Entrepot

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Important note: This article is a part of the project, Products of Sri Lanka Customs.

Entrepot provides facility to import goods, either manufactured or not, from one party of another country free of custom duty and other levies for re-export to a third party of any country. Re-export can be done immediately without any value addition or after a simple processing such as re-packing, re-labeling etc. with a value addition. Changing the container of goods is also possible under Entrepot (re-work).



Basic Procedure

Company registration for Entrepot Trade (one time registration for the company)
Company has to submit an official letter to DDC (Bonds) requesting permission to operate as an Entrepot trader.
Manifest declaration
Cargo has to be declared as ENTREPOT in the manifest.
To-bond Entry + Request Letter
First To-Bond entry and the request letter should be submitted to the SLPA Logistics Manager to obtain the approval. Then the same documents should be submitted to the Bonds Division of the Customs to pass the To-Bond entry. (See documentation)
Port space booking
Entrepot operator has to book the space in the port for the re-work. The approval has to be obtained by contacting the Commercial Manager, Logistics of SLPA. To-Bond entry and a request letter need to obtain the approval.
Export Entry
Export entry has to be approved by the Bonds division. The Entrepot operator has to prove that the buyer has made the full payment already when submitting the Export entry to the BondsDivision. The necessary documents (probably the bank endorsement) to prove that the payment has been made should be submitted along with the entry. (See documentation)

Process

  1. Prepare To-Bond entry, and request letter. (See documentation)
  2. Contact Commercial Manager Logistics of SLPA and get the approval by submitting the To-Bond entry and the request letter.
  3. Have the bank endorsement confirming that the operator has received 100% of the payment from the buyer for the export. (or a bank endorsement confirming the full payment in the near future)
  4. Get the approved documents by SLPA Logistics Manager to the Customs Bonds Division to pass the To-Bond Entry.
  5. Contact SLPA Logistics Manager to confirm the booking of space for the re-work.
  6. SLPA does the un-mounting and de-stuffing on request. (see applicable charges)
  7. Make the usual arrangements to arrange the containers for the export. Get the container numbers. (container numbers are needed to prepare the export entry) (See documentation)
  8. Get the gate passes from SLPA to get the empty containers in.
  9. Prepare the export entry.
  10. Do the re-work under customs supervision. (see applicable charges)
  11. Do the stuffing and mounting. (see applicable charges)
  12. Measure the weight of the containers. (if applicable)
  13. Get the export CusDec passed from the Customs. (See documentation)
  14. Seal the containers.
  15. Do the usual export procedures to export the containers.

Customs Procedure

The facility for the cargo to be imported on duty free basis for re-exports is provided in the section 22A(1) of customs ordinance. The Director-General or such other officer authorized in that behalf shall and subject to such terms and conditions as may be prescribed by the Minister from time to time allow importation of articles which are in-tended to be re-exported without payment of import duty. - Customs Ordinance 22A(1)

Traders who are operating under Entrepot Trade will be registered in Customs Automated Data Processing Division.

Customs Automated Data Processing Division is located at: Third Floor, Sri Lanka Customs, Times Building, Bristol Street, Colombo 01.

Features

  1. 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.
  2. Goods under Entrepot trade can be either stored in a Customs Bonded Warehouse provided the re-export will not be affected immediately.
  3. Repacking, re-labeling and simple processing done to meet the buyer’s requirements within the Bonded area are under Customs supervision.
  4. Transferring from a ship or an aircraft directly to another ship or an aircraft is allowed without the cargo being landed in to a Bonded warehouse.
  5. Consignment can be transferred from a seaport to airport or from airport to seaport in a Bonded carrier.
  6. When cargo arrived by air to be re-shipped by sea or deposited in a Bonded warehouse on approval of ADC (Air cargo), goods are loaded into the bonded carrier arranged by the Entrepot trader.

Terms

  1. The FOB value of re-export must be more than the CIF value of import. (Re-Export FOB) ≥ (CIF * 110%) – Entrepot operator must earn at least 10% of profit from the Entrepot operation.
  2. Re-export of goods under Entrepot trade should be permitted on L/C or D/P terms or against advance payment terms and payment received from the buyer in respect of re-export should be in convertible currencies.
  3. Re-export under DA terms is permitted on prior approval of the Controller of Exchange.
  4. Normal Exchange Control Regulations are applicable.
  5. Actual country of origin (Country of Export) should be declared in re-export documents. Country of origin cannot be Sri Lanka.

Limitations

Following goods are prohibited under Entrepot Trade.

  • Narcotics
  • Arms and ammunitions
  • Goods which are prohibited to import and export under International Conventions for which Sri Lanka has become a contracting party.

Following goods are restricted under Entrepot Trade.

  • 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.

Restricted HS Codes under Textile and Clothing

50 
Silk.
51 
Wool, fine or coarse animal hair; horsehair yarn and woven fabric.
52 
Cotton.
53 
Other vegetable textile fibers; paper yarn and woven fabrics of paper yarn.
54 
Man-made filaments; strip and the like of man-made textile materials.
55 
Man-made staple fibers.
56 
Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof.
57 
Carpets and other textile floor coverings.
58 
Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery.
59 
Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use.
60 
Knitted or crocheted fabrics.
61 
Articles of apparel and clothing accessories knitted or crocheted.
62 
Articles of apparel and clothing accessories not knitted or crocheted.
63 
Other made up textile articles; sets; worn clothing and worn textile articles rags.

All fabrics and garments from HS 50-63 are restricted under Entrepot trade. But raw materials (yarn etc.) are not restricted. If B1 (Public Bonded warehouse owned by SLPA) is used then the capacity is subjected to the availability of the space. Re-work outside of the port is no more allowed.

Documentation

  1. To-Bond declaration (To-Bond CusDec) should be submitted to the bond division with seven copies.
    1. Warrant copy
    2. Delivery copy
    3. Party’s copy
    4. Statistical copy
    5. DBD copy
    6. Locker’s copy
    7. Exchange copy
  2. CusDec should be supported by
    1. Delivery copy
    2. Invoice
    3. Packing list
    4. Endorsement of commercial manager, SLPA in the CusDec
    5. Letter approved by DDC / ADC (WHK)
  3. When the shipment is ready for re-export, export CusDec should be submitted to the bonds division in six copies.
    1. Warrant copy
    2. Security copy
    3. Party’s copy
    4. Statistical copy
    5. CBD copy
    6. Locker’s copy
  4. Export CusDec should be supported by,
    1. Shipping note or airway bill
    2. Invoice (with a value addition)
    3. Packing list (if necessary)
    4. Party’s copy of To-Bond CusDec.
    5. Weight receipt.
  5. CusDec should bear the words “Entrepot Trade” prominently printed in the top right hand corner.
  6. If the importer needs to operate a private bond, a formal application has to be submitted to bonds division.
  7. Country of origin: The trader should declare actual country of origin in customs documents and should not declare Sri Lanka as the tile Country of Origin.

Request Letter

The request letter should be addressed to the Superintendent of the relevant Bond of the Logistics Division of SLPA. The same letter should be copied to the Customs and attached with the To-Bond entry.

The request letter should contain the below points:

  1. Discharging vessel.
  2. BL number.
  3. Container numbers.
  4. Cargo description.
  5. FOB value.
  6. Loading vassal.
  7. Loading container numbers.
  8. Bank endorsement/payment details, payment terms.
  9. Gross profit that the operator can earn from the Entrepot operation.

Bonded Warehouses (Port)

  1. Canal Yard Warehouse
  2. BQ 2 A
  3. CFS 5

Approvals

  1. On receipt of consignment, importer or clearing agent has to request SC (WHK) or ADC (WHK) of Bonds Division to obtain the approval for the transaction under Entrepot trade.
  2. When Entrepot cargo is transferred from a ship to ship or aircraft to aircraft directly without cargo being moved to a bonded warehouse, the approval has to obtained from DDC (WHK) or ADC (WKH) by producing the To-bond and export CusDecs processed at Bonds Division simultaneously.
  3. When doing re-export for cargo arrived by air, Customs To-bond and export declaration should be produced to ADC (Air Cargo). The details of the declaration are noted in the Entrepot cargo register. ADC (Air Cargo) has to authorize the release of Cargo for re-shipment for the airline to make necessary arrangements.
  4. When cargo arrived by air are to be re-shipped by sea or deposited in a bonded warehouse on approval of ADC (Air Cargo), goods are loaded into the bonded carrier arranged by the Entrepot trader.
  5. On receipt of Entrepot cargo at export warehouse for re-export by air/sea the security copy of export CusDec is produced to ASC (Export) along with other documents. On his approval SLPA or Sri Lankan Airlines makes arrangements for the re-shipment.
  6. If the consignment is transferring from a seaport to an airport or vice versa, in a bonded carrier then the carrier should be approved by the Customs.
  7. If the importer is wishing to store his consignments in a public bond, then the space should be allocated by the SLPA prior to submitting the Customs declarations.
  8. If the importer needs to operate a Private Bond, it will be considered by the Bonds Division.
  9. Entrepot trade may be allowed at approved MCC bonded warehouses under customs supervision on the security or guarantee provided by the MCC operator or importer when the requests made by the both parties to bonds division. (Currently not allowed, but can apply)


More Options

Consolidation

Consolidation of Entrepot cargo is permitted. Local cargo should be identifiable with specific marks.

Security for Liabilities

  1. No security is required for surface movement of goods within the ports.
  2. On a Bank or Corporate guarantee to cover the liabilities, removal of goods out of port is allowed. (Currently not allowed, but can request for the approval from DDC, Bonds).
  3. Liabilities of cargo imported are cancelled when proof of remittance is produced within one month of the date of re-export to Bonds division.


Applicable Charges

Customs

Entrepot registrations and approvals are free of charge.

SLPA

Entrepot Charges

1.84 per cbm or per ton

Locker Charges

2.00 per consignment

Movement of Containers

Rate per container

Movement Type 20ft 40ft Over 40ft
Moved from ship to marshalling yard or vice versa or from point to point in the same unit 27.00 41.00 51.00
Shifting from one unit to another unit 34.00 51.00 63.00

Mounting and De-Mounting Containers

Movement Type 20ft 40ft Over 40ft
Moved from ship to marshalling yard or vice versa or from Laden containers 25.00 38.00 47.00
Empty containers 10.00 15.00 18.00

Stuffing and De-Stuffing

Movement Type 20ft 40ft Over 40ft
Stuffing or de-Stuffing only 22.00 33.00 41.00
Stuffing or de-stuffing including all services

(in case of import LCL container and/or FCL container de-stuffed in the port, mounting charges applied in the composite stevedoring charge for laden import container will be reduced from the de-stuffing charge)

10.00 15.00 18.00

All charges are in USD

Benefits

  1. Entrepot cargo is free from all local duties and taxes.
  2. Goods can be imported free of Customs Duty and Taxes under exemption from the requirements of Import Control License.
  3. Re-export of goods can be made with a profit margin even without any value addtion. (See terms)
  4. Simple processing is permitted to meet buyer’s requirements such as re-packing and re-labeling.
  5. Trading transactions can be made from one country to another without arriving the goods physically into Sri Lanka. In that case there is no involvement of local customs procedure.
  6. Can change the status as the transshipment to divert cargo to a consignee in a third country by switching of B/L on a request made by the original consignee in Sri Lanka to a shipping agent or airline.
  7. Exploit the country’s potential in global market providing more opportunities to enhance national revenue.
  8. Goods imported from one country can be re-exported to a third party in the same country.




--Gishan Chaturanga 16:38, 10 July 2012 (IST)

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