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AN EXPLORATORY STUDY ON

Bonded warehouses - features, operations, legal aspects, role in logistics



Submitted To: Submitted By:
Dr. J.P Saxena Priya Jain
MBA (CI &SM)
A0633511009

Amity Institute of Competitive Intelligence & Strategic Management
AMITY UNIVERSITY UTTAR PRADESH, SECTOR 125, NOIDA - 201303, INDIA
Tel: 0120-2445252, 0120-4713600. Website: www.amity.edu
Bonded warehouses - features, operations, legal aspects, role in logistics (Priya Jain)

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TABLE OF CONTENT

Learning Objectives 03
Introduction 05
Bonded Warehouses 05
Features of Bonded Warehouses 06
Operations of Bonded Warehouses... 07
Legal aspects of bonded warehouses 08
Role of Logistics in Bonded Warehouses 11
Detailed subject matter with tables, figures, photographs and examples 14
Applications 21
Advantages and disadvantages.. 22
Summary 24
Bibiliography. 26




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LEARNING OBJECTIVES
Importing goods from overseas can be challenging in many areas. One of those areas includes
the payment of duties on the imported goods. When items are brought into the United States, the
U.S. Customs office requires that the importer pay a duty, or tax, on the imported goods. The
items are stored in bonded warehouses until such time as the disposition is reached. There are
several possible results for removing the items, including export via ship or aircraft, duty
payment to release the goods for use in the United States and destruction of the imported items.
A business that imports goods regularly can save a great deal on operating costs by investing in
the construction or purchase of a bonded warehouse for their exclusive use. While the U.S.
Government owns and leases their own bonded warehouses, it is permissible for importers to be
bonded for their own facilities.
Primarily used by manufacturers, exporters, importers, wholesalers and transport businesses, a
warehouse refers to a commercial building that serves as the storage place for goods. These
warehouses are usually large plain buildings in industrial areas of cities and towns and are
equipped with loading docks, cranes and forklifts. Goods on which the duties are unpaid and
stored under agreement and surety ship are stored in bonded warehouses, however. Bonded
warehouses store goods which are under joint custody of the importer and the customs officer.
These bonded warehouses are usually managed by the state or by private enterprises, but with the
requirement to post customs bond with the government for the latter.
Goods that are being stored in the bonded warehouses are liable to duty and are lodged until the
duty has been paid. For importers, duties should be accomplished at the time of importation. The
system of bonded warehousing has several inconveniences such as the difficulty in finding
sureties on the part of the importers and the immediate selling of the goods in order to pay the
lump sum. Such condition has a trickledown effect on consumers since there will be a mark-up
on the prices of the goods. Realizing this matter, there will be resultant situation: smuggling and
low consumption because of high taxes on bonded warehouses. With the study of features,
operations, legal aspects, role in logistics in bonded warehousing.
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The main aim of this study is to investigate, evaluate and analyse the degree of efficiency and
effectiveness of bonded warehouses. In lieu with this, the research will seek to accomplish the
following specific objectives:
To explore the concept of bonded warehousing based on the advantages and
disadvantages of using them.
To determine the services that bonded warehouses provide business operators
(wholesalers, manufacturers, exporters and importers).
To study how bonded warehouses are managed and controlled based on identifying
the systems, techniques and processes in place.
To distinguish excise and taxing strategies and how these strategies affect the
business operators.
To understand the function of bonded warehouses in the global supply chain as a
value-adding activity.

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INTRODUCTION
Container Corporation Of India Ltd. says that,
The concept of 'bonded warehousing' was first tried out at Whitefield (Bangalore). The
importers could store cargo and effect partial releases thereby deferring duty payment to
Customs, and at the same time releasing the international (ISO) container in which the cargo is
imported.
Bonded warehousing offers a dual advantage to the importer. On the one hand, it allows the
deferral to duty payment, and at the same time, allows for cargo to be stored under the relatively
cheaper option of warehouse storage as opposed to holding on to an ISO container for which
dollar lease rentals accrue on the importer.
There is an increasing demand for bonded warehousing in all parts of the
country. CONCOR has a unique advantage in offering this service. Its warehouses are located in
close proximity to the sidings/ICDs where imports arrive in the first place. This makes bonding
of cargo a very cost effective option, as there are practically no transfer costs involved in the
movement of cargo from landing facility to a nominated bonded warehouse.
To tap into this highly lucrative segment of business, bonded warehousing facilities have already
been made operational by CONCOR at its facilities at Tondiarpet (Chennai), Sanathnagar
(Secundrabad), NewMulund (Mumbai), Tughlakabad (New Delhi), Sabarmati (Ahmedabad),
Gwalior etc.
CONCOR also plans to convert existing facilities or create new ones in all such business centers
where required.
BONDED WAREHOUSE
A Bonded warehouse is building or other secured areas in which dutiable goods may be stored,
manipulated, or undergoes manufacturing operations without payment of duty. It may be
managed by the state or by private enterprise. In the latter case a customs bond must be posted
with the government. This system exists in all developed countries of the world.
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Upon entry of goods into the warehouse, the importer and warehouse proprietor incur liability
under a bond. This liability is generally cancelled when the goods are:
Exported; or deemed exported;
Withdrawn for supplies to a vessel or aircraft in international traffic;
Destroyed under Customs supervision; or
Withdrawn for consumption domestically after payment of duty.
While the goods are in the bonded warehouse, they may, under supervision by the customs
authority, be manipulated by cleaning, sorting, repacking, or otherwise changing their condition
by processes that do not amount to manufacturing. After manipulation, and within the
warehousing period, the goods may be exported without the payment of duty, or they may be
withdrawn for consumption upon payment of duty at the rate applicable to the goods in their
manipulated condition at the time of withdrawal. In the United States, goods may remain in the
bonded warehouse up to five years from the date of importation. Bonded warehouses provide
specialized storage services such as deep freeze or bulk liquid storage, commodity processing,
and coordination with transportation, and are an integral part of the global supply chain.
FEATURES OF BONDED WAREHOUSES
This type of warehouse is a safe option for starters of the business; this is a bonded warehouse
that means the contract of this warehouse controlled by a bond for a time period between the
importer, manufacturer or exporter with the owner of warehouse. This type of warehouse will be
very clean, maintained and very professional.
Basic advantage of a Bonded warehouse is properly licensed to keep all types of imported
goods under the government regulation.
There is no need for Manufacturer, exporter or Importer to invest a big capital on stock,
because the stocks will be safe because it has been maintained by contract for a period of
time, its the duty of authorities to take full responsibility of the goods stored in the
warehouse.
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State in art infrastructure facilities in warehouse, for example if you have agro based food
product, you need to maintain certain amount of temperature to keep those food products
fresh. You need to have certain standards of cooling and heating facility in the
warehouse; this kind of bonded warehouse has those features.
You can keep duty paid goods in warehouse without no hassles.
You can apply for a loan and you can pledge even the goods you kept in warehouse.
Owner of the warehouse takes full responsibility of the goods, no need to worry about
whether things might get lost.
Reduce in capital and also save money in expenses, if manufacturer want to re-export it
to another country.
OPERATIONS OF BONDED WAREHOUSES
Handling the A, C, D, and Es of customs and bonded warehousing
Type A, C, D, and E tax warehouses, AEO, IPR, OPR and PCC operations its an alphabet
soup of regulations out there if you handle excise or customs goods. What are importers and
exporters to do?
Bonded Warehousing enables efficient, compliant operation of a wide variety of import and
export tax-advantaged facilities. So whether you handle excise goods, such as beer, wine, spirits
or tobacco, or customs goods like electronics, textiles, consumer products or pharmaceuticals,
you will have the right tools and controls to make your operations more efficient and compliant.
Some of the alphabet soup of regulations supported includes:
Authorized Economic Operation (AEO)
Type A, C, D and E tax warehousing
IPR, and PCC operations
National Export System (NES)
Excise Movement and Control System (EMCS)
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Alcohol and Tobacco Warehouse Declarations (ATWD)
CFSP electronics customs clearance
Electronic import / export reporting
EU Customs Security Program

In addition, Customs & Bonded Warehousing supports bulk liquid operations as well as dry
goods, and manages value-added services such as kitting under Bond. It comes with a full suite
of reports to support stock balancing and rotation, item level movements, duty analysis and stock
valuations.
Customs & Bonded Warehousing supports the complex needs of WMS Bonded operations that
require a comprehensive, functionally rich Warehouse Management system with a high degree of
configurability and flexibility. This enables you to improve methodologies and efficiency,
increase profits, and provide a high level of confidence and operational integrity to their
customers.
LEGAL ASPECTS OF BONDED WAREHOUSES
With over 300 ports of entry in the United States, including the Virgin Islands and Puerto Rico,
many businesses find establishing their own bonded warehouse(s) to be advantageous.

To do so, a lengthy application must be completed and filed with the local ports U.S. Customs
director. Information must be provided that gives detailed information about the physical
features of the warehouse site (including a blueprint), as well as giving its location, a certificate
of fire insurability by an independent underwriter, and the intended warehouse classification.

The U.S. government recognizes eleven types of bonded warehouses, each defined within its own
class. (These are listed below, as they are described under federal law.)

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Bonded Warehouse Application Requirements Vary According to Classification
All applications for warehouses except Class 2 or Class 7 facilities must reveal if they will be
operated as public bonded warehouses or used solely by the applicant. Private use will require
that the applicant report to the federal officials not only what type of merchandise will be stored
in its private warehouse, but the maximum duties and taxes that will be due on the goods at any
set time.
Customs officials can also require identification of the applicants personnel, including not only
their names and personal addresses, but their fingerprints, as well. The list can require officers
and principals of the company along with all of its employees. This is true, regardless of the
warehouses intended classification.
Duty free shops have special requirements. Designated as a Class 9 Bonded Warehouse under
federal law, duty free shop applicants must provide Customs officials with information regarding
the location, exit-points, record keeping systems, and confirmation of local government
approvals of the facility.
List of Bonded Warehouse Classifications
According to 19 C.F.R. 19.1, bonded warehouses are classified as:
(1) Class 1. Premises that may be owned or leased by the Government, when the exigencies of
the service as determined by the port director so require, and used for the storage of merchandise
undergoing examination by Customs, under seizure, or pending final release from Customs
custody. Merchandise will be stored in such premises only at Customs direction and will be held
under general order.
(2) Class 2. Importers' private bonded warehouses used exclusively for the storage of
merchandise belonging or consigned to the proprietor thereof. A warehouse of class 4 or 5 may
be bonded exclusively for the storage of goods imported by the proprietor thereof, in which case
it shall be known as a private bonded warehouse.
(3) Class 3. Public bonded warehouses used exclusively for the storage of imported merchandise.

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(4) Class 4. Bonded yards or sheds for the storage of heavy and bulky imported merchandise;
stables, feeding pens, corrals, or other similar buildings or limited enclosures for the storage of
imported animals; and tanks for the storage of imported liquid merchandise in bulk. If the port
director deems it necessary, the yards shall be enclosed by substantial fences with entrances and
exit gates capable of being secured by the proprietor's locks. The inlets and outlets to tanks shall
be secured by means of seals or the proprietor's locks.
(5) Class 5. Bonded bins or parts of buildings or of elevators to be used for the storage of grain.
The bonded portions shall be effectively separated from the rest of the building.
(6) Class 6. Warehouses for the manufacture in bond, solely for exportation, of articles made in
whole or in part of imported materials or of materials subject to internal-revenue tax; and for the
manufacture for home consumption or exportation of cigars in whole of tobacco imported from
one country.
(7) Class 7. Warehouses bonded for smelting and refining imported metal-bearing materials for
exportation or domestic consumption.
(8) Class 8. Bonded warehouses established for the purpose of cleaning, sorting, repacking, or
otherwise changing in condition, but not manufacturing, imported merchandise, under Customs
supervision and at the expense of the proprietor.
(9) Class 9. Bonded warehouse, known as duty-free stores, used for selling, for use outside the
Customs territory, conditionally duty-free merchandise owned or sold by the proprietor and
delivered from the Class 9 warehouse to an airport or other exit point for exportation by, or on
behalf of, individuals departing from the Customs territory for destinations other than foreign
trade zones. Pursuant to 19 U.S.C. 1555(b)(8)(C), Customs territory, for purposes of duty-free
stores, means the Customs territory of the U.S. as defined in 101.1(e) of this chapter, and foreign
trade zones (see part 146 of this chapter). All distribution warehouses used exclusively to
provide individual duty-free sales locations and storage cribs with conditionally duty-free
merchandise are also Class 9 warehouses.
(10) [Reserved]
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(11) Class 11. Bonded warehouses, known as general order warehouses, established for the
storage and disposition exclusively of general order merchandise.
ROLE OF LOGISTICS IN BONDED WAREHOUSES
Logistics is the art and science of management, engineering and technical activities concerned
with requirements, design and supplying, maintaining resources to support objectives, plans and
operation.
It is important to recognize the importance of a dynamic balance between the minute details and
the main elements involved in a product. The Role of Logistics is to maintain that balance. Once
the firm realizes the importance of logistics it is necessary that the firm make full and efficient
use of logistics. The first step is to create a buyer value for the customer and a strategic value for
the firm.
The customer is the most important asset for a company. He drives the entire supply chain
including manufacturing, marketing and logistics. Hence it is important for a firm to have a clear
understanding of what the customer demands and to keep up to the customers expectations. Once
a company has a clear understanding of its customers requirements it must device a strategy on
how to use logistics to achieve it. This means that the company has to have a clear understanding
or assessment of companys strategic direction.
Now lets take a look at the various steps involved in a logistics strategy development and
planning process.
Visioning: this includes the systematic development of an organizational consensus regarding the
key inputs to the logistics planning process as well as identification of the potential alternative
logistics approaches. This is an important step for the following reasons:
Helps to define a strategic direction to the company and also to get a clear understanding
the role of logistics in it.
Get a clear idea of the requirements of the various segments of customers.
Have a look at the various factors that would affect the strategy of the company.
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Define alternative strategies and also the scope of the planning effort.
Strategic analysis: this involves taking a look at the various components involved in the process
and selecting the best logistics process among the alternatives. These components, which are to
be reviewed, are revealed during he first step. This may include revamping the entire process to
assessing how a single component can be used more effectively.
Planning: this involves the assembling of a plan that outlines the mission and goals for the
logistics function and the programs and activities to achieve these goals. Logistics planning is an
iterative process. The plans have to be redefined every year to improve the quality of
performance.
Managing change: this involves effective management to implement enhanced ways of
conducting business. The management should keeping changing the plans in accordance with the
change in the market and also coach the organization to effectively embrace this change.
C. Current Logistics Related I ssues
There are several factors that affect logistics. These issues need to be anticipated, prepared for
and taken advantage of for a company to be successful in todays market. They are
External:
Globalization
Technology
Workforce 2000
challenging nature of the work force
Environmental concerns
Internal:
Customer service and quality
Third party networks
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Supply chain management
Changes in management and organization style
Listed below are some of the steps that could be followed to mitigate the above mentioned
issues:
Performance:
Better service for customers
Improved productivity
Assess just in time and quick response needs
System structure:
Better relationship with vendors, customers and third parties to more effectively manage
the supply chain
Better relationship within and across the organization
Technology integration:
Better information systems that connect functions and organizations
Combine information and material handling systems for increased efficiency and
effectiveness.



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DETAILED SUBJECT MATTER WITH TABLES, FIGURES,
PHOTOGRAPHS AND EXAMPLES
The Table below summarizes the position of the licensed bonded warehouses as at April 2006

Table 1: Summary of Bonded Warehouses, Bangladesh April 2006

License Type Total Active Non
Active
Suspended
(a)
Non
Active
Para 202
(a)
Non
Active
Cancelled
Status
Not
known
(b)
Garments
Bond
3,510 2,553 813 106 8 30
Deemed
Bond
1,012 798 157 29 2 26
Export
Processing
Zone
77 75 0 1 0 1
Home
Consumption
96 81 11 2 0 2
Privileged
Bond
14 13 1 0 0 0
Supervised
Bond
51 37 11 1 2 0
4,760 3,557 993 139 12 59

Notes: This Table was provided by CBC. It replaces the information contained in Table
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25 of Bangladesh Administrative Barriers Review, March 2006
(a) The reason for the large number of non-active licenses is that these bonded
warehouses have outstanding claims made by the CBC. The CBC cannot collect these
outstanding bills, but consider they may be in a better position legally if the license is
suspended rather than cancelled
(b) The CBC has no information on the location of these warehouses. They were
licensed by staff who no longer work at the CBC

The Customs Act 1969 (Refer Sections 13, 32, 84-119,156 and 202) and SRO 153 (03/08/1999)
are the main sources of legislation relating to the Bonded Warehouses.

The bulk of staff resources are spent administering the current stock of bonded warehouses rather
than on new license applications

Any application must first be approved by BOI. An application can then be made by the CBC.
The application requires 25 to 28 supporting documents including 20 from 12 different
institutions.

Upon receipt of a license application, the license division checks the submitted documents and
opens a file against the application and forwards it to the License Committee. The Committee
forms an examination team consisting of one or two inspectors and one superintendent. Usually
the applicant is responsible for making arrangements and providing transportation for the
examination team. The examination team carries out a physical inspection and submits a report
of their findings to the inspection committee within seven to fifteen days.
The license committee verifies the inspection report with the submitted documents and forwards
the file with their recommendation to the Commissioner. Based on the recommendation of the
license committee, the Commissioner makes the final decision regarding the issuance of the
license. If approved for a license, the applicant has to appear in person before the issuing
authority to sign a bond against their license. (Note: the CBC has had great difficulty enforcing
these bonds. This is the major reason for the large number of suspended and para 202 licenses)

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Based on a survey of 22 companies in Dhaka that had recently received a license
1
, the average
time taken to acquire a bonded warehouse license was 226 days
Table 1: Time Required to Obtain a New Bonded Warehouse License, 2006.







Source: Administrative Barriers Review April 2006
According to the respondents in the Administrative Barriers Review survey, it costs an average
of Tk. 408,608 to obtain a bonded warehouse license. Of this, 94% of the cost was related to
expenses at the CBC. A further breakdown of costs reveal that 60% of the cost related to BOI,
and 75% of the cost related to CBC represented gifts/bribes.
As it exists the bonded warehouse licensing process is extremely cost prohibitive for businesses,
both in terms of time and money. According to the survey respondents, on average it took longer
than four months and costs more than Tk. 400,000. The process requires duplication of effort,
particularly at BOI, which on average adds 25 days to the process with little justification and
almost no value addition. In addition, while BOI does not charge a processing fee for its
recommendation process, it requires that the service is offered only to businesses registered with
BOI, which itself involves a cost and takes an additional one month to process the registration.
Peru export boom
Despite lower production, Peru managed to export more fishmeal in 2008. This was mainly
because the country managed to reduce inventories created in 2007 as a result of sky high prices

1
Work conducted for the Bangladesh Administrative Barriers Review, March 2006
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Average 25 108 133 59 167 226
Minimum 2 7 9 13 27 40
Maxximum 60 280 340 105 480 585
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and consumer resistance. Total Peruvian fishmeal exports reached 1.56 million tonnes last year,
24% ahead of the 2007 result. Main importing country continued to be China with a 53% share
of Peruvian exports of fishmeal. Germany is a distant second, importing some 190 000 tonnes of
fishmeal in 2008. However, while Peru export figure show an increase, German import statistics
register a decline; this might be explained by the retention of fishmeal in bonded warehouses, a
common practice.



At present, most of the fishmeal business in Peru is betting on the new fishing season as
remaining stocks from the last fishing season are very small. Catch quota for anchovy was fixed
at 3.5 million tonnes. However, the fishery was immediately closed in some areas, as there was a
strong presence of juveniles in the catch. Reports in the trade are that bookings for the second
quarter of 2009 are very good, which should lead to higher prices in the next quarter.

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German imports of fishmeal were down in 2008, as prices were considered too high, and the feed
producing industry turned to different raw material. Peru continues to be the main exported to the
German market with over 80% market share.

The impact of the economic crisis on Chinese consumers is starting to be felt. As industrial
complexes in the southern part of the country start to close down, the migrant workers are
moving back to their home villages. Pork consumption is declining as a result, leading to falling
prices. The swine flu also influence the Chinese consumers negatively, and pork prices in China
are in free fall. The situation has led the government to consider curbing pork imports, increasing
exports and providing subsidies to farmers and meat processors. At present, demand for fishmeal
for feed to the pork weaning industry is declining.
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EXAMPLE
Bonded warehouse (entrepot)
A bonded warehouse, the ultimate solution when it comes to storing your goods without
immediately paying VAT and tariff duties and import duties. Our company disposes of a bonded
warehouse, also known as an entrepot, of the C-type. This is a private warehouse in which only
the manager can store goods. However, the manager does not necessarily have to own these
goods. This means you can always count on us for (temporary) storage.
One can have many reasons to store goods in a bonded warehouse. For example, you do not
immediately need them and want to make them available for use later on. Another possibility is
the fact that you want to return your goods, which makes finalisation of the import redundant. In
any of these cases, our bonded warehouse is the ideal solution.
For more information on the possible storage of your goods in our bonded warehouse, please feel
free to contact us. We look forward to helping you.
APPLICATION
If you are interested in establishing a bonded warehouse, you should first decide the type or class
of warehouse you are interested in. There are nine different types or classes of Customs bonded
warehouses authorized in Customs and Border Protection (CBP) Regulations (19 CFR 19.1).
To apply, an owner or lessee must construct a written application and address it to the local CBP
Port Director describing their premises, giving the location, and stating the class of warehouse
they wish to establish.
The application must be accompanied by a certificate signed by the president or a secretary of a
board of fire underwriters certifying that the building is suitable for a warehouse and acceptable
for fire-insurance purposes, and a blueprint showing measurements to be bonded.
A prerequisite to operating a Customs warehouse is being bonded. The Port Director determines
the bond amount based on the purpose for the bond. The bond can not be less than $25,000 on
each building or area covered by the bond. You can obtain a Customs bond from a Treasury
licensed surety company.

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ADVANTAGE AND DISADVANTAGE
Advantages of Bonded Warehouse
Basic advantage of a Bonded warehouse is properly licensed to keep all types of imported
goods under the government regulation.
There is no need for Manufacturer, exporter or Importer to invest a big capital on stock,
because the stocks will be safe because it has been maintained by contract for a period of
time, its the duty of authorities to take full responsibility of the goods stored in the
warehouse.
State in art infrastructure facilities in warehouse, for example if you have agro based food
product, you need to maintain certain amount of temperature to keep those food products
fresh. You need to have certain standards of cooling and heating facility in the
warehouse, these kind of bonded warehouse has those features.
You can keep duty paid goods in warehouse without no hassles.
You can apply for a loan and you can pledge even the goods you kept in warehouse.
Owner of the warehouse takes full responsibility of the goods , no need to worry about
whether things might get lost.
Reduce in capital and also save money in expenses, if manufacturer want to re-export it
to another country.
By storing goods in a bonded warehouse, traders can enjoy substantial cost savings
through the deferment of payment of tax if the goods are not immediately required when
they arrive in the destination port.
Duty need not be paid on imported goods which are intended for reexport.
Duty need not be paid on goods which are produced in a Free Industrial Zone pending
export if they are stored in a bonded warehouse.

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Disadvantages of Bonded Warehouse
The main disadvantage would be the risk of duty on a certain products being increased while the
goods are in the warehouse.
The following conditions apply:
The duty rate applicable at the time of withdrawal (UNLESS BEING EXPORTED
FROM THE WAREHOUSE) is the rate in force at that time and not the rate that was
applicable at the time of warehousing. In other words if the duty is increased by
Government during the time the goods are warehoused then the increase will apply. By
the same token, if the duty is reduced, the lower rate will apply.
Only dutiable goods may be warehoused however both duty and VAT is then deferred
while in the warehouse. Goods on which VAT only is payable may not be placed in a
Bonded Warehouse.
If, while in the warehouse, duty is totally removed by Government from a certain
product, then the goods must be removed immediately from the warehouse and the VAT
applicable must be paid.
All goods must be removed and duty paid after the two year period is expired.
No goods may be removed from the bonded warehouse WITHOUT PROPER
CLEARANCE AND PAYMENT OF DUTIES AND VAT HAVING TAKEN PLACE.

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Amity Institute Of Competitive Intelligence & Strategic Management Page 24

SUMMARY
As more customs bonded warehouses spring up around the globe, exporters are in a good
position to benefit from this counterparty performance and credit risk management tool.
Licensed by a countrys local customs authority for temporary storage or processing of goods on
which no duties are paid until the goods are cleared for internal consumption, customs bonded
warehouses provide services such as deep freeze or bulk liquid storage, commodity processing
and coordination with onward transportation.
The evaluation study evaluated the sufferance and customs bonded warehouses only; therefore,
only these warehouses are discussed in detail in this report.
Exhibit 3: CBSA-Regulated Warehouses, by Category, Operation and Use.
Warehouse
Category
Operation Use
Sufferance
warehouses
Privately owned and operated,
licensed by the CBSA. 14 sub-types.
Temporary (40-day) storage of
imported goods pending CBSA
release.
Customs
bonded
warehouses
Privately owned and operated,
licensed by the CBSA. Part of Duty
Deferral Program. Two types:
private (for a company's own use) or
public (offer services to clients).
Imported goods can be stored
duty and tax free (generally for
up to four years) until they are
exported or consumed
domestically.
Queen's
warehouses
CBSA operated Storage and disposal of
unclaimed, abandoned, detained
and seized goods.
Highway CBSA operated For examination of unreleased
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Amity Institute Of Competitive Intelligence & Strategic Management Page 25

frontier
examining
warehouses
imports at highway POEs.

Sufferance and customs bonded warehouses are operated by the private sector under CBSA
licence, while Queen's and highway frontier examining warehouses are operated by the CBSA.
Warehouse licences are issued under the authority of the Customs Act and/or the Customs Tariff,
and the operation of the warehouse facilities must adhere to a number of CBSA memoranda and
warehouse-specific regulations and policies.Both the Customs Act and the CBSA Act grant border
services officers (BSOs) open access to all warehouse facilities and authorize them to examine
and seize goods.
Customs Bonded Warehouses
Customs bonded warehouses are part of the larger CBSA Duty Deferral Program. The various
programs under the Duty Deferral Program umbrella are intended to improve the
competitiveness of Canadian businesses by offering relief from payment of most duties and some
taxes on imported goods ultimately destined for export.Customs bonded warehouses provide for
longer-term (generally up to four years) tax- and duty-free storage of goods. Operators are
permitted to conduct limited processing of goods (allowable process) under the terms of
the Customs Bonded Warehouse Regulations.
Customs bonded warehouse operators must provide a security (bond) in the amount of 60
percent of duties and taxes that would otherwise be payable at any time in the year following the
issuance of the licence'. This security bond ranges from $10,000 to $500,000 and is to be
reviewed at least once per year by the CBSA, and may be increased or decreased to reflect the
changing value of in-bond goods stored. In addition, operators pay an annual licensing fee based
on the value of their financial security, ranging from $100 to $5,000. All customs bonded
warehouses are privately owned and operated, and used either exclusively by a single company
or by multiple companies where users are charged storage and handling fees.

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Amity Institute Of Competitive Intelligence & Strategic Management Page 26

BIBILIOGRAPHY
http://sampleresearchproposals.blogspot.in/2008/07/evaluation-of-efficiency-and.html
http://www.fuerstlaw.com/practice-areas/bonded-warehouse-applications
http://www.concorindia.com/bonded_services.asp
http://www.tamadam.com/bondedbenefits.html
http://www.uh.edu/~lcr3600/simulation/logistics.html
http://www.panoramaacuicola.com/reportes_de_mercado/2009/05/11/fishmeal_market_r
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http://www.stockmarketsreview.com/extras/returning_focus_to_china_20110325_124026
http://wiki.answers.com/Q/How_do_you_apply_to_become_a_bonded_warehouse#ixzz2
5bj0QmqI
http://browseme.info/bonded_warehouse.asp
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http://www.cbsa-asfc.gc.ca/agency-agence/reports-rapports/ae-ve/2010/lwp-pvea-
eng.html#s1x1
http://law.justia.com/cfr/title19/19-2.0.1.1.4.2.html