Bonded Warehouse - History

History

Previous to the establishment of bonded warehouses in England the payment of duties on imported goods had to be made at the time of importation, or a bond with security for future payment given to the revenue authorities. The inconveniences of this system were many:

• It was not always possible for the importer to find sureties, and he had often to make an immediate sale of the goods, in order to raise the duty, frequently selling when the market was depressed and prices low.
• The duty, having to be paid in a lump sum, raised the price of the goods by the amount of the interest on the capital required to pay the duty.
• Competition was stifled from the fact that large capital was required for the importation of the more heavily taxed articles.

To obviate these difficulties and to put a check upon frauds on the revenue, Robert Walpole proposed in his "excise scheme" of 1733, the system of warehousing for tobacco and wine. The proposal was unpopular, and it was not till 1803 that the system was actually adopted. That year, imported goods were to be placed in warehouses approved by the customs authorities, and importers were to give bonds for payment of duties when the goods were removed.

The Customs Consolidation Act 1853 dispensed with the giving of bonds, and laid down various provisions for securing the payment of customs duties on goods warehoused. These provisions are contained in the Customs Consolidation Act 1876, and the amending statutes, the Customs and Inland Revenue Act 1880, and the Revenue Act 1883. The warehouses are known as "king's warehouses", and section 284 of the Customs Consolidation Act defined them as "any place provided by the crown or approved by the commissioners of customs, for the deposit of goods for security thereof, and the duties due thereon".

By section 12 of the act, the treasury may appoint warehousing ports or places, and the commissioners of customs may from time to time approve and appoint warehouses in such ports or places where goods may be warehoused or kept and fix the amount of rent payable in respect of the goods. The proprietor or occupier of every warehouse so approved (except existing warehouses of special security in respect of which security by bond has hitherto been dispensed with), or some one on his behalf, must, before any goods be warehoused therein, give security by bond, or such other security as the commissioners may approve of, for the payment of the full duties chargeable on any goods warehoused therein, or for the due exportation thereof (s. 13).

All goods deposited in a warehouse, without payment of duty on the first importation, upon being entered for home consumption, are chargeable with existing duties on like goods under any customs acts in force at the time of passing such entry (section 19). The act also prescribes various rules for the unshipping, landing, examination, warehousing and custody of goods, and the penalties on breach. The system of warehousing has proved of great advantage both to importers and purchasers, as the payment of duty is deferred until the goods are required, while the title deeds, or warrants, are transferable by endorsement.

While the goods are in the warehouse ("in bond") the owner may subject them to various processes necessary to fit them for the market, such as the repacking and mixing of tea, the racking, vatting, mixing and bottling of wines and spirits, the roasting of coffee, the manufacture of certain kinds of tobacco, etc., and certain specific allowances are made in respect of waste arising from such processes or from leakage, evaporation and the like.