Warehousing of Stores Without Assessment under Section 85

Understand Warehousing of Stores Without Assessment (Sec 85)

Key rules to remember

Meaning of stores

Stores (Section 2(38), in plain words) = goods for use in a vessel, aircraft or vehicle, including fuel, spare parts and other articles of equipment (whether or not for immediate fitting), and provisions and articles for consumption by the passengers or crew

This is a paraphrase, not the verbatim text. The definition is wider than Section 85. Section 85 applies only to stores for consumption on board a vessel or aircraft proceeding to a foreign port.

Core rule of Section 85

Warehoused goods + vessel or aircraft proceeding to a foreign port → proper officer may permit them to be taken as stores for consumption on board, without payment of import duty

State the rule in plain words. It is not a permanent exemption for every use of the goods.

Clearance for home consumption

Warehoused goods cleared for home consumption → bill of entry for home consumption and duty payable before removal (Section 68); interest under Section 61 only if the warehousing period, original or extended, has run out

Diversion to home use needs clearance and duty under Section 68 first. Interest under Section 61 is a separate consequence of overstay. If the goods are sold or removed without that clearance, it is an unauthorised removal: duty with interest and possible penalty can be demanded under Section 72, and the goods may be liable to confiscation.

Purpose test

Benefit available only while goods go as stores for consumption on board a vessel or aircraft proceeding to a foreign port

Goods diverted to any other use fall outside the concession.

How to solve Warehousing of Stores Without Assessment (Sec 85) questions

1. 1Confirm the goods are lying in a warehouse, that is, they were warehoused earlier without payment of duty.
2. 2Ask whether the goods are stores under Section 2(38): for use in a vessel, aircraft or vehicle, including fuel, spare parts and equipment articles, or provisions and articles for consumption by passengers or crew. For Section 85, they must be for consumption on board a vessel or aircraft.
3. 3Check the conveyance. It must be a vessel or aircraft proceeding to a foreign port.
4. 4State the rule: under Section 85, on the owner's application, the proper officer may allow such warehoused goods to be taken as stores for consumption on board without payment of import duty. The permission is at the officer's discretion and subject to conditions.
5. 5Check that the owner (or person in charge) has applied, and check the conditions given in the facts, such as supervision by the proper officer and supply only for the stated purpose.
6. 6Test for diversion. Ask whether any part is sold or cleared for home consumption.
7. 7Apply the consequence. Goods supplied as stores carry no import duty. Goods cleared for home consumption need a bill of entry for home consumption and duty under Section 68 before removal. If they are removed or sold without that clearance, it is an unauthorised removal. Duty and interest are demanded under Section 72, and penalty and confiscation arise under the general penal provisions (Sections 111 and 112). Add interest under Section 61 only if the facts show the warehousing period, original or extended, has run out.
8. 8Conclude in one line with the quantity or item treated each way.

Quickest way: Three-question stores check

Common mistakes in Warehousing of Stores Without Assessment (Sec 85)

• Treating any goods in a ship or aircraft as stores

  Students assume anything carried on a ship or aircraft is stores and ignore the definition.

  Fix: Test the purpose. Are the goods for use in the vessel, aircraft or vehicle, or provisions and articles for consumption by passengers or crew, as Section 2(38) says? For Section 85, are they for consumption on board a vessel or aircraft going to a foreign port? If not, Section 85 does not help and the normal import rules apply.

• Saying stores are permanently exempt from customs duty

  The words without payment of duty sound like a total exemption.

  Fix: Say the warehoused goods may be supplied as stores without payment of import duty for a vessel or aircraft going to a foreign port. Diverted goods become dutiable.

• Describing Section 85 as warehousing without assessment

  Students mix the supply of stores with the act of warehousing itself.

  Fix: Section 85 applies to goods already in a warehouse. It allows them to be taken out as stores without payment of duty.

• Ignoring the destination and the conditions in the facts

  Students memorise the headline rule only.

  Fix: Always add that the vessel or aircraft proceeds to a foreign port and that any conditions or procedure given in the facts are met. Do not invent conditions the question does not give.

• Ignoring what happens on diversion to home use

  Questions hide this in the last line of the facts.

  Fix: Read the facts to the end. If any part is cleared for home consumption, apply Section 68 and duty to that part. If it was sold without clearance, call it an unauthorised removal and refer to Section 72. Consider interest under Section 61 only if the warehousing period has run out.

• Quoting a wrong section number or inventing detailed rules

  Students try to sound precise without being sure.

  Fix: Cite Section 85 for this topic, Section 2(38) for stores, Section 68 for home consumption clearance, Section 61 for interest on overstay and Section 72 for improper removal. For other details, state the rule in plain words.

Worked examples