The AC/DC is competent to cancel the license of private bonded warehouses  in any of the following cases

·         By serving one month notice in writing to the licensee or

·         If the licensee has violated any of the provisions of the custom Act or rules and regulations made under the act or committed breach of any of the conditions of license.

However, before any such cancellation under bullet point 2 above the licensee shall be given an oppurtunity of being heard . Further pending an enquiry whether any license should be cancelled under bullet point 2 , the AC/DC may suspend the license

The importer of any goods who wants to deposit the goods in a warehouse (i.e. who has presented bill of entry for warehousing) has to execute a bond binding himself in a sum equal to twice the amount of the duty accessed under section 17 or 18 on such goods-

·         To observe all the provisions of this Act and the rules and regulations in respect of such goods

·         To pay on or before a date specified in a notice of demand all the dues and interest if any , payable under section 61(2) including all rent and charges claimable on account of such goods under this act together with interest @24% on the same from the date so specified. Also to discharge all penalties incurred for violation of provisions of this act, the rules and regulation in respect of such goods

·         Permission to enter a general bond: The AC/DC of custom may permit an importer to enter into a general bond for such an amount as may be approved by them in respect of warehousing of goods to be imported by him within a specified period.

a)      In the case of capital goods intended for use in any 100% EOU , till the expiry of 5 years

b)      In the case of goods other than  capital goods intended for use ion 100%EOU till the expiry of 3 years

c)       In the case of any other goods, till the expiry of 1 year. Extension of warehousing period by the principal commissioner or commissioner of customs is available.

Interest in respect of warehouse goods

·         In case of goods meant for 100% EOU : Where any warehouse goods being capital goods and other goods meant for 100%EOU remain in a warehouse beyond the period specified above interest shall be charged @15% per annum on the amount of duty payable at the time of clearance of goods for the period from expiry of the said warehousing period till the date of actual payment of duty on the warehoused goods.

·         In case of other goods( i.e. goods meant for 100%EOU) which remain in a warehouse beyond a period of 90days interest payable @ 15% p.a. on the amount of duty payable at the time of clearance of goods, for the period after the expiry of 90days till the date of actual payment of duty on the warehouse goods.

Note: The SC in Pratibha processors v. UOI (1996)(SC) has held that if on date of removal of goods from warehouse such goods are chargeable with NIL rate of duty or are wholly exempt from duty then no interest is payable since interest is calculated on duty amount

Ø  All warehoused goods shall be subject to the control of PO

Ø  No person shall enter a warehouse or remove any goods there from without the permission of PO

Ø  The PO may  cause any warehouse to be locked with the lock of customs department and no person shall remove or break the lock

Ø  The PO shall have access to every part of a warehouse and power to examine the goods therein.

·         Inspect the goods

·         Show the goods for sale

·         Separate damaged or deteriorated goods from the rest

·         Deal with the goods and their containers in such manner as may be necessary to prevent loss or deterioration or damage to the goods

·         Sort the goods or change their containers for the purpose of preservation ,sale or export or disposal of the goods

·         Take samples of goods without entry for home consumption ,and if the PO so permits without payment of duty on such samples.

(a ) In case ,finished goods are wholly or partly exported : If the whole or any part of the goods resulting from such operations are exported ,import duty shall be remitted on the quantity of the warehoused goods  contained in so much of the waste or refuse as has arisen from the operations carried on in relation to the goods exported. However, this remission shall be allowed only ,if –

(i ) such waste or refuse is destroyed; or

(ii ) Duty is paid on such waste or refuse ,as if it had been imported into India in that form.

(b ) In case finished products are wholly or partly cleared from home consumption: If the whole or any part of the goods resulting from such operations are cleared from the warehouse for home consumption, import duty shall be charged on the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen from the operations carried on in relation to the goods cleared for home consumption.