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are the biggest sufferers
The biggest victims are the big importers and the tiny
importers. Mid levels are trying to reach higher sales
level and like the middle classes are not willing to
rock the boat. Smaller importers and more ambitious
upstarts have, in the past, created a situation wherein,
the huge stocks they imported could not be liquidated
in 2 years. They simply raised their hands and buckled
under the stark market realities. Since the material
was not de-bonded they could not be forced to shell
out the duties. Many simply ‘re-exported’
to unknown destination, rather than face the wrath of
customs.
Genesis of the current predicament
Unknown to most new importers this action of the department
is not new or even recent. The genesis lies in the Customs
Circular No.99/95 dated September 20, 1995. In this
circular, the methodology for licensing of private bonded
warehouses was defined. The matter of revolving bond
and the debit of 25% duty was very clearly specified.
Of course, along with several other limitations, the
solvency certificate from a schedule bank of repute
for Rs. 50 lakhs was to be submitted before the bonding
would be allowed.
Since it was not a Gazette Notification, the letter
was never followed in strictest sense and for the last
12 years the Commissioners were ‘extending’
the date of implementation of this clause. Perhaps,
due to increasing cases of material not being de-bonded
the Board has decided to take the tough stand this year
and the matter has come to a head.
Customs department holds the key
Not that the department felt things were out of control.
As a part of the standard procedure, the products are
always under lock and key under the charge of a responsible
customs officer. Only he can physically unlock the warehouse
and release them on payment of adequate duties or debiting
the revolving duty credit account.
The warehouse is fully insured to the extent of the
duty payable and the policy is assigned to the Commissioner.
In case of any theft, burglary or fire, the damages
have to be reimbursed to the customs department. The
title of goods also remains with the commissioner.
Pleadings of importers
International Spirits and Wine Association of India
and the Delhi Bonded Warehouse Association have been
pleading with the department to withdraw the circular
no. 18/2007 dated April 24, 2007 directing enforcement
of bank guarantee. They wonder why the issue has been
raked up after 12 years when in fact.
While stressing the above mentioned points, the President
of the Association, Mr. L.C. Madan also took the plea
that if the government was still insistent, it should
exempt those bonded warehouses who have had no defaults
during the previous five years.
A very fair and solid point, except that it would certainly
be challenged in the court of law by the newer importers
and would create polarisation between the old and the
new members.
All such please to the Board have had no positive effect
and now the importers are running under cover and arranging
the bank guarantee. Lobbying is still going on with
the State Minister of Finance and many MPs have been
roped in to make the Honourable minister see the fair
side and withdraw the said order.
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