Customs Act, 1962 Section 89 — Stores to be free of export duty
Customs Act, 1962 · Stores to be free of export duty
Plain-English Explanation
Overview
Section 89 of the Customs Act, 1962, provides an exemption from export duty for goods produced or manufactured in India that are taken as stores on foreign-going vessels or aircraft. This facilitates international trade and transportation by reducing the operational costs of such vessels and aircraft. It is intended to keep India a competitive hub for international logistics.
Who Does This Apply To?
This section applies to:
- Manufacturers and producers in India whose goods are used as stores on foreign-going vessels or aircraft.
- Operators of foreign-going vessels and aircraft that require stores for their voyages or journeys.
- Customs officers responsible for determining the permissible quantity of stores and overseeing their export.
How It Works
The process for exporting goods as stores duty-free under Section 89 involves the following steps:
- Production/Manufacturing: The goods must be produced or manufactured within India. This condition ensures that the benefit applies only to goods originating from India, supporting local industries.
- Requirement as Stores: The goods must be intended for use as stores aboard a foreign-going vessel or aircraft. "Stores" typically includes food, beverages, fuel, lubricants, and other consumable items necessary for the vessel's or aircraft's operation and the well-being of passengers and crew.
- Quantity Determination: The proper officer of Customs determines the permissible quantity of goods that can be exported duty-free. This determination is based on several factors, including:
- The size of the vessel or aircraft.
- The number of passengers and crew members on board.
- The length of the voyage or journey.
- Export: Once the quantity is approved by the proper officer, the goods can be exported without payment of export duty.
Important Conditions & Exceptions
- Condition 1: The goods must be genuinely required as stores for the vessel or aircraft. This means they must be intended for consumption or use during the voyage or journey and not for resale.
- Condition 2: The exporter must comply with all other applicable customs regulations and procedures, including filing the necessary export documents and obtaining relevant permissions.
- Exception: If the goods are subsequently landed back in India without proper authorization, they may be subject to export duty and penalties.
Practical Example
An Indian food manufacturer, "Tasty Bites Pvt. Ltd.," produces packaged snacks. A foreign-going cargo ship, "MV Global Voyager," departing from Mumbai to Singapore, requires stores for its 20 crew members for a 10-day voyage. Tasty Bites Pvt. Ltd. supplies the snacks. The proper officer assesses the vessel size, crew number, and voyage length and determines that 500 kg of snacks are a reasonable quantity to be considered stores. Tasty Bites Pvt. Ltd. can export those 500 kg of snacks duty-free under Section 89, provided they comply with all other export procedures.
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 goods qualify as 'stores' under Section 89 of the Customs Act, 1962, and are therefore eligible for duty-free export?
Under Section 89, 'stores' generally encompass goods produced or manufactured in India and required for the operation of a foreign-going vessel or aircraft. This includes items necessary for the vessel/aircraft's function and the comfort of its passengers and crew during a voyage or journey. The specific items qualifying are determined by the 'proper officer' based on the vessel/aircraft size, passenger/crew numbers, and trip duration (See also Circular No. 36/2017-Customs).
How does the 'proper officer' determine the quantity of duty-free stores allowed under Section 89 of the Customs Act, 1962?
The 'proper officer' determines the permissible quantity of duty-free stores by considering factors such as the size of the vessel or aircraft, the number of passengers and crew on board, and the anticipated length of the voyage or journey. This ensures that only a reasonable quantity, necessary for the specific trip, is exempted from export duty under Section 89.
Are there any specific documentary requirements for exporting stores duty-free under Section 89 of the Customs Act, 1962?
Yes, exporting stores duty-free under Section 89 requires proper documentation. Typically, this includes a declaration detailing the goods, their quantity, and their intended use as stores on a foreign-going vessel or aircraft. Exporters should consult with customs officials to confirm the exact documentation needed for compliance, as these may vary based on specific circumstances and local customs regulations.
What happens if the exported stores, initially declared under Section 89, are found to be diverted or used for purposes other than intended on the foreign-going vessel or aircraft?
If stores exported duty-free under Section 89 are diverted or misused, it would be treated as a violation of customs regulations. This can result in penalties, including the recovery of evaded export duties, fines, and potential legal action against the parties involved (See Section 111 and related sections of the Customs Act, 1962).
Does Section 89 of the Customs Act, 1962, apply to stores supplied to foreign-going vessels or aircraft engaged in coastal trade or exclusively domestic routes?
No, Section 89 specifically applies to stores required on 'foreign-going' vessels or aircraft. Therefore, it generally does not extend to vessels or aircraft engaged solely in coastal trade or exclusively domestic routes within India. For stores supplied to vessels/aircraft on domestic routes, relevant regulations pertaining to local supplies and taxes would apply.
What is the process for obtaining clearance from the 'proper officer' to export stores duty-free under Section 89 of the Customs Act, 1962?
To obtain clearance, exporters must submit an application with the necessary documentation to the 'proper officer' before the vessel or aircraft departs. The application should detail the type and quantity of stores, along with supporting documents verifying their purpose and the vessel/aircraft details. The 'proper officer' will then assess the application and grant clearance if all requirements are met, allowing for duty-free export under Section 89.
Has there been any recent amendments or clarifications to Section 89 of the Customs Act, 1962, or related regulations that impact the duty-free export of stores?
While Section 89 itself may not have frequent amendments, related circulars and notifications from the CBIC (Central Board of Indirect Taxes and Customs) concerning the procedural aspects and interpretation of 'stores' are subject to change. Taxpayers should stay updated on the latest notifications and circulars issued by the CBIC to ensure compliance with the current regulations governing duty-free export of stores (Refer to CBIC website).
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Goods must be produced/manufactured in India | Only goods that originate from India qualify for export as stores without export duty. |
| Intended for foreign-going vessel/aircraft | The goods must be destined for use as stores on a vessel or aircraft embarking on an international voyage or journey. |
| Quantity determined by proper officer | The allowable quantity of goods exported duty-free is subject to the approval and determination of the customs officer. |
| Factors considered for quantity determination | The proper officer considers the vessel/aircraft size, number of passengers/crew, and voyage length to determine the appropriate quantity of stores. |
| Exemption from export duty | Eligible stores are exempt from export duty, facilitating international voyages and journeys. |
Amendment History
No amendment records available for this provision.
Customs Act, 1962 Section 89 — Stores to be free of export duty