Customs Bonded Warehouses Quiz

Customs Memorandum Order (CMO) 03-2022

• Revised rules and regulations on the establishment, supervision, operation, and control of Customs Bonded Warehouses (CBWs)
• Aims to provide procedures for CBW establishment and operation, improve transparency, and institute a full compliance regime
• Includes provisions for transfer of goods, storage periods (differentiating between perishable & non-perishable), allowable importations, restricted/regulated goods, withdrawals for local sales, and for sub-contracting.

Objectives

• Establish CBW procedures and operations
• Implement a CBW management system using ICT for better monitoring and control
• Establish a full compliance regime for CBW operators and provide sanctions for violations
• Define duties, responsibilities, and accountabilities of BOC personnel and CBW operators

Administrative Provisions

• Transfers of Goods to CBWs: Goods transfer to CBWs requires mandatory non-intrusive inspection at the port of discharge (whether WSAD or TSAD). If the goods are not placed under an Alert Order or chosen for physical/non-intrusive examination, an immediate transfer is possible.
• Storage Period of Bonded Goods: Goods can remain in a CBW for up to one year from arrival (extendible for valid reasons). Perishable goods have a three-month maximum. Common Bonded Warehouses (CCBWs) calculate storage from the arrival of goods at the mother warehouse.
• Allowable Importations: Importations are limited based on the CBW's authority/license, specific raw materials, quantity, and the type of CBW
• Non-importation of Finished Goods for warehousing unless part of another manufactured/exported finished good.
• Restricted and Regulated Goods: Entry or storage of these goods requires the appropriate clearance and authorization
• Withdrawals for Local Sales/Domestic Consumption: Withdrawals for such consumption are permitted with District Collector approval and payment of taxes, limited to 30% of total bonded materials brought in for the year.

Procedures for Application for the Issuance of Authority to Operate a CBW

• Application is filed with the Collection District responsible for the location
• Includes details about the premises, location, capacity, and purpose of the proposed facility.
• Necessary Documents:
  • BOC Accreditation as an importer
  • Lease contract/title to the property.
  • Maps, layouts, structural diagrams
  • Inventory, office spaces, and any relevant details.
  • Feasibility study.
  • Monthly raw material importation requests
  • Compliance with all requirements

Procedures for Renewal of Authority to Operate a CBW

• Renewal applications are due 120 days before the expiration of the authority and must be filed properly with the relevant Collection District.
• Additional documents required for renewal:
  • Current Importer's Accreditation
  • Income Tax Returns or Audit Financial Statement
  • Performance Clearance documents

Procedures for Application for Membership to a CCBW

• Conform to Section 3.1 procedures for CBW approval, and include documents relating to membership intent, debt-free status with former CCBW, and written approval from the former CCBW

Procedures for Application for Accreditation as Sub-Contractor

• Firm must meet criteria outlined in CMO and submit supporting documents including a Service Agreement or Memorandum of Understanding

Application for Accreditation as Client End-User of an ICBW

• Companies can apply if they meet the requirements for CBW operation
• Applications must include details of any contracts, material requirements, and the products they plan to produce.

Application for Accreditation as Client-Exporter of a Manufacturing CBW or Accredited Member of a CCBW

• Operators apply for company accreditation to support their client exporters
• Additional requirements for applications may include export accreditations and related documents

Application for Renewal of Authority to Operate a CBW

• Applications must be completed 91 days prior to expiration
• Includes details about ongoing obligations, financial statements, and updated details about the firm's operations.

Withdrawal of Bonded Goods

• Goods can be withdrawn under several circumstances, including for production, export, or sale to other CBWs.
• The necessary forms and supporting documents are detailed in the notes.

Disposition of Wastages, Rejects and By-Products

• Wastages, rejects, and by-products can be addressed through consumption, re-exportation, or condemnation, following specific procedures.

Liquidation of Materials, Entries, and Cancellation of Bonds

• Clearances must be made within 60 days of last export.
• Includes a list of required documents for liquidation and cancellation.

Abandonment of Bonded Goods

• Goods that are not processed or exported within the permitted time are considered abandoned.
• The operator has the option of paying taxes, exporting the goods, or abandoning them formally.

Suspension and Closure of CBW

• The CBW can be closed for various reasons, including fraud, inactivity, violations, or structural/usage issues.
• The process includes a closure order and required procedures for closing and transferring any remaining goods.

Inspection of CBW and Inventory of Bonded Goods

• Regular inspections and inventories of CBWs are required for compliance verification and to ensure there are no violations.
• Includes lists of documents required and the process for the checks.

Duties of Customs Personnel

• Detailed descriptions of duties for the different roles within the Customs service related to CBWs.