A warehouse licensed to keep imported goodsawaiting clearance because of non-payment of custom duties is called a bondedwarehouse. These warehouses are maintained by port trust and customauthorities. These warehouses are situated near the port. The bonded warehousesare used by the importers in the following cases when:

he does nothas his own godown,

he may not beable to pay custom duties immediately,

he wants tore-export the imported goods for entrepot trade.

The goods onwhich duty has been paid is kept in duty-paid warehouse for which a warehousereceipt is given. The goods on which duty has not been paid is kept in thebonded warehouse for which dock warrant is issued which serves like a warehousereceipt. Bonded warehouse may be a government warehouse or private warehouse.When goods ware stored, an agreement is entered into by the owner of warehouseand custom authorities where the owner of the warehouse undertakes for safestoring of goods and the payment of import duties.

Advantages:

The followingservices are rendered by a bonded warehouse:

i. The goodsare stored in bonded warehouse without payment of custom duties. The goods arestored till the importer is able to arrange for the payment of import duty.Because of this facility the importer is saved from the payment of heavy dutyat a time.

ii. Warehousefacilitates the conduct of various operations which make the goods suitable formarketing. the importer is permitted to divide, mix and pack the goods whenthese are kept in the warehouse.

iii. Itfacilitate re-export of goods without much financial expenditure because theimported goods meant for re-export are kept in the warehouse.

iv. Theimporter can effect sale of goods or transfer the title of goods by endorsingthe warehouse receipts. By this it enables to save much on part of theimporter.

v. The ownerof the goods is allowed to brand, grade, label and pack the goods when theseare in bonded warehouses. By this provision, it facilitates proper marketing ofgoods.

vi. Goods keptin bonded warehouse are used as collateral security for bank loan.

vii. Goodskept in bonded warehouse are safe and are free from the fear of being stolen ordamaged.