F.A.Q.
The Bonded Manufacturing Scheme is a program that enables businesses to import raw materials and capital goods without paying customs duties, with the condition that the final products may only incur duties if sold within the domestic market.
Businesses can import raw materials and machinery duty-free, manufacture products, and export them. Customs duties are only applicable on the finished products if they are sold domestically.
Entities engaged in production processes utilizing imported materials and capital goods are eligible to benefit. This scheme is particularly advantageous for businesses with predominantly local sales that rely on imported machinery for their manufacturing processes. It stands as the sole available scheme for such businesses.
The primary advantage is cost savings. By deferring customs duties until the final product is sold, companies can enhance cash flow management. This increased cash flow enables them to maintain surplus inventory, negotiate more effectively with suppliers, and save on interest payments for borrowed funds, among other benefits.
The eligible import duties for exemption or deferral include Basic Customs Duty, Integrated Goods and Services Tax, Social Welfare Surcharge, GST Compensation CESS, and Anti-Dumping Duty.
Further, second hand capital goods can also be imported duty-free in this Scheme.
No, there is no export obligation mandated under the scheme. It is a duty deferral benefit rather than a blanket exemption, so no export obligation is prescribed.
Duty becomes payable only at the time of removing capital goods from the manufacturing unit, whether for sale, scrapping, or any other purpose.
Only the duty amount saved during the initial import of the capital goods needs to be paid when removing them from the unit after 10 years. The duty owed does not decrease based on the number of years the goods were used. However, no interest will be charged.
Any entity involved in the business of manufacturing goods can register under the scheme. This includes various entity types such as Private Limited Companies, Limited Liability Partnership Firms, Partnership Firms, and Proprietorship Firms.
Certainly. A recently established company, even with no prior history in import-export activities, is eligible to register under the Bonded Manufacturing Scheme. This includes any legal entity that has not engaged in import-export transactions in the past.
The application process includes submitting both physical and online applications, with approval usually taking 4-6 weeks, subject to individual cases. The registration is a one-time process and remains valid unless voluntarily surrendered or cancelled.
Regarding registration, it is premises-based, necessitating a separate registration for each unit. The registration is not entity-specific, meaning that all units of the same entity are not automatically registered; separate applications are required for different manufacturing units of the same entity.
Some of the key documents are site plan, bank solvency certificate, insurance policy, fire safety audit certificate, financial statements, business profile, kyc documents of key managerial persons, etc.
Yes, instead of filling bill of entry of home consumption, unit under the scheme would be required to file bill of entry for warehousing.
Records of movement of duty-free imports to be kept electronically and monthly return furnishing details of duty-free imports received, removed and in stock to be submitted with the jurisdictional customs authorities.
The Scheme does not require ongoing monitoring and supervision of business premises by Customs. However, if there is intelligence indicating fraudulent activities, authorities may conduct inspections. Even in such cases, measures are taken to ensure minimal disruption to routine business operations.