Regarding Bonded Warehouse legal requirements for “export-oriented” companies 

        - The legal conditions that an “export-oriented” factory must satisfy in order to sell bonded goods in the domestic market. 
 

        - Legal requirements/conditions to qualify as a “non-export oriented”  factory. 
 

         - Potential for liabilities and possible safeguards/mechanisms. 

With regards to Query 1, an export-oriented  factory may sell domestically if they satisfy section 104 requirements of the Customs Act 1969. Section 104 states: 

“104. Clearance of bonded goods for home consumption.- Any owner of warehoused goods may, at any time within the period of their warehousing…….clear such goods for home consumption by paying- 

1. the duty assessed on such goods under the provision of this Act; and
2. all rent, penalties, interest and other charges payable in respect of such goods. 

“Provided that necessary permission will have to be taken from Commissioner of Customs (Bond) or any other Commissioner of Customs authorised by the Board fifteen days in advance in case of Special Bonded Warehouse for special purposes to be determined by the  Commissioner of Customs (Bond) or any other Commissioner of Customs authorised by the Board.” 

This section essentially validates the sale of bonded goods by export-oriented companies as long as they pay their duties and other arrears that would have been payable under the act if such goods were exported in the factory’s capacity as an export-oriented entity. 

With regards to the second query, there is no requirements or conditions to be a non-export oriented factory except that such factory should not be owned by an export-oriented company. 

With regards to the third query, safeguards and mechanisms depend on the particular situation. In general, the practice recommended is to take an undertaking from the seller/manufacturer to the extent that they should declare that they will practice within the legal requirements set by the laws of the land failing which the buyer/reseller wont be liable to any claim or prosecution by the government.