A bonded warehouse is a storage facility where imported merchandise (except perishable articles and explosive devices), may be stored without the payment of duties for a period of five (5) years.
A bonded warehouse may be used as (1) a location to manipulate imported goods prior to entry into the commerce of the United States, (2) a location to manufacture goods from imported and domestic components for purposes of exportation, and (3) a duty-free sales enterprise. These variations depend on the class of bonded warehouse license the warehouse proprietor obtains and the nature of the merchandise.
In order to operate a bonded warehouse, the owner or lessee of the warehouse must file an application with the District Director of Customs where the warehouse is located. The application must disclose the names and addresses of all officers and managing officials of the warehouse, and all persons who have a direct or indirect financial interest in the warehouse.
The application must also state the exact location of the bonded warehouse and, if a private warehouse, the nature of the merchandise that will be stored therein and an estimate of the maximum amount of duties that are owing on bonded merchandise stored within the warehouse during a given period of time. This last requirement is necessary in order to determine the amount of the bond the warehouse proprietor must secure.