Central Excise - Clearance of goods intended for storage in a warehouse and export therefrom under Notification No. 26/98-C.E. (N.T.), dated 15th July

Circular No. 422/55/98-CX dated 21-9-1998

[From F.No. 209/4.S/97- CX.6]

Government of India

Ministry of Finance (Department of Revenue)

Central Board of Excise & Customs, New Delhi

Subject : Central Excise - Clearance of goods intended for storage in a warehouse and export therefrom under Notification No. 26/98-C.E. (N.T.), dated 15th July 1998 - Regarding.

I am directed to draw your attention to Notification No. 26/98-C.E. (N.T.) dated 15th July, 1998 and Order Nos. 10/98-Central Excise 23rd July 1998 and 11/98-Central Excise dated 10th August, 1998, both issued thereunder, relating to extention of the provisions of Chapter VII of the Central Excise Rules, 1944 to excisable goods specified in the Schedule to the Central Excise Tariff Act, 1985 for storage in a warehouse and export therefrom. In this regard the salient features of the Scheme and the procedure to be followed are given as under :

2. Applicability of the Scheme

2.1. The Scheme applicable to excisable goods falling in the Schedule to the CETA, 1985(5 of 1986), exclusively for the purpose of export of such goods from the warehouse registered for this purpose.

2.2 The exports who have been accorded status of Super Star Trading House or Star Trading House and the foreign departmental stores of repute, are presently eligible to obtain approval and registration of warehouse from the Commissioner in terms of the provisions of rule 140 of the said rules.

2.3 The warehouses may be established and registered in Ahmedabad, Bangalore, Calcutta, Chennai, Delhi, Hyderabad, Jaipur, Kanpur, Ludhiana and Mumbai.

3. Registration

3.1 An application shall be made by the exporter to the Commissioner in the Form R-I (Central Excise Series No. 3) to get himself registered under rule 140 read with rule 174 of the said rules.

3.2 The Commissioner may cause an enquiry to be made in respect of the security of the premise for warehouse indicated by the exporter in the application. If found in order, the Commissioner will accord his approval subject to such directions, terms and manners as he may specify under the provisions of Rule 140 of the said rules and forward the application to the Assistant Commissioner having jurisdiction over the premise within seven working days of the receipt of the application.

3.3 The Registration certificate will be issued by the Assistant Commissioner in the Form specified in Annexure-I within one working day of the receipt. Any amendment in the certificate can be made by the jurisdictional Superintendent only alter the concurrence of the Assistant Commissioner.

4. Execution of bond

4.1 Every exporter registered in the aforesaid manner, shall execute before the Assistant Commissioner of Central Excise a general bond under Rule 14 of the Central Excise Rules for export of goods from the warehouse in the B-1 (General Security) Form modified annexed to this Circular at Annexure-II. Notwithstanding Board’s instructions contained in Circular No. 284/118/96-CX, dated 31st December, 1996, the exporter shall also be required to furnish security equal to 25% of the bond amount. In case any bank guarantees are furnished, it shall be the sole responsibility of the exporter to renew its validity.

4.2 A ‘Running Bond Register’ will be opened in the format specified at Annexure-III. This register shall be maintained by the Superintendent in charge of the warehouse. A similar register shall be maintained as mentioned in Annexure-IV by the exporter in the warehouse and shall be made available to the officer-in-charge or officers of Internal Audit for scrutiny and checkings.

5. Warehousing Procedure

5.1 Removal of excisable goods from a factory or any other premise approved by the Commissioner to a warehouse : Procedure laid down under rule 156A as modified by rule 173N of the said rules will be applicable. It is clarified that the Notification No. 26/98-C.E. (N.T.), dated 15-7-1998 do not cover removal from one warehouse to another.

5.2 The Central Excise Officer in-charge of the warehouse will issue certificate in duplicate of removal in the Form CT-1 (modified) specified at Annexure-V indicating details of the general bond executed by the exporter. The CT-1 (modified) shall bear pre-printed serial numbers running for the whole financial year beginning on the 1st April of each year. The said officer will issue twenty five CT-1 certificates at a time, signing each of the leaf with the official stamp. More certificates can be issued if it is so requested by the exporter on the grounds of large number of procurements. The exporter will fill up the relevant information in CT-1 (modified). After making provisional debit in the Running Bond Account, he will indicate the same in the CT-1 (modified). One copy of CT-1 (modified) will he forwarded to Officer-in-charge of the warehouse. One copy will be sent to the consignor and one copy will remain with the exporter.

5.3 The consignor will prepare an application for removal (AR-3A) and an export invoice (under Rule 52A) taking into account CT-1 (modified) certificate and follow the procedure under Rule 156A as modified by Rule 173N. The serial number of the ‘corresponding CT-1 (modified) shall be mentioned on the top of the each copy of AR-3A. Any nominal variations between the provisional debit indicated in the CT-1 (modified) and the actual duty involved in the goods removed as indicated in AR-3A, can be ignored, Immediately on receipt of goods, the provisional debit shall be converted into actual debit on the basis of the details mentioned in AR-3A.

5.4 The officer-in-charge to the warehouse will countersign application and despatch to the Range Office having jurisdiction over the factory/ other approved premise of removal within one working day of receipt of the application. He will make suitable entry in his own record accordingly.

5.5 A Warehousing Register shall be maintained by the assessee in the form specified at Annexure-VI which will be in lieu of W.R.G.2 prescribed at series no. 81 of the List of Central Excise Forms in Appendix-1 of the Central Excise Rules, 1944.

5.6 Goods supplied by an SSI Unit exempted from Registration

An SSI Unit exempted from registration under rule 174 of the said rules will also prepare AR-3A against CT-1 (modified) in the same manner as mentioned in Para 5.3 above except that he will use his own invoice. Registration under rule 174 shall not be insisted merely because such units prepare AR-3A. The Warehousing Certificate forwarded to the Range Office having jurisdiction over such SSI Unit shall be retained in the office and will be tallied with the details submitted by the SSI Unit in the quarterly statement as specified in Board’s Circular No. 212/46/96-CX, dated 20th May, 1996 (F.No. 209/18/96-CX.6). The clearances on those AR-3A in respect of which Warehousing Certificate is not received within ninety days of removal or such extended period as the Commissioner may allow, will be treated as clearances for home consumption. If the Warehousing Certificate is subsequently produced, the clearances which was treated as “clearance for home consumption” as aforesaid, shall be expunged.

6. Receipt of goods in warehouse

6.1 Receipt of goods will be governed by the provisions of rule 141 as modified by rule 173N.

6.2 Ten percent of the consignments, subject to minimum of two, received in a month will be randomly selected, spread over the entire month, for verification by officer-in-charge after the receipt of D-3 intimation.

7. Packing, re-packing, labelling or re-labelling within the warehouse

7.1 These operations in relation to excisable goods received and stored in the warehouse will be governed by the provisions of rule 143 as modified by Rule 173N. Suitable entries must be made meticulously in the Export-Warehouse register. In case of non-reconciliation of quantity (Column 5 & 8A), after adjusting any wastage or refuse, the differential quantity shall be treated as unaccounted and action for recovery of duly will be initiated.

7.2 The exporter may procure packing or labelling material and bring into the warehouse under the warehousing procedure itself. No duty paid goods will be permitted to be brought into the warehouse.

7.3 Where this process of packing, repacking, labelling or relabelling amounts to manufacture in terms of the provisions of the Central Excise Tariff Act, 1985 its repercussions on the goods permitted for clearance for home consumption shall be determined, and assessment shall be done accordingly.

8. Storage

Goods brought under the cover of an AR-3A shall be stored separately till these are exported or diverted for home consumption. A stock-card shall be maintained in the format given an Annexure-VII. In cases of change in marks & numbers, size of packing, number of packets/containers due to any processing (packing/repacking/labelling/relabelling), the same should be suitably indicated in a new stock-card while retaining the original stock-card appended to the new-stock-card. These details shall also be recorded in the Export - Warehouse register.

9. Clearance of goods for export outside India

9.1 For the export of goods from the warehouse, the procedure relating to preparation of AR-4, examination and sealing and acceptance of proof of export specified under Board’s Circular No. 87/87/94, dated 26th December, 1994 as amended from time to lime :

9.2 The requisite copies of AR-4 (Para 10.1 of the aforementioned Circular) will be filed with the Assistant Commissioner having jurisdiction over the warehouse and with whom the B-1 Bond (modified) was executed for acceptance of proof of export and issue of a certificate to this effect.

9.3 The credit in Running Bond Account shall be made on the basis of the certificate of the proof of export.

9.4 The Superintendent in-charge of the warehouse is empowered to issue certified attested copies (more than one copies may be required by exporter as one AR-4 may consist of goods of several AR-3As) and hand over to the exporter for forwarding to the factory whose goods were exported so that such factories can avail other export benefits, such as encashment of Modvat credit accumulated on account of export in terms of rule 57F(13) of the said rules. This refund will be given only after goods covered on an AR-3A is entirely exported. In case of any diversion to home-consumption, refund will be reduced on pro-rata basis.

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

9.6 It is clarified that the photocopies of the Shipping Bill/Export Application and Bill of Lading duly attested by the Superintendent in-charge of the Warehouse alongwith certificate of proof of export should be accepted as valid documents under Notification No. 85/87-C.E., dated 1-3-1987, as amended. The proof of export received directly/official sealed cover from the Superintendent in-charge of the warehouse may be used to verify the authenticity.

9.7 Where neither duplicate copy of AR-4 nor original copy of AR-4 duly attested at the port of export, are available within the time stipulated under Rule 4A, it shall be taken that export of goods cleared from warehouse has not taken place. The demand shall be raised by the Assistant Commissioner having jurisdiction over the warehouse (Jurisdictional Assistant Commissioner) for non-fulfilment of the conditions of Bond executed by the exporter.

10. Diversion of goods for home-consumption

10.1 Goods can be diverted for home-consumption from the warehouse with the permission of the jurisdictional Assistant Commissioner. The clearance shall be effected on invoice prepared under rule 52A on payment of duty, interest and any other charges, on TR-6 Challans and after making necessary entries in the Export-Warehouse register. Credit of duty will be permitted in the Running Bond Account equivalent to the duty involved in the goods so diverted, which shall not exceed amount of duty debited on the basis of AR-3A on which such goods were received in the warehouse. If entire quantity is not diverted, calculation shall be done on pro-rata basis.

10.2 Goods can be diverted for home-consumption after the clearance from the warehouse on AR-4. For cancellation of documents, the procedure contained in Board’s Circular 87/87/94, supra, at Para 12 may be followed. The intimation shall be given to Assistant Commissioner having jurisdiction over the warehouse. Credit in Running Bond Account will be permitted in the same manner as mentioned on Para 9.1 above.

10.3 Where the goods are diverted for home-consumption in full or in part, the exporter shall be liable to pay interest @ 18% per annum on the amount of duty payable on such goods from the date of clearance from the factory of production or any other premises approved, till the date of payment of duty and clearance.

11. Waiver of physical warehousing in case of exigency. The officer-in-charge of the warehouse may permit waiver from physical warehousing (i.e. permitting export without physically storing the goods in the warehouse) where exporter so requests in writing provided all the formalities relating to record keeping shall be completed in usual manner with suitable record in the Remarks column: ‘warehousing waived’.

This permission will be given in exceptional cases where delay occurred due to delayed supply from the factory or longer transit - period or requirement of immediate export or any other genuine reasons and where the entire consignment is entered for export in the original packing. Such cases of permission granted will be reported to Superintendent-in-charge of the warehouse at the earliest.

12. Providing of accommodation for the Officer. The exporter shall provide adequate office accommodation and furniture for the Officer deployed for examination and supervision, in the warehouse.

13. However, any specific instructions of this Circular shall prevail.

[Annexures - Not Printed - See 1998 (103) ELT (T29)]