Bonded Warehouse

A customs bonded warehouse is a building or other secured area, approved by U.S. Customs and Border Protection (CBP), where imported dutiable goods can be stored, and in some classes manipulated or manufactured, without paying duty. The warehouse proprietor's bond, not a cash deposit, secures the duty while the goods sit. The statutory authority is 19 U.S.C. 1555 and the operating rules are in 19 CFR part 19.

How a bonded warehouse works

• Warehouse entry: instead of an entry for consumption, the importer, usually through its customs broker, files a warehouse entry (ACE entry type 21) on the CBP Form 7501 entry summary (19 CFR 144.11), and the goods go into the warehouse under bond
• Time limit: the goods may stay up to five years from the date of importation, not from the day they reached the warehouse, unless CBP grants a longer period on request (19 U.S.C. 1557(a); 19 CFR 144.5)
• Withdrawal: goods come out in lots. A withdrawal for consumption (entry type 31) pays duty at the rate in force on the date of withdrawal; a withdrawal for export pays no US duty
• Control: CBP controls every movement in and out, so each withdrawal is a customs filing, not just a pick ticket.

The warehouse classes in 19 CFR 19.1

• Classes 1 to 3: government premises for goods under examination or seizure; an importer's private bonded warehouse for its own goods; and the public bonded warehouse most importers use (Class 3)
• Classes 4 and 5: bonded yards, sheds, pens and tanks for heavy or bulky goods, animals and bulk liquids; bins and elevators for grain
• Classes 6 and 7: manufacture in bond solely for export; smelting and refining of imported metal-bearing materials
• Class 8: cleaning, sorting and repacking, but not manufacturing, and only under a prior CBP permit (19 CFR 19.11)
• Classes 9 and 11: duty-free stores, and general order warehouses for cargo nobody entered in time. Class 10 is currently reserved

When bonded storage pays off

Deferring duty frees cash on stock that will sell slowly, and goods that are re-exported never pay US duty at all. Because the rate is fixed on the date of withdrawal, a rate cut helps you and a rate increase can cost more than paying on arrival would have. For goods that will be sold within days or weeks, the warehouse entry, the proprietor's charges and a filing for every withdrawal usually cost more than the deferral saves.

Bonded warehouse vs FTZ vs general order

• Foreign-trade zone: merchandise may remain in a zone indefinitely, and zones allow processing and manufacturing for the US market. A bonded warehouse has the five-year limit, and manufacturing in bond (Class 6) is generally for export only
• General order: not something you choose. Cargo without a release may stay at the place of unlading only until the fifteenth calendar day after landing (19 CFR 4.37); after that CBP can send it to a general order warehouse at the consignee's risk and expense. A warehouse entry into a bonded warehouse you picked is the controlled alternative when an entry is stuck

Customs bonded warehouses in India

India's rules are in Chapter IX of the Customs Act, 1962. Customs commissioners license public (section 57), private (section 58) and special (section 58A) warehouses. The importer files a bill of entry for warehousing and executes a bond for three times the duty assessed (section 59). Most goods may stay for one year from the warehousing order, which the commissioner can extend (section 61).

Bonded storage through Airlift

Airlift does not own or operate warehouses. It books bonded space on request with partner facilities, depending on the location and the cargo, together with the drayage in and out; see warehousing. Airlift is not a licensed customs broker: the warehouse entry and each withdrawal are filed through our licensed customs-broker network or your own broker (customs clearance). Estimate the duty you are deferring in the tariff simulator.