Warehouse License

Overview of Warehouse License 

Warehousing is a process of physically storing goods till they are sold or distributed to any other location. It ensures that the goods are stored safely in an organised manner in order to track the location, date of arrival and time of their storage in the warehouse and also the quantity of those goods. Warehouses are an essential aspect of businesses and are used by importers, producers, wholesalers, transport companies, etc. Warehousing is a supply chain it impacts the storage and management of inventory. It ensures that the businesses are receiving their orders on time. 

Functions of Warehouse:

• To maintain price stability 
• To create storage space 
• To minimise risk 
• To pack and grade goods

Warehouses are used for multiple things; some of them are as follows:

• Warehouse Management: It means the day-to-day operations that occur in the centre of a warehouse to ensure operational efficiency. Such operations include the management of staff, stock and equipment. Tasks like ensuring that correct security gear is used in the warehouse and that the staff have relevant licenses and certifications for using certain working equipment. 
• Warehouse Operations: It includes the role of ensuring that the warehouse is efficient. Part of these operations includes keeping warehouse costs low, checking that one needs a correct number of items, and ensuring that there is enough space in the warehouse. 
• Warehouse Management Software: It is a system that ensures all activities in the warehouse are being appropriately managed. It also assists in improving stock management. 

As per the Warehousing (Development and Regulation) Act, 2007 and Warehousing (Development and Regulation) Registration of Warehouse Rules, 2017, a person commencing or carrying on a warehouse business has to mandatorily get the warehouse registered and obtain a Warehouse License with the Warehousing Development and Regulatory Authority and also comply with other legal requirements. If the procedure to obtain such License and registration is not complied with as per the applicable provisions of the Warehousing (Development and Regulation) Act, 2007, or not fulfilling any of the warehouse legal requirements will attract penal provisions in the form of fines or imprisonment or both.

Types of Warehouses 

The following are different types of warehouses, depending on their size and form, which require a warehouse license:

Private Warehouse 

The private warehouse is owned and managed by suppliers and resellers to fulfil their distribution activities. Examples of such warehouses are retailers renting out warehouses to store their goods or other items, warehouses used by a producer near to its place of work and warehouses either owned or leased by a wholesaler where they store or distribute their inventory. 

Public warehouse 

Warehouses owned by the Government and used by private entities for storing goods, as long as they are paying rent, fall under this type of warehouse. Such warehouses are sometimes of assistance to small companies that need storage facilities but cannot afford to have their own. 

Bonded storage

This refers to a warehouse that is owned and managed by both the Government and private entities. Such a warehouse is used to store imported products where an import duty has not been paid, and private entities receive a license from Government for the same. 

Co-operative warehouse

The co-operative warehouse is owned by co-operative societies. Such warehouse is meant to be accessible storage facilities as the rates charged by them are not so high as other types of warehouses. The co-operative warehouse is not established to make a profit but to assist those members who are unable to afford to rent a warehouse at a usual rate. 

Distribution centres

Distribution centres are storage facilities to keep large amounts of inventories for a short period of time. The main purpose of these distribution centres is to be used as a distribution system where the goods are moved quickly from a supplier and then to the consumer. 

Special Warehouse

It is a site or building where dutiable goods are deposited. 

Conditions to be fulfilled for Warehouse License

Conditions to be fulfilled by an applicant while obtaining the Warehouse License, where after inspection of premises, evaluation of compliances and conducting enquiries, the Principal Commissioner of Customs or Commissioner of Customs is satisfied that the License should be granted are as follows:

• Provide an all-risk insurance policy including natural calamities, riots, fire, theft, skilful pilferage & commercial crime in favour of the President of India for a sum equivalent to amount of duty involved on dutiable goods proposed to be stored in the warehouse at any point of time
• Provide an undertaking binding himself to pay duties, interest, fine and penalties payable in respect of warehouse goods 
• Provide the undertaking indemnifying the Principal Commissioner of Customs or Commissioner of Customs from any liability arising on account of loss suffered in respect of goods stored in the warehouse due to accident, damage, deterioration, destruction or any other unnatural cause during their receipt, delivery, storage, dispatch or handling
• Appoint a person as a warehouse keeper who has sufficient experience in warehousing operations & customs procedures.

Benefits of Warehouse License

Operating a warehouse is only possible with a proper warehouse license, and apart from storing products or goods, a warehouse has the following benefits, which can be enjoyed only after having a proper license for the warehouse:

Better inventory accuracy 

Warehouses ensure that all inventories are in one place. 

Protection of goods

The warehouse ensures that all inventories are safely stored, especially the perishable goods. It ensures that they are stored in the appropriate conditions. 

Decrease in overhead costs

Warehouse assists in improving inventory management and a warehouse's daily operations, which means one can reuse their costs. 

Central location

Warehouses near manufacturing units or consumers assist in having better transportation of goods and so less time is required in moving the goods or products. 

Eligibility Criteria to obtain Warehouse License

An application is made for a warehouse license to the Principal Commissioner of Customs or Commissioner of Customs, and such licence is only issued to an applicant who fulfils the following eligibility criteria:

• Citizen of India or a business incorporated or registered under any law for the time being in force
• Submits any undertaking to comply with terms & conditions as may be specified by Principal Commissioner or Commissioner, as the case may be.
• Furnishes a Solvency Certificate from a scheduled bank for a sum of a specified amount under Warehouse Licensing Regulations, 2016. This is for public warehouses, whereas for private and special warehouses, the amount is specified by the Principal Commissioner of Customs or Commissioner Customs. However, the condition of furnishing a solvency certificate shall not be applicable to an undertaking of Central Government or State Government or Union territory or other such conditions.

The prescribed Principal Commissioner of Customs or Commissioner of Customs, as the case may be, must not issue any license to an applicant if they fall under the following criteria:

• Declared insolvent or bankrupt by a Court or Tribunal
• Penalised for any offence under the Warehousing (Management and Regulatory) Act, the Central Excise Act, 1944 or the Finance Act, 1994 
• Convicted for any offence under any law for the time being in force
• Unsound mind as declared by a competent Court

Principal Commissioner, or the Commissioner, as the case may be, is satisfied that the following conditions are fulfilled:

• The site or building of the proposed warehouse is not a suitable place for securing storage of dutiable goods;
• The site or building of the proposed warehouse is not suitable for general supervision by customs officers
• Any bankruptcy proceedings are pending against the applicant 
• Any criminal proceedings are pending against applicant, and offences involved are of such nature that he is not a fit person for grant of a license

There are three more eligibility criteria for a special warehouse:

• Propose to store goods notified by the Board 
• Submits an undertaking complying with terms and conditions specified by Principal Commissioner of Customs or Commissioner of Customs
• Undertakes to pay for services of supervision of warehouse by custom officers on recovery of costs. 

Documents Required for Warehouse License

Applying for a warehouse license usually requires completing the following list of forms and paper works:

• Warehouseman name 
• Mobile number and email address of warehouseman
• Scanned copy warehouseman PAN Card 
• Photograph of warehouseman 
• Aadhar Number
• Scanned copy of ownership details 
• In case of rent, lease or partnership, scanned copy of deed papers.
• Warehouse office complete address with pin code
• Area of whole warehouse and open area
• Landmark near warehouse 
• Village and khasra number on which warehouse is established or built
• Nearest weighbridge information, including Name, location, address, etc.
• Available fire extinguisher information in the warehouse 
• Authorised person details such as Aadhar number, email address, Virtual ID, PAN or mobile number.
• Each details including its Length, Width, Height and other design parameters with development standards
• Scanned Copy of Layout plan 
• Scanned Copy of Valid FSSAI Certificate 
• Scanned Copy of Fitness Certificate 
• Scanned Copy of Self-declaration 
• Scanned Copy of Sampler and Grader Certificate 
• Scanned Copy of SFSP, Burglary and Fidelity Insurance Policy 
• Location Geo -Coordinate (latitude and longitude)
• License Fee 
• Scanned Copy of GST Identification Number
• Photograph of warehouse facilities depicting Fitness and Completeness of the warehouse including photos of Approach Road from Main Road, boundary wall or Fencing, Road at Entry Gate, Shutter gate, Floor, Roof, Electric Connection with meter, various facilities, Weighbridge, Drinking water facility, Lavatory, Main gate, etc. (with clear images).

Other Documents that are also required are as follows:

• An individual category of License
• Type of warehouse
• Total land area under the warehouse 
• Nearest National Highway, State Highway, Railway Station, Mandi and Procurement centre to the warehouse
• Application For License in appropriate Form as per the choice of business
• Site Plan
• NOC From Owner
• Bank Solvency Certificate
• Undertakings
• ID Proof of Directors
• Certificate Of Incorporation
• List Of Director
• Board Resolution
• General Continuity Bond
• Indemnity Bond
• Insurance details
• ITR and Balance Sheet
• Memorandum and Articles
• Appointment Letter of Warehouse Keeper
• Work Experience Certificate of Warehouse Keeper
• Importer Exporter Code
• Lorry weighbridge 
• Distance of weighbridge from warehouse 
• Number and type of fire extinguisher
• Name of the Jurisdiction Police station with its distance, contact number of the police station and Police station number 
• Name of Jurisdiction Fire station, its distance and contact number of the Fire station
• Number of Entry and exit points of warehouse and number of Security Guard at these gates
• Authorised Representative details such as Name of Representative, Mobile Number, Email, Postal Address, District, Aadhar/ virtual ID, PAN etc.
• Authorisation Letter type such as based on the Power of Attorney, Organisational Letterhead, Board Resolution, as per departmental transfer posting etc. 
• Person Authorisation Letter Type
• Information and complete Details, including its description, width of walls, ceiling, height from ground level, floor description, construction year, construction standard, and number of doors & windows.
• Self-Declaration Format
• Weigher-Sampler-Grader License Format
• Fitness Certificate Format 

Procedure for Warehouse License

A complete procedure for obtaining a warehouse license is as follows:

• The applicant makes an application in the prescribed Form to obtain a new License for their warehouse as per the type of its business and warehouse. 
• All the Documents required are provided along with the prescribed fee to the competent licensing authority jointly with the application. 
• The application form, along with the submitted Documents, are examined by the Commissionerate. 
• The Commissionerate has to examine the application form and grant the License within fixed days from the date of receipt of the application. 
• The bond officer also examines the application, and it also visits the premises. 
• After conducting a proper examination of the application and premises to be granted License, the bond officer submits its report to the Principal Commissioner or Commissioner within 15 days of the receipt of the application. 
• The Principal Commissioner or Commissioner, i.e., the licensing authority, has the discretion to approve or reject the application after receiving such a report within the next 15 days.
• After conforming to the acceptance or rejection of the application, the applicant is intimated regarding the decision of licensing authority (principal commissioner or commissioner) to grant the warehouse license or not. 
• After intimation of rejection with reason, the applicant provides further related necessary papers to the licensing authority that, includes Principal Commissioner or Commissioner. And in case of intimation of acceptance, the Principal Commissioner or Commissioner grants the License to the applicant for its warehouse. 

This License is valid till its surrender by the applicant or cancellation, and so there is no requirement for renewal of such License.