A bonded warehouse or a bonding area is a private or public warehouse that is
under the control of Customs Department and is usually near a major dock or
docking station. In some cases Bonding warehouse is owned/maintained by docking
authorities a port trust.
This is a special type of warehouse used to accommodate goods that have arrived from
import and are dutiable, but duty is not yet paid on them. The importers may
use the bonded warehouse as a storage facility and pay duty on certain goods
that they want to be cleared, and leave the rest for clearance at a later time.
This saves the importer a huge amount of money in terms of duty payment that
can be paid at his convenience. In this median time, interest charges against
goods will have to be paid. The reason it is called “Bonded” is because a bond
is issued between the warehouse managing authority/proprietor and the importer.
On payment of duty the goods may be released from bond.
Bonded warehouse maybe used to the advantage of importer for various reasons. One of
them being it can be used as a transition point before the goods are re-exported
or transported to the local markets. In this way, no duty has to be paid until
the day the goods are taken out from the bonded warehouse. In some cases if
there is no local market to absorb the goods into, they may be re exported
without having to pay customs duty. In some countries Vat also has to be paid
upfront along with duty charges, These two charges can be deferred to a later
payment if goods are placed in a bonded warehouse and only when released can
the vat be paid on it. Also, the bond receipt can be used to avail commercial
loan against products in bond and maybe used as collateral for bank.
As far as packing, labeling, restrapping and branding can all be done in the
premises of the bonded warehouse, thus saving the importer time and he doesn’t have
to hire another warehouse specifically for this purpose.