Circular No. 32 / 2016 - Customs
F. No: 473 / 05 / 2015 – LC
Govt. of India
Ministry of Finance
Dept. of Revenue
Central Board of Excise and Customs
North Block, New Delhi
Dated 13
th
July 2016
All Principal Chief Commissioners Customs,
All Principal Chief Commissioners of Customs & Central Excise,
All Chief Commissioners of Customs,
All Chief Commissioners of Customs & Central Excise,
All Directors General, Chief Departmental Representative,
All Principal Commissioners of Customs,
All Principal Commissioners of Customs & Central Excise,
All Commissioners of Customs,
All Commissioners of Customs & Central Excise.
Subject: - Procedure regarding Duty Free Shops.
Madam/Sir,
Please refer to Notification No. 66/2016 – Customs (N.T.) dated 14
th
May 2016, Special
Warehouse Licensing Regulations, 2016, Special Warehouse (Custody & Handling of Goods)
Regulations, 2016 and Circular no. 20 / 2016 – Customs dated 20
th
May 2016.
2. It may be noted that the Special Warehouse (Custody & Handling of Goods)
Regulations, 2016 prescribe maintenance of a computerized system for accounting.
Accordingly, a system of accounting of receipt, storage, operations and removal of goods with
regard to Duty Free Shops is prescribed below:
3. Maintenance of records of warehoused goods only in digital form:
(a) Every licensee shall maintain electronic records of receipt, handling, storage and
removal of the warehoused goods based upon data elements contained in Form A appended to
this circular. While the data elements contained in the Form are mandatory, the licensee will be
free to add or continue with any additional data fields, as per their commercial requirements. It
would be necessary for the data to be maintained as per systems of “stock keeping unit” (SKU).
(b) All licensees are required to enter data accurately and immediately upon the goods
being deposited in or removed from the warehouse. Such electronic records should be kept
updated, accurate, complete and shall be available at the warehouse at all times so as to be
accessible to the bond officer or any other authorised officer, for verification.
(c) The software for maintenance of electronic records must incorporate the feature of audit trail
which means a secure, computer generated, time-stamped electronic record that allows for
reconstruction of the course of events relating to the creation, modification, or deletion of an
electronic record and includes actions at the record or system level, such as, attempts to
access the system or delete or modify a record.
4. Filing of returns in relation to warehoused goods:
(a) The Regulations also prescribe that,-
(i) a licensee shall file with the bond officer a monthly return of the receipt,
storage, operations and removal of goods in the warehouse, within ten days after the close of
the month to which such return relates.
(ii) where the period specified in section 61 of the Customs Act, 1962 for
warehousing of goods is expiring in a particular month, the licensee shall furnish such
information to the bond officer on or before the 10th day of the month immediately preceding
the month in which the period of storage of goods in the warehouse is expiring.
(b) The monthly return, as per para 4 (a) (i), containing transactions undertaken during the
month, shall be filed by the licensee in Form A appended to this circular. The Return may be
filed as a paper copy or in digital form, as preferred by the licensee (digital form means, such
as, in a Pen drive or CD). The Return need not include details of sales to individual international
passengers. These can be verified by the bond officer or any authorised officer, from the digital
records maintained by the licensee.
(c) The monthly return to be filed by the licensee as per para 4 (a) (ii) shall be filed in Form
B appended to this circular. The Return shall be filed with the Bond officer as a paper copy.
(d) The Duty Free Shop Operator shall also maintain digital records of sales to international
passengers as per Form C. The digital file containing these details shall be integrated with the
records maintained for the warehoused goods, every 24 hours, and should be available for
inspection as a part of the data maintained as per Form A. However, filing of returns would not
be required for the record maintained as per Form C.
5. Acknowledgement of the receipt of goods in the warehouse:
The Licensee shall follow the procedure contained in Regulation 6 of the Special Warehouse
(Custody & Handling of Goods) Regulations 2016. Upon receipt of the goods in a warehouse,
the licensee shall, send an acknowledgement of such receipt, duly signed by the bond officer,
as follows:
(i) in case where goods are received from a customs station, to the Assistant/Deputy
Commissioner in charge of the Bond section at the Customs station of import; or
(ii) in case where the goods are received from another warehouse, to the proper officer
of the warehouse from where the goods have been received.
6. Facilities:
In view of the requirement in the regulations to retain photocopies of documents such
as bills of entry, transport documents and Form for transfer of goods from a warehouse, send
acknowledgement of receipt of goods in the warehouse etc., the licensee shall maintain
facilities such as computer, photocopier, scanner and printer at the warehouse.
7. Effective Date:
The above requirement of maintaining digital records, in the prescribed Forms, is
applicable from the 14
th
May 2016. Thus, the record of any goods received on or after 14
th
May
2016 shall be maintained as per the prescribed Forms. However, during the consultations with
Duty Free Shop Operators, it was gathered that they are already maintaining records in
software based systems but due to the requirement of maintaining the bond register, records
are being reduced to manual form to comply with prescribed columns. Now that a system of
computerised record keeping has been prescribed, the information regarding the stock of goods
lying deposited in the warehouse can be integrated into the digital record prescribed under this
circular. It is clarified that data relating to goods already removed from the warehouse by 13
th
May 2016, are not required to be updated in the digital records. However, the stocks lying for
sale in the duty free shops should be entered in the digital records since their duty liability is not
extinguished till their sale to international passengers. In so far as goods deposited, removed
and already sold through Duty Free Shops before 14
th
May 2016 are concerned, the
information recorded in the extant bond register shall suffice.
8. Procedure for removal of goods from the warehouse and accounting thereof:
The Board has approved the following procedure for accounting of the goods removed
from a warehouse licensed under section 58A of the Customs Act, 1962, without payment of
duty:
a. Upon removal of goods from the warehouse licensed under section 58A, the licensee
shall immediately record the same in the records;
b. The removal of goods from the warehouse, without payment of duty, is subject to the
condition that the goods are removed to the customs area for sale to passengers
arriving into or departing from India.
c. The records relating to removal of the goods to the duty free shops at the arrival area
and departure area shall be maintained separately.
d. The bond officer shall escort the goods from the warehouse to the point of sale (DFS) in
the customs area, whereupon, their subsequent sales to passengers arriving into or
going abroad from India shall be under the general supervision of the customs officers
on duty at the passenger terminals.
e. Every duty free shop shall record their sales to passengers by a computer generated
invoice, which shall contain the name of the passenger, flight number & passport
number. This data shall be stored digitally, in Form C.
f. The records of the warehouse shall be updated every 24 hours with the data elements
contained in Form C.
9. Security and Solvency Requirements:
The Board has dispensed with the requirement of security to be furnished under section
59 of the Customs Act, 1962 by a DFS operator in respect of his imports (Circular No.21/2016-
Customs refers).
9.1 As regards requirements of solvency, as provided under clause (b) of regulation 3 of the
Special Warehouse Licensing Regulations 2016, the Board has decided that the Licensee shall
furnish a solvency certificate of a value equivalent to the amount of duty involved on the goods
proposed to be stored at any point of time. In this connection, it may be noted that proviso to
the aforesaid clause, waives the requirements of a solvency certificate in respect of the PSU
owned duty free shops (for example, ITDC).
10. In-flight duty free shop:
Requests have been received for clarifying whether the existing business practice of in-
flight duty free sales can be continued by Airlines.
10.1 The removal of goods from the warehouse licensed under section 58A of the Customs
Act, 1962, without payment of duty, is subject to the condition that the goods are removed to
the customs area for sale to passengers arriving into or departing from India. In other words, as
long as the said goods are sold to passengers arriving from abroad or going abroad, the mode
of sale shall not affect the due accounting of the goods removed from the warehouse.
10.2 Accordingly, goods removed from a warehouse licensed under section 58A of the
Customs Act, 1962 and loaded on a scheduled commercial airline for sale to passengers going
abroad, as inflight duty free shop sales, shall be permitted. In such a case, the bond officer
shall escort the goods up to the aircraft and shall take into record the copy of the manifest,
which must duly reflect the quantity of goods loaded for in-flight duty free sales. Further, the
licensee must have accounting procedures, in conjunction with the Airlines, to record the in-
flight sales with the name of the passenger, passport number and flight number. The data
relating to the inflight sales has to be provided by the Airlines to the inflight duty free shop
operator immediately upon return of the aircraft to India. In turn, the operator shall update the
electronic records to co-relate with goods removed from the warehouse.
11. Recovery of costs:
Clause (e) of Regulation 3 of the Special Warehouse Regulations 2016 and circular no.
20 / 2016 – Customs dated 20
th
May 2016 provide that the Licensee of a special warehouse
shall undertake to bear costs of customs supervision on Merchant Over Time basis or on Cost
Recovery. Now, the Board has approved the following guidelines:
a. The Licensee shall have to indicate the frequency with which the warehouse has to be
operated per day / per week and the expected business hours of such operation.
b. The Principal Commissioner / Commissioner shall evaluate the projected requirement
and the distance of the warehouse from the customs office to determine which of the
modes of recovery of costs needs to be applied.
c. Illustratively, if the requirement of the licensee warrants the operation of the warehouse
on a frequency which is, say, once in a week, the cost of supervision shall be charged
on Merchant Over Time basis. Or, in cases, where the services of the Customs officer
are required once a day, cost of supervision could also be based upon Merchant Over
Time. However, if the warehouse is at such distance from the nearest customs office or
the nature and duration of work is such that, the visit of the bond officer on every day
basis, means his absence from his office for an entire day or better part thereof, the
licensee shall have to undertake the services on cost recovery basis. Further, in cases
where the licensee requires services of a customs officer for more than once in a day,
he shall have to undertake supervision on cost recovery basis. Similarly, in case where
round the clock services are requested, the licensee will have to bear charges on cost
recovery basis for a suitable number of officers. Basically, this issue has to be
examined on the above lines for deciding the recovery of costs from the licensee.
12. Administrative arrangements:
For the purposes of uniformity of jurisdiction and supervision, the Board has also
approved the following:
a. The duty free shops shall be under the general supervision of the Principal
Commissioner/ Commissioner of the Airport (Passenger Terminal).
b. A warehouse licensed in the precincts of the Airport complex shall also be in the
jurisdiction of the Principal Commissioner / Commissioner of the Airport (Passenger
Terminal). Accordingly, he shall be the licensing authority.
c. A warehouse licensed under section 58A, which is located outside the precincts of the
airport shall be under the Principal Commissioner / Commissioner having jurisdiction
over that site. Accordingly, he shall be the licensing authority and also allot the Bond
Officer(s) required.
d. Principal Commissioners / Commissioners shall ensure a smooth transition to the above
system on or before 13
th
August 2016.
13. Difficulties, if any, should be brought to the notice of the Board.
14. Hindi Version follows.
Yours faithfully,
(S. Kumar)
Commissioner (Customs)
Encl: Forms A, B and C
FORM -A
Form to be maintained by a special warehouse Licencee of the receipt, handling, storing and removal of warehoused goods.
(as per Circular 32/ 2016-Customs dated 13.07.2016)
Warehouse code and address:
Receipts
Bill of
Entry
No. and
date
Customs
Station
of import
Code and
address of
Warehouse from
where received
(only in cases of
bond to bond
transfer)
Bond
No.
and
date
Description
of goods
Description
and No. of
packages
Marks
and
numbers
on
packages
Unit,
Weight
and
quantity
Value
Duty
assessed
Date of
order
under
Section
60(1)
Registration
No. of
means of
transport
OTL
No.
Quantity
received
Date and
time of
Deposit
Shortage ( date
and time of
intimating Bond
officer)
Breakage/damage
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Handling and storage
Removal to DFS
Sale through DFS *
Incoming Passenger Outgoing passenger
Date of expiry of
initial Bonding
period
Date of expiry of
extended Bonding
period
Activities
undertaken
under section
64
Sample drawn by
government
agencies ( with date
and time)
Date and
time of
removal
Quantity
cleared
Value Duty forgone Quantity
Value
Duty forgone
Quantity
Value
Duty forgone
18 19 20 21 22 23 24 25 26 27 28 29 30 31
Other removals Returns from DFS Balance in warehouse Remarks
Following codes to be used :
WH: Transfer to another warehouse.
EX: Export
OS: others
Date and
time
Quantity Value Duty
Date and
time
Quantity Value
Duty
involved
Quantity
Value
Duty
32 33 34 35 36 37 38
39 40 41 42 43 44
* Data relating to sales to each international passenger shall be maintained in Form C and kept in digital form only. No paper copies of form C are to be filed. Monthly aggregate quantity sold is to be indicated
in column 26-31 while filing monthly returns.
FORM- B
Details of goods stored in the warehouse where the period for which they may remain warehoused under section 61 is expiring in the following month.
(as per Circular 32/ 2016-Customs dated 13.07.2016)
Bill of Entry No. and
date
Bond No. and
date
Date of order under Section
60(1)
Balance goods in the warehouse Date of expiry of
initial bonding period
Date of expiry of
extended Bonding
period
Remarks
Sl. No of the import
invoice
Description of
goods
Quantity Value
1 2 3 4
5 6 7 8 9 10
FORM –C
Details of sale made through DFS
(as per Circular 32/ 2016-Customs dated 13.07.2016)
Sale to outgoing passengers
Name of passenger
Passport No. Flight no.
Description of goods
along with Quantity
Name of passenger
Passport
No.
Flight no.
Description of goods along with
Quantity
1 2 3 4 5 6 7 8
