Central Board of Indirect Taxes & Customs (“CBIC”) has issued a Circular No. 48/2020-Customs in order to provide clarifications related to Section 65 i.e. “Manufacture and other operations in relation to goods in a warehouse” of the Customs Act, 1962.
Key points of the Circular are:
1. CBIC has clarified the procedure to be followed for removal of goods for job work by units registered under Section 65 subject to the following conditions :
i. The goods upon import should be first deposited in the premises registered under Section 65 and duly accounted for before the same is sent for job work.
ii. It should be possible to establish the identity / correlate goods after the job work with those sent for job work.
iii. On completion of the job work, the goods can be brought back to the unit registered under Section 65 or exported / cleared to DTA from the job worker’s premises. In case the goods are exported / cleared to DTA from the job worker’s premises, the procedure as per Manufacturer and Other Operations in Warehouse Regulations, 2019 (“MOOWR”) will be followed and the date of removal from job workers premise will be deemed to be the date of removal from the warehouse.
iv. Scrap, waste or remnants generated during the job work will be either returned to the unit registered under Section 65 or cleared from job worker’s premises on payment of applicable duties.
v. The procedure and timeline for return of goods sent for job work unit registered under Section 65 will be in line with GST provisions as the unit is also a GST registrant.
vi. The account will be maintained under and updated at all times.
vii. In case of violations of any of the above provisions, the goods will be deemed to be cleared for home consumption on the date of clearance of goods for job work. The duties, interest and penalties will be reckoned accordingly.
2. CBIC has further clarified on whether the unit registered under Section 65 can itself carry out job work for other units and the procedure to be followed for the same. It has been clarified that since Section 65 being a GST registered unit, can perform job work operations and will maintain due accounting of such work as per the provisions of GST law. In case any imported inputs which are warehoused are consumed during the job work process, duty will be paid on such goods by filing Ex-Bond Bill of Entry, when such job worked goods are returned to the principal / owner. In case the goods after job work are exported from the premises of the Section 65 unit, the import duty on the warehoused goods used for the job work need not be paid as per Section 69 of the Act relating to non-payment of import duty in case warehoused goods are exported.
3. CBIC has further provided clarification on whether unit registered under Section 65 can procure goods from FTWZ (Free Trade and Warehousing Zones). It has been clarified that since the objective of Section 65 units are to enable manufacture and other operations in customs bonded warehouses. For this purpose, the units should be able to procure required raw materials, consumables, capital goods etc., imported or procured from domestic market. There is no restrictions imposed on sourcing of goods by units under Section 65. Moreover, the units are GST registrants, therefore, they are allowed to procure goods from SEZ / FTWZ.
