TYPES OF WAREHOUSE

1. BONDED WAREHOUSE

1. Bonded warehouses store dutiable goods which cannot be removed until duty on them has been paid. Dutiable imports that are meant for re-export may also be kept here until they are shipped overseas. However, if customs duty has already been paid on these imports, a drawback or refund can be obtained when the goods are re-exported.

2. These warehouses are under the control of the Custom and Excise Authorities. The owner of such warehouses have given a bond to the Custom and Excise Authorities not to remove the goods from the warehouse without payment of duty. Usually, a customs officer is present to ensure this is adhered to. Those that are owned by the government are called customs warehouses while those that are privately owned are called licensed warehouses.

 

Functions of bonded warehouse

1. They provide a space for imported goods to be stored until the duty is paid.

2. They enable the Customs and Excise Authorities to check on the entry of goods into the country and to collect the customs duties payable.

3. They facilitate commerce because businessmen can carry on trade easily.

 

Importance of bonded warehouse

To the trader

1. Whilst goods are still in the bonded warehouse, the trader (importer) has access to these goods to perform the necessary operations like grading, packing and labeling, to prepare them for sale as in the case of other warehouses.

2. The trader need not remove all his goods at once until it is convenient for him to do so. He can make delivery of small quantities of the goods as he sells them by paying the duty and warehouse rent to date. This enables him to make use of his working capital for other purposes.

3. The trader can sell the goods while they are still in bond, leaving the payment of duty to the buyer or, alternatively, get a loan on the security of the stored goods.

4. The entrepot trader who imports with the aim of re-exporting the goods can store his goods in the bonded warehouse while waiting for transhipment of his goods to other countries.

To the manufacturer

1. (a) The manufacturer is assured of regular orders from overseas buyers who are freed from the financial strain of paying at once for the import duties on goods, since the latter can make use of the bonded warehouse.

(b) In this way, the manufacturer's turnover will increase and he can reap the benefits of large-scale production.

2. (a) The manufacturer who makes use of imported raw materials can perform some of the processing functions in the warehouse while the goods are still in bond.

(b) He only withdraws and pays duty for those goods he requires.

(c) As his financial resources need not be used to pay all the import duties at once, he is able to put them to alternative uses to expand his business.

To the government

1. It enables collection and prevents evasion of customs duties.

2. It provides information on the goods imported and exported.

3. It gives the government some control over the goods imported and exported.