manufacturing in warehouse

Warehouse is a place where imported goods are stored before payment of custom duty. From the warehouse goods can be exported or can be cleared for home consumption, in which case custom duty is payable. If it exported from warehouse, no custom duty is payabe.

If some manufacturing activity takes place in warehouse, theoretically it amounts to manufacture in India and Central Excise duty may be payable. However, if goods are exported from warehouse, the is no duty liability as excise duty is exempted on export goods. Yes, if after manufacturing activity, goods are cleared for home consumption, Custom duty is payable and for valuation purpose it will include the value of manufacturing also. When we say custom duty is payable, it means CVD (equivalent to central excise duty) is also payable.

100% EOU is basically a manufacturing activity in warehouse. When after manufacturing goods are cleared for home consumption, Central excise duty is payable under Section 3(ii) of the Central Excise Act.