The Bonded Warehousing functionality, which deals with the storage and clearance of bonded goods, gives distributors the possibility to store bonded goods and defer the payment of import duties until the cleared goods are sold; alternatively pay in advance before selling the cleared goods. While imported bonded goods that you plan on exporting are exempt from import duty, any imported bonded goods that you plan on selling domestically require the payment of import duty.
For a domestic sale, the bonded goods must first be cleared, which is done using the IRO functionality, before a sale can take place for the cleared non-bonded goods. During the clearance process the calculation of estimated import duty takes place which is aided by the landed cost applied on the IR purchase order.
Note: The bonded warehousing functionality does not support the following types of orders from a non-bonded (logical) warehouse:
- MDC order
- BtB orders
- Simulation orders
- Claim orders
- Quotation orders
- Cash sales
- Shipment orders
What this document contains:
- Storage and tracking
- Methods for clearing bonded goods for a domestic sale
- Estimated import duty
- Stock movement/ stock adjustment/ stock take
Storage and tracking
The storage and tracking of bonded and cleared non-bonded goods, (which can physically be stored together even though there is no physical marking on the goods to denote if they are bonded or non-bonded), is facilitated by the Stock Ownership functionality, an IM7 reference, and automatically updated customs-related files.
- The Stock Ownership functionality, which must be activated together with the Bonded Warehousing functionality, provides the possibility to set up and utilize logical and physical warehouses for tracking bonded, non-bonded and physical inventory. The bonded goods are tracked using the bonded logical warehouse, and the non-bonded goods are tracked using the non-bonded logical warehouse.
- An IM7 reference must be entered when purchasing bonded goods and is updated in the Customs-related files.
The system automatically updates the following customs-related files:
| Customs-related files | Purpose |
|---|---|
| Work with customs reference file
Customs reference log file |
The system will track and store the bonded inventory balance against an IM7 reference as follows:
As a result, the Work with customs reference file and the Customs reference log file will always display the available balance against each IM7 reference. Note: Any manual changes required in the Work with customs reference file may only be performed by users with ADMIN authority, and only limited details are allowed to be altered. For example IM7 reference field – The value in this field can only be changed if the quantity of the IM7 reference is not consumed by any sales order. If editable, then a change in this field will also trigger an automatic update in the Customs reporting file. Values for other editable fields can be changed but any change to those field values in this file requires a mandatory manual change of the equivalent field values in the Customs reporting file. Any altered details will automatically be logged in the Customs reference log file (which is accessed via the Enquiries menu). |
| Work with customs reporting file
Customs reporting log file |
The Work with customs reporting file tracks all the transactions of bonded inventory that are purchased, cleared, and sold against the IM7 reference. This file can also be used to create monthly, quarterly, and yearly reports as per customs regulations.
Note: Any manual changes required in the Work with customs reporting file may only be performed by users with ADMIN authority, and only limited details are allowed to be altered. Any altered details will automatically be logged in the Customs reporting log file (which is accessed via the Enquiries menu). Extracting logged data and creating reports for customs The calculation of the actual duty can be facilitated by the following:
|
Methods for clearing bonded goods for domestic sale
The clearance of bonded goods for a domestic sale can be done via one of two ways:
- Automatically by creating a sales order from a non-bonded warehouse. Note: This method should be chosen when you want to delay the payment of import duty until you sell the cleared goods.
When the sales order line is created, the system will check if the quantity is NOT available in the non-bonded (logical) warehouse but instead available in the bonded (logical) warehouse. If it is not available in the non-bonded (logical) warehouse, the system will create the following manual reservations thereby protecting the order line quantity from being used for any other sales order:
- On the Bonded (logical) warehouse, as outgoing quantity required on the sales order line
- On the Non-bonded (logical) warehouse, as incoming quantity required on the sales order line
- These reservations will be created with additional details, e.g., Dispatch date, Expiry date, Stock unit, Sales order, and Sales order line number for which this reservation is done.
- Any update or deletion of this sales order line will also trigger the update/deletion of the respective manual reservations.
When you confirm the pick list, the IRO’s (IR purchase order and IR sales order) will automatically be created, processed, and auto confirmed – thus transferring (i.e., clearing) the required quantity of goods and calculating the estimated import duty by applying the Landed cost to the IR purchase order.
During this automatic creation/processing/confirmation, the following processes will automatically take place:
(Note that Pick cancel, or re-confirmation is not allowed for the sales order which is connected to the “clearance” IROs.)
- All manual reservations will be removed against the specific sales order line.
- Based on the pick confirmed quantity and the quantity balances in the Customs reference file, one or more IM7 references (that were entered on the purchase order when receiving bonded stock) will be used (in FIFO sequence) to create IR sales order/lines. Hence, the purchase order is also updated, and the quantity on the purchase order is reduced in FIFO sequence.
- The IR sales order will then create an IR purchase order.
- The IR purchase order will be updated with the Landed cost type that is set up for the country of origin and non-bonded warehouse.
- The automatically generated IRO information (i.e., IR sales order and IR purchase order) will be available to view in the Sales order enquiry for the original sales order on the Order line, Additional information 6 panel.
OR
- Manually using IRO orders and transferring goods from the bonded to the non-bonded logical warehouse. Note: This method should be chosen when you want to pay the import duty in advance before selling the cleared goods.
Estimated import duty
When deferring the import duty until the cleared goods are sold, (i.e., if you automatically cleared the bonded goods for a domestic sale), the invoice that will be sent to the domestic customer will not include the import duty owed because it is not the domestic customer that pays the duty. Instead, it is the purchaser of the bonded goods that pays the duty.
Likewise, when paying the import duty in advance before a domestic sale (i.e., if you manually cleared bonded goods to be able to keep a buffer of the cleared goods), it is the purchaser of the bonded goods that pays the duty.
For both above-mentioned scenarios, you can view the estimated import duty owed in the System value field on the PO discrete landed costs enquiry panel. This panel is accessed via the Purchase order enquiry for the IR Purchase order that was automatically or manually created.
- Access the Purchase order enquiry
- Select the applicable IR purchase order.
- On the Order lines panel, select the line.
- On the Detailed order line 1 panel click the Fnc list function key and select Landed costs.
- On the Landed costs enquiry panel right-click the Type and select the Display discrete cost option.
- The System value field on the PO discrete landed costs enquiry panel displays the estimated import duty.
Stock movement/ stock adjustment/ stock take
- No manual stock movements are allowed using the standard stock movement functionality. Instead, movements must be handled using the IRO functionality as described in the Methods for clearing bonded goods for a domestic sale section above.
- Stock adjustment is allowed but the adjustment in the Custom reference files and Customer reporting files must be done manually and is restricted to those with ADMIN authority.
- Stock take is only allowed on the physical warehouse. Since the flag for Stock take/owner must be set to YES on the physical warehouse as part of the set-up for the Bonded warehousing functionality, this flag provides the possibility to decide how much of the gain or loss each owner (warehouse) will take. This can be done using existing stock ownership functionality to drill down to the logical warehouse during the stock take and enter the actual counted quantity for bonded and non-bonded warehouses.