Bonded warehouses are places where imported foreign goods can be stored, but they cannot be kept there forever.
There is always a set storage period. This is because a bonded warehouse is not the final storage location for foreign goods, but merely a temporary storage location until customs clearance procedures are completed.
However, in reality, it is not uncommon for cargo to remain in storage even after the storage period has expired. So what happens to the cargo once the storage period has expired?
This article explains the rules regarding the usage period of a conservation warehouse.
Bonded warehouse storage period
How long can cargo be stored in a bonded warehouse?
If you are in the import business, you may want to store your goods in a bonded warehouse until the time of shipment. In that case, it is better to consider extending the storage period early.
The storage period in a bonded warehouse is generally two years.
The storage period in a bonded warehouse is basically three months after the cargo is brought in . If you wish to extend the period beyond three months, you can store the goods for up to two years by obtaining permission called “warehouse approval” from the Director of Customs .
Foreign goods that have not received this approval will be subject to detention if they are held for more than three months from the date of delivery . Although they will not be immediately detained after three months, customs may inquire about the reason for the long-term storage.
Can be extended if approved
We explained that goods can be stored in a bonded warehouse for up to two years if approved by the Director of Customs .
However, if the Director of Customs recognizes there are special reasons, the period may be extended beyond two years , such as stockpiling crude oil, long-term aging of alcoholic beverages, or sudden changes in the market making storage unavoidable.
It is also possible to obtain import permission to import only the necessary amount of goods, treated as foreign cargo in a bonded warehouse, and store the rest with storage approval. To apply for storage approval, you must submit a storage approval application form, an invoice, etc.
If the storage period at the bonded warehouse has expired
It is common for foreign goods to be left in bonded warehouses even after the specified storage period has passed without permission or application. In such cases, how is the goods handled?
The cargo is detained by customs
The Director-General of Customs has the authority to detain foreign goods that remain in a bonded warehouse after a certain period of time has passed without any extension procedures being applied for. Detention means that customs takes possession of goods that have been left there for the specified period of time .
There are two types of containment: normal containment and emergency containment, which are completely different in nature.
- Normal storage: Storage after the storage period in a bonded warehouse has expired.
- Emergency storage: Emergency storage even before the storage period has expired.
If you apply for release within four months of the detention, you will be approved for release. In this case, you must pay a detention fee based on the weight and type of cargo, the detention period, etc., and obtain approval from the customs director.
After four months of detention, they are put up for public auction.
After a certain period of time has passed, the detained cargo will be put up for public auction. Public auction is a procedure that takes place when cargo remains in detention after four months without any procedures such as release from detention being carried out.
In a public auction, a public institution will forcefully sell or buy the goods through competitive bidding, etc. However, please be aware that in the case of cargo that has been subjected to emergency detention, depending on its contents, it may be put up for public auction before the four months have passed.
Reasons for extending the storage period for imported goods
What are the reasons for extending the storage period for imported cargo? Most of the reasons are due to the benefits that can be gained by obtaining storage approval. Here are two benefits that are directly related to the reasons for extending the storage period.
You can adjust inventory
The greatest benefit of extending the storage period with warehouse approval is that you can import only the minimum quantity necessary in accordance with the market situation in Japan . Even if all cargo is taken over and there are unsold goods, customs duties and consumption tax paid after import permission is granted cannot be refunded.
However, cargo that has not yet been approved for import and has been approved for storage can be returned (returned to a foreign country) for reasons such as poor sales, which means you can avoid the risk of holding inventory.
To counter rising container prices
Since December 2019, the global spread of COVID-19 has led to a sharp rise in container prices and rising sea freight rates, which continue to this day. As a result, the prices of raw materials, products, and other goods have risen, significantly affecting everyday life.
In this case, obtaining storage approval is an effective way to deal with transportation costs.
- Transport as many items as possible in one shipment to minimize shipping costs per shipment
- Furthermore, the amount of imports into Japan will be kept to a minimum.
For the reasons mentioned above, inventory management using storage approval can be said to be efficient.
Time required for customs clearance procedures at a bonded warehouse
When importing or exporting goods, various procedures must be completed before they can pass through customs. These procedures are called customs procedures, but how long does it take to complete all of these procedures, including submitting documents for import/export declarations and transporting goods to a bonded warehouse?
According to a survey conducted by the Customs and Tariff Bureau of the Ministry of Finance in March 2017, the average time required from import declaration to customs to import permission was 3.1 hours for ocean freight and 0.3 hours for air freight. The average number of days required from cargo arrival at port to import permission was 2.5 days for ocean freight and 0.5 days for air freight.
The reason why air cargo takes less time to complete customs clearance procedures than sea cargo is that aircraft can carry less cargo than ships. For both sea and air cargo, the general rule is that import permission is granted within 24 hours of the import declaration.
summary
We have explained the rules regarding the storage period in a bonded warehouse. If the storage period expires and goods are detained or sold at a public auction, this is not a violation of the law or a crime. The owner of the goods can take them back at their own will.
However, to release the item, you will need to pay the cost of storage in addition to a penalty called a storage charge. To avoid additional expenses, if you wish to extend the storage period, be sure to obtain storage approval well in advance.
