The MOOWR Scheme under Section 65 of the Customs Act: An Overview

What MOOWR is

MOOWR is the commonly used short form of the Manufacture and Other Operations in Warehouse Regulations, 2019, framed under the Customs Act, 1962. Section 65 of the Act allows the owner of warehoused goods, with the permission of the Principal Commissioner or Commissioner of Customs, to carry on manufacturing processes or other operations in a bonded warehouse. The Regulations set out how such permission is obtained and how the warehouse is operated.

How duty deferment works

Imported inputs and capital goods can be brought into the licensed warehouse without payment of import duty at the time of import. Broadly:

• where finished goods are exported, duty on the imported inputs used in them is generally not payable;
• where finished goods are cleared for home consumption, duty becomes payable on the imported inputs contained in them at that point; and
• imported capital goods can be used in the warehouse with duty payable if and when they are cleared for home consumption, in the manner the law provides.

The result is a working-capital benefit: duty is paid later, and in some cases not at all. The exact treatment of each category of goods should be confirmed against the current Regulations and CBIC instructions.

Who the scheme typically suits

• Manufacturers that rely heavily on imported raw materials or components.
• Export-oriented units that do not wish to operate within a special economic zone.
• Businesses setting up capital-intensive plants with imported machinery.

Licensing and compliance

The applicant applies to the jurisdictional Principal Commissioner or Commissioner of Customs for a private bonded warehouse licence under Section 58 and permission under Section 65, through the prescribed process. The licensee executes a bond and, where required, furnishes security. Once operational, the unit must maintain records of receipt, use and removal of goods in the prescribed manner and file periodic returns, and movements of goods into and out of the warehouse must follow the prescribed procedure.

MOOWR compliance interacts with GST as well as customs, so an assessment should look at both before an application is made. See the firm’s Customs and MOOWR practice.

This article is general information about the law as understood on the review date shown above. It is not legal advice and does not create an advocate–client relationship. Statutory provisions are amended from time to time; verify the current text before acting.