cleared for home consumption Warehoused goods contained in so much of the resultant products cleared for
home consumption
Tax
Date and Bill of Duty paid
GST Invoice Description of Quantity paid Description of Quantity Assessable
time of Value Entry No.
No. and date goods with UQC GST Comp. goods with UQC Value Comp.
removal and date BCD IGST
cess cess
43 44 45 46 47 48 49 50 51 52 53 54 55 56

IMPORTED GOODS CLEARED AS SUCH

Imported goods cleared as such for home consumption Imported goods exported as such
Duty paid Duty involved
Bill of entry Description Quantity Assessable Shipping Bill Description Quantity Assessable
Comp. Comp.
No. and date of goods with UQC value BCD IGST No. and date of goods with UQC Value BCD IGST
cess cess
57 58 59 60 61 62 63 64 65 66 67 68 69 70

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)
Descri Duty involved Details of Duty paid Duty involved
Quantity Assessab Descripti Quanti Descripti Quanti Assessab
ption Com valu Com Com
with le BC IGS on of ty with Challa BC IGS on of ty with le BC IGS
of p. e p. p.
UQC value D T goods UQC n no. D T goods UQC value D T
goods cess cess cess

71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89

TREATMENT OF WASTE OR REFUSE ARISING OUT OF MANUFACTURE OR OTHER OPERATIONS WHEN THE RESULTANT REMARKS
PRODUCT IS CLEARED FOR HOME CONSUMPTION (if any)
Duty paid on warehoused goods contained in so much of the waste or refuse
Duty paid
Bill of Entry No. and date Description of goods Quantity with UQC Assessable Value
BCD IGST Comp. cess
90 91 92 93 94 95 96 97
 INVENTORY OF SPECIFIED GOODS IN STRONG ROOM

S.No Description of Classification UQC Date of Opening Quantity deposited Quantity removal from Strong Room Closing
specified (CTSH) deposit/ Balance in Strong Room Balance
goods removal Import Transfer from Removed for Removed as Removed as Removal
another manufacturing such for such for home as such to
warehouse / processing export consumption another
warehouse
 Annexure-C

General Bond

(To be executed under Section 59 of the Customs Act, 1962 and MOOSWR 2020 by a unit operating
under section 65 of the Customs Act1962)

KNOW ALL MEN BY THESE PRESENTS THAT we M/s having our

office located at and holding Import –Export Code
No. , hereinafter referred to as the “importer”, (which expression
shall include our successors, heirs, executors, administrators and legal representatives) hereby jointly
and severally bind ourselves to the President of India hereinafter referred to as the “President” (which
expression shall include his successors and assigns) in the sum of Rs.
(please fill amount in words) to be paid to the President, for which payment well and truly to
be made, we bind ourselves, our successors, heirs, executors, administrators and legal representatives
firmly by these presents.

Sealed with our seal(s) this day of 20 .

WHEREAS the Principal Commissioner or Commissioner of Customs, has decided to grant license
to operate a warehouse under Section 58A of the Customs Act;

AND WHEREAS the Principal Commissioner or Commissioner of Customs, has decided to permit
carrying out manufacture and other operations in the warehouse under Section 65 of the Customs Act;

AND WHEREAS the Assistant/ Deputy Commissioner of Customs has given permission to enter into
a General Bond for the purpose of sub-section (2) of Section 59 of the Customs Act, in respect of
warehousing of goods to be imported by us during the period from _______to (both
days inclusive).

NOW THE CONDITIONS of the above written bond is such that, if we:

(1) comply with all the provisions of the Customs Act, 1962, Central Goods and Services Tax
Act, 2017 or Integrated Goods and Services Tax Act, 2017 or Goods and Services Tax
(Compensation to States) Act, 2017 and the rules and regulations made thereunder in respect
of such goods;

(2) pay in the event of our failure to discharge our obligation, the full amount of duty chargeable
on account of such goods together with their interest, fine and penalties payable under section
72 of the Customs Act, 1962 in respect of such goods;

(3) pay all penalties and fines incurred for contravention of the provisions of the Customs Act,
1962, Central Goods and Services Tax Act, 2017 or Integrated Goods and Services Tax Act,
2017 or Goods and Services Tax (Compensation to States) Act, 2017 and the rules or
regulations made thereunder, in respect of such goods;

Then the above written bond shall be void and of no effect; otherwise the same shall remain in full
force and virtue.
IT IS HEREBY AGREED AND DECLARED that:

The President through the Deputy/Assistant Commissioner of Customs or any other officer
may recover any amount due under this Bond in the manner laid down under sub-section (1) of
section 142 of Customs Act, 1962, without prejudice to any other mode of recovery.

IN THE WITNESS WHEREOF, the importer has herein, set and subscribed his hands and seals the
day, month and year first above written.

SIGNED AND DELIVERED by or on behalf of the importer at (place) in the

presence of:

(Signature(s) of the importer/authorised signatory)

Witness:
Name and Signature Address Occupation
1.
2.
Accepted by me this ____ day of 20 , for and on behalf of the President of India.

(Assistant/Deputy Commissioner)
Signature and date
Name:
Schedule to the General Bond to be executed by the importer under sub-section (2) of Section 59
of the Customs Act, 1962 for the purpose of warehousing of goods to be imported by them.
Bill Duty Bond Debit Credit Balance Remarks Signature of
(Warehousing/ assessed value to of bond the officer
Home on the be debited value along with
consumption/ goods or full name
/Export) No. credited and
and date (Thrice designation
the
amount of
duty)

(1) (2) (3) (4) (5) (6) (7) (8)