A report in Decanter says that the Bordeaux City Bond will start operating from Monday, the 22nd June when the Director of French Customs will make the new announcement on Monday. It will enable overseas buyers to store their wine tax-free for an unlimited amount of time in a secure, controlled environment.
The current laws state that no wine can be stored for longer than two years (with one year's grace period) in a commercial warehouse in France, but this is due to be scrapped, allowing storage for unlimited time under certain conditions, according to the report.
Bordeaux City Bond is a private entity whose main investors are the Bordeaux Chamber of Commerce which has 41%, and Vinexpo which owns 10%. The other 49% is shared between 12 negociant companies like Maison Sichel and also four supply chain companies.
The company will be headed by two former heads of custom in Bordeaux.
In India, the bond is given to the importers of several products including wine, spirits, cheese and other edible foods. The goods can be stored in a public bonded warehouse like CWC or private bonds like Veritas. Several established importers have their own bonds, for which the bank guarantees of up to 100% of the customs duties are to be deposited beforehand.
But the bigger problem arises when the wine cannot be sold due to marketing constraints within the stipulated period. Besides, it can also be a perishable commodity after a certain period, as are the food products. The importers complain that if they cannot sell the goods, they are obliged to re-export the goods or de-bond them after paying duties and junk them, resulting in a double whammy (actually doubly hammy and a half-the customs duty payable is 150%). Many exporters are known to re-export them only to be consigned to see once the ship reaches international waters, to avoid the penalties.
Perhaps, there might be a page defining equitable balance in the new bond being evolved at Bordeaux and some Indian customs officials could make a trip to Bordeaux to study the new system!
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