Post Date : July 8, 2021
First introduced in 1966 under the Customs Law, the ‘Manufacturing & Other Operation in Warehouse Regulation’ (MOOWR) scheme that was restructured by the Centre, has caught the attention of importers dealing in both the domestic and international markets, with its liberalised compliance requirements that garnered a lot of interest. We take a look at the revised scheme and what it has to offer.
What is MOOWR?
MOOWR is an appealing scheme that has caught the attention of importers, or should we say: it has left importers asking for moowr. (“My logisticians are a humourless lot… they know if my campaign fails, they are the first ones I will slay.” – Alexander)
This scheme helps importers retain cash flow as goods can be kept in warehouses bereft of any time limit and duty is to be paid only when the goods are cleared for domestic sale.
In a bid to promote local manufacturing, the Government restructured the earlier ‘Manufacturing & Other operation in Warehouse Regulation’ (MOOWR) scheme, introduced first in 1966 under the Customs law.
In contrast to the earlier scheme, where the owner of the warehoused goods could go ahead with the manufacturing processes or other operations subject to specific conditions, the revised scheme has liberalised key compliance requirements in the revised MOOWR, 2019, notified on 1 October 2019, which is now aligned with the Government’s ‘Atmanirbhar Bharat’ or ‘self-reliant India’ plan.
The revised scheme has garnered the attention of many corporates in India. Owing to the plethora of benefits including the distinct advantage and ease of administration, unlike other export formats, large multinational companies are considering this option.
The most promising feature of the scheme is that, unlike various existing schemes, the MOOWR scheme is segregated from the quantum/obligation of exports and the benefits can be reaped by importers who import the goods for domestic clearance/sell.
Benefits of the MOOWR scheme
Deferred Duty on Capital goods and import of raw material: Under this scheme, when the raw materials or capital goods are imported, then the import duty (both BCD and IGST) are deferred.
On Import of Raw Material: The duty on import of raw material used in manufacturing or other operations is deferred until the clearance of finished Goods,. It will be waived off, in the event finished goods are exported.
Capital Goods: The duty on capital goods used in manufacturing or other operations, is deferred until the clearance from a bonded facility, and can be avoided if they are exported.
For home consumption, Customs Duty and IGST needs to be paid at the time of removal from the factory i.e. bonded area – Deferral in payment of duty.
Positive NFE need not be maintained: On top of that, the revised scheme does away with the requirement of maintaining positive NFE (Net Foreign Exchange Earnings)
Permanent License Validity: License once obtained is valid for permanence unless cancelled. No hassles of periodic renewals.
No interest upon removal of Capital goods: After unlimited use there is no Interest upon removal of Capital Goods itself for the home consumption. All that is required is for one to pay the Customs Duty and IGST on the Capital goods.
No time limit for goods within warehouse: In case of manufacturing, no interest implication and the imported inputs / capital goods can remain in the warehouse without any time limit .
No Export Obligation: An entity may sell 100% of the goods manufactured in the bonded Warehouse into the domestic market. However, this will be followed by the liability to pay duty on imported inputs.
Clearance of Warehouse Goods
The scheme promotes a seamless transfer of goods between warehouses.
- Transfer of goods from a warehouse: As per the scheme, a licensee shall allow transfer of warehoused goods to another warehouse or to a customs station for export, with due intimation to the bond officer on the Form for transfer of goods from a warehouse.
- Removal of resultant goods for home consumption: A licensee may remove the resultant goods from warehouse for home consumption: Provided that a bill of entry for home consumption has been filed in respect of the warehoused goods contained in so much of the resultant goods and the import duty, interest, fine and penalties payable, if any, in respect of such goods have been paid.
- Removal of resultant goods for export: A licensee shall remove the resultant goods from the warehouse for export without payment of duties or under IGST refund, upon filing a shipping bill or a bill of export, as the case may be, notes the scheme.
How to obtain a licence under MOOWR, 2019?
The new MOOWR has set aside the following regulations determining the eligibility criteria for obtaining a license:
- A person who has been granted a licence for a warehouse under section 58 of the Customs Act, in accordance with Private Warehouse Licensing Regulations, 2016.
- A person who applies for a licence for a warehouse under section 58 of the Customs Act, along with permission for permission for undertaking manufacturing or other operations in the warehouse under section 65 of the said Act.
How to apply:
An application is to be submitted to the Principal Commissioner of Customs or the Commissioner of Customs along with an undertaking:
- To maintain accounts of receipt and removal of goods in digital form and submit it digitally to the bond officer on a monthly basis
- To inform the input-output norms or any revision in the norms wherever considered necessary; and
- To complete a bond in the specified format