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Bonds Division was established in year 1984 with a view to centralize Customs functions related with the importation of cargo
for temporary storage on Security bonds to facilitate clearance for the needs of Trade and Industry under specific procedures and promote manufacturing
export industry aiming to explore new avenue for diversification of the traditional trend of exports in Sri Lanka with proper coordination between the
relevant line authorities.
The Division comprises with the following sub-divisions to perform the operational and administrative functions:
Warehouse keeping branch
Export facilitation branch
Investment facilitation center
Administration and Investigation Branch
WHK Branch implements the Customs Warehousing Scheme to facilitate storage of import cargo at a designated place of security
without payment of Customs Duty and Taxes until such cargos are removed for the intended purpose under the Provisions of Sec. 69 to 100 of the Customs
Ordinance.
The Hon. Minister of Finance grants approval for appointment of Customs Bonded Warehouses on recommendation of the Director General of Customs.
Types of Bonded Warehouses
Public Bonds
Private Bonds
Sri Lanka Ports Authority owns & manages Public Bonds within the Port premises under Customs Control. Any importer is privileged
to bond the import cargo at the Public Bond subject to the allocation of space by the SLPA and approval of the Customs.
Private Bonds are appointed on requests of the traders to warehouse the goods imported by the respective bondmen for the intended purposes under existing
facilities.
The Customs does not process any applications to establish Private Bonds for supply of goods to the local market except for re-export or goods such as
sugar and rice imported to keep buffer stock Diplomatic Missions and Duty Free Shops on instructions of the Ministry of Finance.
Benefits for the Trade
Traders can utilize Customs warehousing facilities to suspend Customs Duty and Taxes on imported goods, which are required.
for domestic market on payment of applicable fiscal levies
to be supplied on free or at concessionary rates of duty as entitled by the
Diplomatic Missions
Export Oriented Industries, (BOI or Non BOI)
Passengers arriving in or leaving out the country
Ships/Air Crafts as provisions on board
For re-export purposes
After utilization as inputs by re-export industries registered Division
With the facilities under Entrepot Trade
Categories under Private Bonds
Sugar and Rice Bonds
Bonds for supply of goods to the local market
Bonds for supply of goods to the Export Oriented Enterprises
Service Bonds, Feeder Bonds and Duty Free Shops
Bonds for supply of goods as provisions to Ships/Air Crafts and spares for reefer containers
Manufacturing Bonds
Multi Country Consolidation Bonds
Bonds for clearance of unaccompanied personal baggage
Bonds for clearance of express cargo (Courier)
General Regulations for Bonded Cargo
The goods fall under following categories are not permitted to be bonded.
Duty paid goods
Perishable goods
Damaged goods
Inflammable/Dangerous goods
Prohibited goods
Restricted goods without necessary License/Permit
The permissible period of bonded cargo depends on the nature of goods subject to the maximum of two years.
Two months for confectionary
Three months for cigarettes and tinned foods
Six months for wine/beer in bottles
Two years for all other goods
Under the regulations the initial period granted for Bonded Cargo is six months and the approval has to be obtained for extension of the bonded period from the Customs at the end of six months.
Requirements for the establishment of Private bonded Warehouses
Duly perfected application with project proposals
Business Registration Certificate & Memorandum of Article
TIN Certificate and Registration
Plan of the Bonded Warehouse and premises approved by the local authority with Deed or Tenancy Agreement
Certificate on safety of electrical installation
Insurance Policy covering the Bond and the Cargo as well
Approval of the line ministry or department (Where necessary)
Security arrangements through out the day
Strong building and safe environment
Easy access to the premises for heavy vehicles
Security Guarantees are not required for the liabilities of cargo bonded at Public bonds. In respect of the goods deposited at Private bonds, Security guarantees are required as determined by Customs depending on the category and the volume of cargo to be bonded.
Recovery of Customs Duty and Taxes
All the levies are payable on ex-bonded goods for supply to the domestic market,
At current rate of Duty
On CIF value at the time of importation
At current Rate of Exchange
Responsibilities of the Bondsmen
Maintain the records in proper manner
Submit cancellation documents in time
Make the disposals within the specified period
Settle Customs Liabilities, if any
Safe custody of goods
Storage for easy identification of goods and easy access
Obtain prior approval of Customs for any transaction of bonded cargo and the services of Customs Officials as required under regulations
Report on any damaged or spoiled cargo to the Customs immediately
Customs warehousing scheme further facilitate importers to generate foreign exchange by trading the products of other
countries in the lucrative export market under Entrepot Trade.
Importers can utilize warehousing facilities of the Public Bonds with concurrence of the Sri Lanka Ports Authority and process documents for
re-export of goods at Customs Bonds Division.
Traders can operate Private Bonds with the formal approval of Customs for operating Bonded Warehouses to store the goods imported under Entrepot
Trade pending re-export.
Also the Customs permits to transfer the goods from one vessel to another without cargo being landed into a Bonded Warehouses.
Traders can obtain approval of Customs to consolidate Entrepot cargo at MCC Bonds.
Benefits for the Traders
Goods can be imported free of Customs Duty and Taxes under exemption from the requirements of Import Control Licence.
Re-export of goods can be made as imported with a profit margin
Simple processing is permitted to meet buyers requirements such as re-packing and re-labeling.
Trading transactions can be made from one country to another without arriving the goods physically into Sri Lanka.
Changing the status of B/L is permitted as transshipment by Customs to divert shipments to a consignee in third country by switching of Bill of Lading.
Requirements under Entrepot Trade
Following goods are prohibited /restricted under Entrepot Trade
Prohibitions
Narcotics
Arms and ammunitions
Goods which are prohibited to import and export under International Conventions for which Sri Lanka has become a contracting party.
Restrictions
Cloves - re-export to the countries under preferential trading arrangements
Textile and clothing – re-export to USA, Canada, India, Australia, Italy, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Spain, Luxembourg, Sweden, Netherlands, Portugal and UK.
The FOB value of re-export should be more than the CIF value of import.
Re-export under DA terms is permitted on prior approval of the Controller of Exchange.
Normal Exchange Control Regulations are applicable
Actual country of origin (Country of Export) should be declared in re-export documents.
The WHK Branch grants approval for the transaction under Entrepot Trade on request made by the trader giving the details of import
and export, name of the vessel, B/L number , terms of payments, value and descriptions of the goods etc.
Exporter should submit proof of export (remittance, B/L etc.) to the WHK Branch within one month from the date of export for cancellation of liabilities.
Export Facilitation Branch implements TIEP 1, TIEP IV and Duty Rebate Schemes under the Provisions of Section 22 of the Customs Ordinance
and List of Exemption/ Concession to facilitate export industries to minimize cost of productions and enhance the competitiveness of such products in the global
market. The operators under above schemes can import raw materials free of Duty and Tax or draw back the Duty paid on raw materials at the time of importation.
The registered enterprises under this scheme can import all the inputs conditionally relieved from payment of import duties and taxes on the basis that such goods
are intended for manufacturing, processing or assembling and subsequent exportation The governing regulations of the scheme have been published in Gazette Notification
No.1053/11 November 1998.
Manufacturers cum Direct Exporters or Indirect Exporters are eligible to obtain the facilities under TIEP I Scheme to export their products directly to other countries
or supply to direct exporters as intermediate goods of their industries.
Inputs permitted to import
Raw Materials, Components and parts which will be incorporated in the export products.
Parts for assembly of the products to be exported
Consumables such as catalysts, acceleration and chemicals
Packaging materials in finished form as labels, stickers, tags etc.
Raw materials for the manufacture of packaging materials
Export catalogues and brochures
Registration
For the purpose of registration under TEIP I Scheme any enterprise should furnish the following documents to the Export Facilitation Branch.
Duly completed prescribed from (TIEP I ) in triplicate
Project Report
Certificate of VAT Registration
Business Registration (Form 65)
Memorandum of Article (Form 48)
Recommendation by the Ministry of Industrial Development for the project including consumption ratio and wastage factor of inputs with H.S. Codes.
Other necessary approvals of line authorities wherever applicable (Tea Board, Coconut Development Board etc
Customs approval for the TIEP operation will be granted up to a period of 12 months in general or for a specific importation as
needed by the applicant. With the allocation of Procedure Program Number after registration at the Export Facilitation Branch, the information of the
enterprise will be entered in the Computer System to facilitate import and export documentation.
In addition to the data maintained by the Customs in respect of the imports and exports of the enterprise, the party should maintain such records for the
purpose of reconciliation with Customs records. Registration of the operation will be renewed at the end of 12 months period at the request of the operator
after evaluation past performance of the operation by Customs.
Customs will secure liabilities of imports on Bank Guarantee or Personal/Corporate Guarantee depending on the credentials established with Customs by the operator.
Discharge of Liability
Documents needed are:
Export CusDec by the direct exporters
Following documents by indirect exporters:
Goods Received Notice (GRN) for supplies to another TIEP Operator or BOI Enterprise located within Zones
GRN together with VAT Invoice for supplies to BOI Enterprises located out side zones and Infac Operators except for the
enterprises registered under VAT Suspension Scheme.
Credit Voucher for VAT deferments
Registered industries under TIEP IV Scheme are entitled for whole or partial exemption of Customs Duty on imported capital goods utilized for
the manufacture of products/services and export at least 25% or more of the total output.
Capital goods eligible for exemption
Machinery equipment and accessories directly involved in production process.
Supporting equipment, appliances or devices such as electricity generators, air conditioners etc.
Transport and handling equipments required for the production process exclusively at the factory premises.
Spare parts for the project plants and machinery etc.
Breeding stocks for agricultural projects.
Direct and Indirect Exporters can obtain the facilities for exemption of Duty and Surcharge under the following basis.
100% exemption for exporters who export 50% or more of their out puts and indirect exporters who supply 50% or more of their out puts to direct exporters.
50% exemption for exporters who export 25% or more of their out puts and indirect exporters who supply 25% or more of their out puts to direct exporters.
Registration
For the purpose of registration under TIEP IV Sheme any enterprise should furnish the following documents to the Export Facilitation Branch.
Duly completed prescribed form (TIEP IV) in triplicate
Project report
Certificate of VAT Registration
Business Registration (Form 65)
Memorandum of Article (Form 48)
Other necessary approvals wherever applicable (Tea Board, Coconut Development Board etc
Customs grants approval for the registration under TIEP IV scheme if the documents are in order. With allocation of the Procedure Program Number by Export Facilitation Branch the information of the enterprise will be entered in the Computer System to facilitate Customs documentation for imports and exports.
Types of Approval
General approval for the period of one year from the date of registration
Specific approval for a single importation as requested.
Customs will secure liabilities of imports on Bank Guarantee or Personal /Cooperate Guarantee depending on the credentials established
with Customs by the operator.
Discharge of Liability
At the end of one year from the date of commencement of productions the TIEP Operator should submit a statement of productions and exports and/or supplies of
such products to exporters respectively, duly certified by a recognized auditor in Form – TIEP V ( In triplicate), to the Director General of Customs.
After discharge of the guarantee, the TIEP Operator should give a written undertaking to the Director General of Customs that the items imported under this
scheme will not be sold, hired, leased, disposed of or used for any other purpose other than for which the items were allowed importation without the prior
approval of the Director General of Customs.
Manufacturers who incur fiscal levies on raw materials imported directly or purchased locally and utilize such items to manufacture
products or export are eligible to register under Duty Rebate Scheme. Import Duty and Surcharge levied on raw materials are considered to determine the Rate
of Rebate on direct exports and indirect export as well. The regulations for payments of Duty Rebates have been formulated in terms of Section 22 A. of the
Customs Ordinance under the gazette Notification No. 1053/12 of 11.11.1998.
The payments are made on claims of registered exporters as a percentage of FOB value based on the general rates published in Gazette Notification. On request
of the exporters the Customs approves special and specific rates based on cost statements submitted along with relevant import documents.
The exporters under this scheme are not entitled to claim duty rebates for particular item provided they are already registered under any other facilitation
scheme to obtain duty concessions for the identical item.
Registration
Export Facilitation Branch registers the exporters under Duty Rebate Scheme on submission of following documents to the Customs.
Duly completed application form
Parties copy of Export Cusdecs and Invoice Copy with necessary endorsements
Bill of Lading/Air Way Bill certified by the Local Agent
Mates Receipts , Shipments Certificate etc. whenever Necessary
After registration of the exporter under Duty Rebate Scheme the Export Facilitation Branch allocates the Procedure Program Number for
identification of the enterprise to provide necessary facilities to process Customs documents through the Computer System.
Exporters can submit their claims for rebates to the Commercial Banks where the remittance of export proceeds is received. All the claims should be made within
six months from the date of exportation. Appeals on time – barred claims will be considered by the Director General of Customs on reasonable grounds up to a
period of 2 years from the date of exportation.
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