The MOOWR scheme is a duty deferment program that allows for the import of goods (both inputs and capital goods) for manufacturing or other permitted activities within a customs-bonded warehouse.
Introduction
Are you looking to set up a manufacturing unit in India or enhance your existing operations?
The Manufacturing and Other Operations in a Customs Bonded Warehouse (MOOWR) scheme, launched by the Central Board of Indirect Taxes and Customs (CBIC), can be a game-changer for your business.
This article explores the MOOWR scheme in detail, explaining its benefits, eligibility, and how it can empower businesses, especially MSMEs.
What is the MOOWR Scheme?
The MOOWR scheme is a duty deferment program that allows for the import of goods (both inputs and capital goods) for manufacturing or other permitted activities within a customs-bonded warehouse.
This translates to significant cost savings and operational flexibility for businesses.
By deferring customs duties on imported materials, MOOWR reduces the upfront financial burden on businesses.
This allows them to invest these resources in other areas, such as:
- 1. Acquiring machinery
- 2. Hiring personnel
- 3. Improving product quality
Additionally, the scheme provides flexibility in sourcing materials.
Businesses can import what they need, when they need it, without worrying about immediate customs duties.
This optimizes their supply chain management and ensures they have the right materials on hand to meet production demands.
Purpose Of the MOOWR Scheme
The main purpose of the MOOWR Scheme is two-fold:
Make India a competitive manufacturing hub
By deferring customs duties on imported materials and simplifying procedures, MOOWR reduces the cost burden on businesses and creates a more attractive environment for manufacturing in India.
This can lead to increased investment, job creation, and a boost to the Indian economy.
Attract investment
The scheme’s benefits, particularly for MSMEs, make it easier for businesses to set up or expand their operations in India.
The simplified approval process, flexibility in sourcing, and no minimum investment requirement make it an attractive option for both domestic and foreign investors.
Benefits of the MOOWR Scheme
Duty Deferment
MOOWR defers customs duties on imported goods until their clearance from the warehouse. This frees up working capital for businesses.
MSME Friendly
The scheme has no minimum investment threshold or location restrictions, making it ideal for small and medium-sized enterprises (MSMEs).
Simplified Approvals
A single application and approval process with a single point of contact at the jurisdictional Commissioner of Customs streamlines the procedure.
Flexibility in Sourcing
Businesses can source capital goods and inputs from imports, the domestic market, or even SEZs/FTWZ zones.
Flexibility in Sales
Finished goods can be exported or sold domestically, with no export obligation.
Other Advantages
The scheme allows for sending inputs for job work, digital record-keeping, and record-based controls.
Who is Eligible for the MOOWR Scheme?
The MOOWR scheme is designed to be inclusive and accessible to a wide range of businesses.
Any company or entrepreneur looking to manufacture goods or conduct certain permitted activities within a customs bonded warehouse can apply for the MOOWR scheme.
This includes established manufacturers:
- 1. Seeking to streamline their operations,
- 2. New businesses setting up production facilities,
- 3. and even foreign companies looking to leverage India’s manufacturing potential.
The scheme’s flexibility makes it suitable for businesses of all sizes, from small startups to large corporations.
Comparison Between Various Export Schemes
| Parameters | EPCG | MOOWR |
| Concept | Capital Goods can be imported duty- free under this scheme | Enables conduct of manufacture and other operations in a Customs bonded warehouse with free import. |
| Type | There are two types of EPCG schemes: Zero duty Export Promotion Capital Goods Schemes Post Export EPCG Duty Credit Scrip | Regular scheme, & Special Warehousing scheme for some specified goods |
| Applicable law | FTP, HBP, related Customs tariff notification | Chapter IX of the Customs Act and related regulations |
| Customs Benefit | Upfront Exemption from BCD on import of capital goods. | Deferment of all customs duties on warehoused goods and the same is waived if the goods are exported |
| IGST Benefit | Upfront Exemption from IGST on import of capital goods | Deferment of IGST on warehoused goods and the same is waived if the goods are Exported |
| Eligibility & Investment Criteria | Only for capital goods with the export obligation and no Investment. | Any existing or new factory can be converted and no Investment. |
| Need for a license/Registration | Yes, EPCG Authorization from DGFT | Permission under Section 65 and license under Section 58/58A from jurisdictional customs |
| Validity of License | 18 months for import & 6 years for export | N/A |
| Who can avail of the benefit of the scheme? | Manufacturer/Mer chant Exporter tied to Supporting manufacturer, Service providers | A person who has been granted a license under Section 58 combined with Section 65 under Customs Act |
| Export Obligation | Export value equivalent to 6 times of duty saved in 6 years along with the average level of Exports in the preceding 3 licensing years for the same & similar Products | No Export Obligation |
| Trading is allowed? | Yes | Yes, but interest is applicable for period beyond 90 Days |
| Procurement from the Domestic Tariff area | Considered as deemed Export | It will be a regular supply |
| Sales in the Domestic Tariff Area | Allowed, as long as export obligation to be fulfilled | Allowed, but the duties deferred at the time of Import will be payable on imported inputs contained in the finished goods |
| Job work/ Sub- Contracting | Allowed | Inputs, moulds, dies, jigs, fixtures, etc. are allowed as per GST law. Capital Goods allowed subject to Permission |
| Separate Registration under GST Act | No | No |
| Import of Second-hand Capital Goods | No | Specifically, not restricted |
| Input-Output Norm | Not applicable | Norms to be defined by the company |
| Audits | Not provided | Yes, by the Customs Authority |
| The benefit of Depreciation on the Sale of used Capital Goods | Not available but proportionate duty reduction will be allowed to the extent of EO fulfilled. | Not available |
| Opting for one or more schemes together | Yes, EPCG & AA can be opted together i.e., one for Capital Goods and the other for Raw Materials | Along with MOOWR, EPCG & AA can be opted |
| Points to consider while opting for the scheme | When there is sufficient Export to meet the EO and the requirement of Capital goods is not constant | When there is a huge Import of Capital Goods and not planning to sale the same soon as duty needs to be paid on same. |
| Availability of Duty Drawback benefit | Can be claimed | No, specifically excluded |
| Requirement of Bond & Security | Bond required & there are certain exemptions from Security | Requirement of triple duty bond & Security required for traded goods |
| Availability of RODTEP benefit | Can be claimed | No, specifically Excluded |
Conclusion
The MOOWR scheme offers a compelling package for businesses seeking to establish or expand their manufacturing operations in India.
By deferring customs duties, simplifying procedures, and providing operational flexibility, MOOWR fosters a more competitive environment and positions India as an attractive investment destination.
