Business Standard brings you the fortnightly Q&A on SMEs
Q. We import certain goods that we want to keep in a bonded warehouse before clearance on payment of duty in due course. We understand that we are required to furnish a bond for three times the duty involved. Please give us the relevant legal provision and the format of the bond to be furnished. Also, if we want to make it a regular practice, can we furnish a general bond instead of furnishing a bond every time?
In accordance with Section 59(1) of the Customs Act, 1962 an importer is required to execute a triple duty bond at the customs station of import with respect to the goods to be cleared for deposit in a warehouse. The bond must remain valid till the warehoused goods are duly cleared for home consumption or for export from the warehouse, and will also cover the movement of goods from the customs station of import to the warehouse, or from one warehouse to another, as well as for the due accounting of goods while stored in a warehouse.
Under Section 59(2) of the said Act, the jurisdictional Assistant/Deputy Commissioner of Customs can permit execution of a general bond. The formats of the bond to be executed are prescribed through CBEC Circular no.18/2016-Cus dated May 14, 2016.
Q. We manufacture HDPE drums. Our buyer, an exporter, has asked us to supply the drums we make to the manufacturer of a chemical, who will fill the chemicals in the drums that we supply and then export them through our buyer. Can we supply at 0.1 per cent GST under notification 41/2017-IT(Rate) dated October 23, 2017?
Quite obviously, your buyer is a merchant-exporter, who exports the chemicals manufactured by another manufacturer packed in the drums that you supply. Also, notification 41/2017 requires that you move the goods directly to the Port, Inland Container Deport, Airport or Land Customs Station from where the said goods are to be exported, or to a registered warehouse from where the goods will be further moved to the Port, Inland Container Deport, Airport or Land Customs Station.
If the merchant exporter procures goods from different registered suppliers, he may move such supplies to his registered warehouse, aggregate such procured goods at the warehouse and move the goods to the Port, Inland Container Depot, Airport or Land Customs Station from where the goods are exported. In the instant case, you raise an invoice on the merchant exporter but ship the goods to the manufacturer of chemicals. So, the condition specified in the said notification 41/2017 remains unfulfilled. Therefore, you cannot supply the HDPE drums at 0.1 per cent IGST.
Q. We are a small-scale industry. We have little exports and paid GST of less than Rs1 crore last year. Now, we want to import capital goods under EPCG authorisation. What is the amount of BG we have to furnish to Customs?
CBEC Circular no.17/2009-Cus dated May 25, 2009, prescribes BG at 15 per cent of the bond amount.
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