Bonded Manufacturing

Have you ever wondered how bonded manufacturing operates or functions?

Worry not!

We have you covered. 

In today’s competitive business environment, manufacturers are oriented towards seeking increased profitability as well as efficiency. This innovative approach has allowed the companies to leverage a network of trusted suppliers as well as streamline operations, leading to cost savings and overall efficiency. It is by forging strong partnerships with the suppliers that businesses may benefit from reduced lead times, faster turnaround times, and higher quality products. 

As a result of this, allow yourself to undertake the power of bonded manufacturing and ways to assist businesses in unleashing their path to increased profitability or efficiency. No wonder the demand for customized products continues to grow, embracing bonded manufacturing, giving them a strategic advantage. 

Unveiling the Power of Bonded Manufacturing: Boosting Efficiency and Profitability

Bonded manufacturing refers to the process where the imported raw materials in a country are kept in a bonded warehouse and then utilized in the manufacturing of the finished goods for export. As a key benefit of this process, the imported materials in no way are subjected to customs duties or taxes until the final goods are sold in a domestic market or exported to another country. 

In a process such as this, you can easily import the raw materials, including the capital goods, without having to pay for the customs duties or IGST. You may even carry out the processes, such as manufacturing or processing, with the employed raw materials where you can export the manufactured or the processed goods. Soon after, you would be encouraged to pay for the customs duty along with IGST, mainly on the raw materials, with goods cleared for home consumption, along with the additional applicability to GST with no such export commitments.

Bonded Manufacturing is Permitted in India.

The Indian Government has made efforts to foster India’s manufacturing hub. As this initiative the Central Board of Indirect Taxes (CBIC) implemented the initiative, allowing the import of raw materials along with capital goods without paying the duty in cases of manufacturing or operations in a bonded manufacturing facility. 

As mentioned, when raw materials or capital goods are imported, the import duty on them is usually deferred. Likewise, if these imported inputs are utilized for the exports, the deferred duty is automatically exempted. Only when the finished goods are cleared to the domestic market is the import duty to be paid on the imported raw materials used in the production. Import duty on capital goods is to be paid if and when the capital goods are cleared to the domestic market.

As someone from the manufacturing industry, you must have heard of bonded manufacturing. In this blog post, we will explore the benefits of bonded manufacturing and how it can act as a game-changer for your company. The list is mentioned below-

• Cost Savings

One of the key advantages of bonded manufacturing consists of the potential for cost savings. By utilizing bonded warehouses, you can easily postpone the payment of the taxes or duties on the imported raw materials until they are utilized in the production process. It even implies that you can support your cash flow and minimize the overall production costs. 

• Improved Supply Chain Efficiency

Bonded manufacturing is counted as one of the crucial steps in enhancing supply chain efficiency. It is with the storage of the raw materials in the bonded warehouses you can have a prepared stock, especially when you need them. Such a thing eliminates any additional requirement for the inventory by minimizing production delays. 

• Flexibility and Scalability

Another benefit of bonded manufacturing primarily focuses on flexibility as well as the scalability it usually offers. With bonded warehouses, you can easily store a variety of materials while encouraging you to adapt to the dynamic market demands. For instance, bonded manufacturing may also talk about the opportunity to expand the reach of the operations while expanding it to newer markets, simplifying the import-export process. 

Therefore, we conclude that bonded manufacturing comes with innumerable benefits for the manufacturers. From cost savings to enhanced supply chain efficiency to scalability or flexibility, the advantages of the same have been made clear.

It is with the process of bonded manufacturing, as per the business, that you can enhance the product quality by gaining a competitive advantage while also contributing to the company’s success.

The documents required for Bonded Manufacturing are detailed below-

• Certificate of Incorporation (For companies)
• MoA and AoA (For partnership firm)
• Partnership Deed (For partnership firm)
• Copy of ID proofs of proprietors/ partners/ directors
• Copy of Aadhar Card of Authorised Signatory
• Documents supporting property-holding rights, such as rent agreement
• Copy of warehouse license, if issued earlier
• Ground plan of the site with details
• Fire safety audit certificate

As someone operating the bonded manufacturing unit, after appropriating the licenses, you will be required to adhere to the compliances as well as conditions that come with the process of bonded manufacturing. Some of these compliances, which manufacturers comply with, are as follows- 

• Documenting and keeping a record of when raw materials are imported, ways in which they are dealt with, and whether they are put in a manufacturing facility or taken out of the facility for any purpose. 
• It is a must-have to document and prepare the records for the performed task or operation undertaken on the imported goods.  
• In any case, if the sample is taken from the imported goods under a bonded manufacturing scheme, then you must keep a record of the samples as well.
• You are required to keep records/ copies of the relevant documents, including the bills of entry, transport papers, and shipping bills, along with any other papers that hint towards any transaction of any warehouse goods. 
• Make sure that you have the updated records or accounts kept as per the correct format from five years of eliminating the goods from the bonded manufacturing unit. 
• You must keep the required digital copies of these records away from the facility to make sure they are preserved in the best possible manner in cases of natural disasters. 
• Alongside, the manufacturers usually require filing the monthly returns regularly by the tenth of each month. 

Therefore, you must adhere to these compliances meant for Bonded Manufacturing.

The steps involved in the manufacturing are as follows-

Step 1:- Connect with the Corpseed team

Firstly, contact Corpseed as your one-stop solution provider. 

Step 2:- Meet Our Experts 

Secondly, Corpseed will align a dedicated professional to help you with Bonded Manufacturing.

Step 3:- Filing of Online Application

In the next step, we help you fill out the online application, with details mentioning the nature of manufacturing and particulars of imported inputs as well as anticipated trade volume. 

Step 4:- Document Submission 

After the steps mentioned above, our professionals will assist you in submitting the requested documents promptly. 

Step 5:- Execution of a Bond 

As of this, our experts will provide their assistance and encourage you to execute a bond as per the requirements of Annexure C while ensuring that you submit the physical copy to the required authority, as instructed. 

Note: Before execution of a Bond, a Customs Officer visits the facility to evaluate the compliances to issue the license.

Step 6:- Granting sanction 

Within this, our officials would ensure that you get the permissions for manufacturing or operations as per the bonded facility. Accordingly, it includes the permissions related to the manufacturing process or operations permitted. 

Hence, such is how we will help you complete the procedure of bonded manufacturing.

At Corpseed, we emphasize Bonded Manufacturing and acknowledge its profound significance and the substantial impact it can have on businesses in India. Adhering to the regulations and requirements is essential for seamless Operations and long-term prosperity. We fully comprehend the intricate Complexities and hurdles that entrepreneurs encounter when manoeuvring Through the legal landscape. Our seasoned experts have extensive knowledge And expertise in obtaining Certification, enabling us to offer comprehensive Guidance and unwavering support to our clients.