The Customs warehousing procedure

The Customs warehousing procedure is a facility granted to those involved in external trade to place their goods temporarily in Customs warehouses, without the payment of duties and taxes and, at times, without the application of economic restrictions and prohibitions, until the manner in which the goods are to be disposed of is finally decided. Operations permitted in a Customs warehouse are those required to improve the packaging and marketable quality of the goods and to prepare them for shipment. Such operations include re-packing, sorting and grading, breaking bulk, grouping of packages, and operations intended to keep the goods in the same state.

The Customs warehousing procedure can fulfill a few functions:

1) it can be utilized to develop a country's entrepô t trade;

2) entrepô t trade operations provide employment opportunities;

3) the warehousing procedure can enable the country to earn foreign exchange;

4) exporters sometimes can use the warehousing facility to combine domestic goods with identical imported goods so that a single export order can be satisfied;

5) the warehousing procedure can assist manufacturers in processing goods for export.

An additional advantage is that an importer/exporter can keep his goods in the country until he can re-negotiate sales abroad on more favourable terms. This is particularly the case when persons using this warehousing facility import goods in bulk, at discounted prices, and re-export such goods in similar quantities at higher prices, thus making net foreign exchange gains.

Goods can be imported for storage in warehouses and re-exported in
the same state without the payment of duties and taxes and normally without being
subjected to import or export licensing requirements.

Firms import goods from their subsidiaries which are located abroad, or from establishments in other countries which produce or manufacture goods for them under contract. Thus, when domestic production falls short of targeted output, goods can, be, imported to meet contractual export obligations without incurring duty or other liabilities. This does not, however, apply in cases where the origin of goods is a consideration to satisfy quota or tariff requirements.

In some countries there are traders who, acting as agents for manufacturers who manufacture goods for export, consolidate import orders and import their consignments in bulk. Goods so imported are, subsequently released to manufacturers who operate under the inward processing procedure. These traders, who specialize in wholesale trade, are therefore able to import goods in bulk at the most favourable terms, which are not normally available to importers
of smaller quantities. Such bulk importations are made possible only by taking
advantage of the warehousing procedure. Consequently, such traders are in a
position to offer their goods to manufacturers at prices lower than what they would get had they to import their consignments individually.

Payments are received for handling arid similar services rendered at these warehouses, and for other tertiary services provided, such as transport.

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