Bonded Manufacturing Scheme
In order to promote and support the Initiative of Make in India to attract investment and strengthen the manufacturing sector the Ministry of Finance (Government of India vide Circular No. 34/2019 ” dated 1st October 2019) has come up with the Bonded Manufacturing Scheme.
Features of the Bonded Manufacturing Scheme
- Bonded Manufacturing Scheme allows duty-free import of raw material and capital goods for manufacturing and other operations in a custom bonded manufacturing facility.
- The scheme would enable efficient capacity utilization, as there is no quantum of clearance for export or domestic business.
- Units can be set up anywhere in India; there is no set of geographical limitations imposed yet.
Treatment of Materials or Capital Goods
When the raw material or capital goods are imported, the import duty on them is deferred.
- When the raw material or capital goods as imported inputs are exported, the deferred duty is fully exempted.
- When finished goods are sold in the domestic market then import duty on raw material will be levied and the same applies to the case of capital goods.
Advantages of Bonded Manufacturing
There are various types of advantages we can get after registering under this scheme such as:
- Duty on imported raw materials is deferred until the manufactured goods are sold in the domestic market if finished goods are exported then the duty is waived off completely.
- Duty on imported capital goods are deferred until the finished goods are cleared from the bonded facility, if capital goods are resold to the foreign manufacturer then the duty will be avoided or adjusted with other taxes.
- Goods can be transferred from one bonded warehouse to another bonded warehouse without payment of any duty.
- No limitation that finished goods manufacture in a bonded facility has to be exported only it can be sold in the domestic market also after subjecting to necessary conditions.
Ease of Bonded Manufacturing
This scheme plays a vital role in enhancing the Ease of Doing Business as under:
- Single point of approval from commissioner level officer of the Customs.
- One form for getting a license and permission for manufacturing and other allied operations.
- Goods can be kept in a bonded warehouse until domestic consumption or export clearances are done.
- A new manufacturing facility can be set up or change the existing manufacturing unit into a bonded manufacturing unit at any place in India.
- Maintain all records of manufacturing and other operations digitally in a single format.
Types of Benefits
A business entity can avail exemption on customs duty paid on imported inputs when they export the finished goods in the international market through a bonded manufacturing schemes.
The custom duty levied on imported inputs will be deferred until cleared to the domestic market. If the finished goods are cleared to the domestic market, it will attract the customs duty on the imported inputs.
Process of Registration in Bonded Manufacturing Scheme
The following procedure has to be followed to get registration under this act:
- Fill online application as per Annexure-A( Application for license u/s 58 and permission for manufacturing and other operations u/s 65 of Customs Act, 1962) along with the following documents:
- COI of Company/Partnership Deed of Firm
- ID Proof of Director/Partner/Proprietor
- Aadhar Card of authorized signatory
- Property document or rent agreement
- Ground plan of the site with details
- Audit certificate from the fire department
- General Bond Execution as per Annexure-C (As per Section 59(2) of Customs Act,1962) submitted to Commissioner of Custom under the jurisdiction of the entity.
- Grant of Sanction by Commissioner of Custom for manufacturing or other operations in the bonded facility.
Make in India moment is oriented to enhance the Indian Businesses and for export promotion Bonded Manufacturing Scheme acts as an extended arm that works for the facilitation of business units functional in India.
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