Customs Act, 1962 Section 85 — Stores may be allowed to be warehoused without assessment to duty
Customs Act, 1962 · Stores may be allowed to be warehoused without assessment to duty
Plain-English Explanation
Overview
Section 85 of the Customs Act, 1962 provides a mechanism for importers to warehouse goods intended as stores for vessels or aircraft without immediate payment of import duty. This provision streamlines the process for supplying ships and planes, avoiding unnecessary upfront duty payments when the goods are destined for use outside India.
Who Does This Apply To?
This section primarily affects:
- Importers: Specifically, those who import goods with the intention of supplying them as stores to vessels or aircraft.
- Customs Officers: The proper officer who has the authority to permit warehousing of goods without prior assessment to duty.
- Vessel and Aircraft Operators: Entities that rely on these stored goods for the operation of their vehicles, ultimately benefiting from a more efficient supply chain.
How It Works
Section 85 operates through the following steps:
- Import and Warehousing Entry: An importer imports goods and files an entry for warehousing, indicating their intent to store the goods in a customs bonded warehouse.
- Declaration: The importer must make a formal declaration that the goods are intended to be supplied as stores to vessels or aircraft. This declaration is crucial as it confirms the intended use of the goods and their eventual export.
- Permission from the Proper Officer: The proper officer reviews the importer's entry and declaration. If satisfied that the goods are indeed intended for use as stores on vessels or aircraft, the officer may grant permission for the goods to be warehoused without prior assessment of import duty. This is the core benefit of Section 85.
- Warehousing: The goods are then deposited in a customs bonded warehouse, and remain there until they are required for supply to vessels or aircraft. Normal warehousing regulations then apply.
- Supply as Stores: Eventually, the goods are withdrawn from the warehouse and supplied as stores to vessels or aircraft. At that point, the relevant procedures for supplying stores without payment of duty are followed (as per Chapter of the Customs Act).
Important Conditions & Exceptions
- Condition 1: The declaration made by the importer is critical. It must be accurate and truthful, reflecting the genuine intention to supply the goods as stores. Misrepresentation could lead to penalties and duty demands.
- Condition 2: The goods must be physically deposited into a customs bonded warehouse. This ensures customs control and accountability.
- Exception: If the proper officer has reason to believe the goods are not truly intended for use as stores, they can refuse permission to warehouse without prior assessment.
Practical Example
XYZ Aviation Imports brings in aircraft parts worth ₹50,00,000. They intend to supply these parts to various airlines as maintenance stores. Instead of paying the import duty immediately, XYZ Aviation Imports files a warehousing entry and makes a declaration stating the goods are for supply as stores to aircraft. The proper officer, after reviewing their records and past compliance, grants permission. The goods are warehoused. Later, XYZ Aviation Imports supplies these parts to Air India and Indigo Airlines. The import duty is effectively deferred until the goods are supplied as aircraft stores, greatly improving XYZ Aviation's cash flow.
Key Amendments
No major amendments since enactment.
No case laws found for this provision yet.
Browse all case laws →Frequently Asked Questions
What types of imported goods qualify as 'stores' under Section 85 of the Customs Act, 1962, and are eligible for warehousing without assessment to duty?
Section 85 doesn't specifically define 'stores,' but generally refers to goods intended for consumption or use on board vessels or aircraft. This commonly includes provisions, supplies, and equipment necessary for the operation of the vessel or aircraft and the comfort of passengers and crew. The specific items qualifying as stores are subject to interpretation by the Proper Officer.
What is the procedure for warehousing imported goods as 'stores' under Section 85 without immediate duty assessment?
To warehouse goods as stores without assessment under Section 85, the importer must enter the goods for warehousing and submit a declaration stating the goods are for supply to vessels or aircraft as stores without duty payment. The Proper Officer then reviews the declaration and may permit the warehousing without assessment. This is further detailed in Chapter IX of the Customs Act, 1962 which deals with warehousing provisions.
Are there any time limits specified within which the 'stores' warehoused under Section 85 must be supplied to vessels or aircraft?
While Section 85 doesn't explicitly state a time limit, the general warehousing provisions under the Customs Act, 1962 apply. Section 61 governs the period for which warehoused goods may remain in the warehouse. Failure to remove the goods within the permissible warehousing period will trigger the payment of applicable duties and potential penalties.
What happens if the 'stores' warehoused under Section 85 are not ultimately supplied to vessels or aircraft as declared?
If the warehoused goods declared for supply as stores are not ultimately supplied to vessels or aircraft, the importer becomes liable to pay the import duty that was initially deferred. Additionally, penalties may be imposed under the Customs Act, 1962 for misdeclaration or improper removal of warehoused goods. The specific penalty will depend on the nature and severity of the violation, as outlined in Sections 111 and 112.
Can the benefit of Section 85, allowing warehousing of stores without duty assessment, be claimed if the vessel or aircraft is engaged in coastal trade or domestic operations?
Section 85 is typically intended for goods supplied as stores to vessels or aircraft engaged in international voyages or flights. Applying Section 85 to vessels or aircraft solely engaged in coastal trade or domestic operations may not be permissible, as the intent is to facilitate international transport and trade, potentially excluding domestic usage without duty payment. The Proper Officer's interpretation will be crucial in such scenarios.
What documentation is required to demonstrate that the warehoused goods have indeed been supplied as 'stores' to vessels or aircraft, in order to avoid duty liability under Section 85?
To demonstrate proper supply as stores, the importer needs to maintain records and provide documentation such as ship chandler invoices, bills of lading, vessel or aircraft logs, and certifications from the captain or pilot confirming the receipt and utilization of the goods as stores. These documents should clearly link the warehoused goods to the specific vessel or aircraft and the date of supply, satisfying the requirements of the Proper Officer for duty exemption.
Has there been any recent amendments or clarifications related to Section 85 of the Customs Act, 1962, particularly concerning the definition of 'stores' or the procedural aspects of warehousing without duty assessment?
While Section 85 itself might not have undergone frequent direct amendments, keep abreast of relevant circulars, notifications, and judicial pronouncements issued by the Central Board of Indirect Taxes and Customs (CBIC) that provide interpretations or clarifications on the application of the Customs Act, 1962, including Section 85. These updates often address procedural aspects and definitional issues concerning 'stores' and warehousing, impacting the practical implications of this section.
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Goods must be entered for warehousing. | The imported goods must be formally entered into a customs warehouse. |
| Importer's declaration for stores supply. | The importer must declare that the goods will be supplied as stores to vessels or aircraft. |
| Stores supplied to vessels/aircraft. | The intended use of the goods is crucial; they must be for supply as stores. |
| No import duty payment intended. | The declaration signifies an intention to supply the goods without paying import duty under this chapter. |
| Proper officer's permission required. | The warehousing without assessment is subject to the permission of the 'proper officer' as defined in the Customs Act. |
| Exemption, not an absolute right. | The permission to warehouse without assessment is a privilege, not an unconditional right, and depends on satisfying the conditions and officer's approval. |
Amendment History
No amendment records available for this provision.
Customs Act, 1962 Section 85 — Stores may be allowed to be warehoused without assessment to duty