Page 219 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes Beyond consistently meeting high standards for product quality and safety, these warehouses
must also possess the efficiency and reliability. Energy is a major contributor to the cost of
business, and the prospect of power price hikes can heighten the pressure on the profit margin.
There are also issues of environmental regulation, equipment flexibility, and logistics
management to deal with. Even a minor change in consumer’s eating habits such as the advent
of in-store take-out and heat-and-serve products can create a ripple affecting the refrigerated
food supply chain.
Unfortunately, the nature of refrigeration systems makes it difficult to implement wholesale
changes. The standard operating procedures and process hazard analyses need to be undertaken
regularly. Planning on a long-term basis and partnerships with equipment manufacturers is
increasing in importance. Many such warehouses work with professional service providers for
solutions with regard to preventive maintenance, special lubrication systems and filtration,
consistent chemical water treatment, etc.

New technologies in refrigeration design are proving quite successful in eliminating pathogens
from processed foods. Ammonia refrigeration systems are replacing systems based on Freon,
due to environmental concerns. Operators of private refrigerated warehouses are increasingly
using automation technology to provide the efficient, cost-effective services demanded by today’s
food processors.
Commodity Warehouses: These are designed to handle bulk material such as wheat, rice, sugar,
lentils, cotton, edible beans, and milk etc. Non-food commodities include jute, fertilizers, tires
wood pulp, tobacco, etc. Some commodities can also be in liquid form, this includes most
petroleum products as well as many chemicals.

Due to the diverse nature of commodities, many commodity items require special handling or
storage considerations, such as grain storage warehouses may require elevators, liquid
commodities may require tank farms, and a commodity like tobacco requires a barn.
In India, most agricultural commodities are handled by the Central and State Warehousing
Corporations. These are discussed in the section on public warehouses.

Bonded Warehouses: These warehouses are licensed by the government to store goods prior to
payment of taxes or duties. The facility of warehousing of imported goods in Customs Bonded
Warehouses, without payment of Customs duty otherwise leviable on import, is permitted
under the Customs Act, 1962. Basically, goods after landing are permitted to be removed to a
warehouse without payment of duty and duty is collected at the time of clearance from the
warehouse. The law lays down the time period up to which the goods may remain in a warehouse,
without incurring any interest liability and with interest liability.
The warehouses are to be appointed/licensed at particular places only which have been so
declared by Central Board of Excise and Customs. The Board has delegated its power for declaring
places to be Warehousing Stations to the Chief Commissioners of Customs. In respect of 100
percent EOUs, the powers to declare places to be Warehousing Stations have been delegated to
the Commissioners of Customs.
Licences are issued by Customs and are classified into two categories viz., storage of sensitive
goods such as liquor, cigarettes, foodstuffs, consumables, etc. and other non-sensitive goods. All
warehoused goods are subject to the control of the Customs officers. The owner of the warehoused
goods may inspect, sort, show for sale, take samples, etc. from the bonded goods with the
permission of the proper officer. The owner of the bonded goods has also to pay warehouse-
keeper rent and warehouse charges at the rates fixed under law.
In addition to bonded warehouses for imported items, bonded warehouses are also used for
items that are subject to excise. Excise duty is a tax on manufacture or production of goods. Excise
duty on alcohol, alcoholic preparations, and narcotic substances is collected by the State

214 LOVELY PROFESSIONAL UNIVERSITY