MOOWR Scheme 2019: Duty-Free Imports for Indian Manufacturers
Unlock your manufacturing potential with zero upfront import duties. The Manufacturing and Other Operations in Warehouse Regulations (MOOWR) Scheme lets Indian manufacturers defer customs duties on imported raw materials and capital goods.
Enhance India's manufacturing competitiveness by streamlining import processes and reducing production costs
Key Advantages
Duty deferment on imported raw materials and capital goods until they are utilized or sold domestically
Eligibility
All Indian manufacturers without minimum investment thresholds, including traders under specific conditions
Process Flow
Registration, conversion to bonded warehouse, duty-free imports, and payment only upon domestic clearance
Objectives of MOOWR Scheme
Global Competitiveness
Align Indian industry with global standards
Boost Manufacturing
Support Make in India campaign
Cost Reduction
Lower production costs via duty deferment
Economic Growth
Create jobs and strengthen economy
The MOOWR Scheme was introduced by CBIC in 1996 and significantly revamped in 2019 to boost the Make in India initiative. By promoting local value addition and reducing reliance on imports, it contributes to a more self-sufficient and sustainable Indian economy while enabling manufacturers to participate more effectively in the global marketplace.
Legal Framework of MOOWR Scheme
Customs Act, 1962
Section 58 permits duty-free storage of imported goods in a custom bonded warehouse while Section 65 allows further processing or manufacturing activities on such duty-free goods in the warehouse.
Notification No. 69/2019
Dated 1 October 2019, this notification formally introduced the Manufacture and Other Operations in Warehouse Regulations, 2019, specifying all rules regarding eligibility, application, and import processes.
Circular No. 34/2019
Issued on 1 October 2019, this circular details the application process, application form, monthly return format, and other procedural requirements.
FAQ Document
Released on 27 October 2020 via F. No. 484/03/2015, this document addresses common queries in a simple question-and-answer format to clarify practical aspects of the scheme.
Key Advantages of MOOWR Scheme
Capital Goods Duty Deferment
Customs duty payable only when capital goods are physically removed from the manufacturing unit, allowing businesses to utilize their funds more efficiently during the operational lifecycle of the equipment.
Raw Material Duty Deferment
Customs duty on imported raw materials becomes payable only when the manufactured goods are removed from the unit for domestic consumption, improving cash flow and reducing working capital requirements.
Auxiliary Items Duty Deferment
Customs duty on moulds, tools, dies, and spares is payable only when these items are removed from the unit, providing significant financial relief for equipment-intensive manufacturing operations.
Comprehensive Duty Coverage
The deferment applies to all applicable duties including basic customs duties, social welfare surcharge, integrated goods and services tax, and anti-dumping duties.
Additional Benefits Under MOOWR
No Time Limit
Unlike other schemes, MOOWR has no time restriction on storage or processing of warehoused goods, providing greater operational flexibility.
No Export Obligation
Manufacturers can focus on domestic or export markets without mandatory export commitments, making it suitable for businesses with variable market focus.
Job Work Permitted
Goods can be sent for job work to other facilities, allowing specialized processing without duty payment, enhancing manufacturing capabilities.
Working Capital Relief
Significant reduction in working capital requirements as duties are deferred until goods are cleared for domestic consumption.
MOOWR vs. Traditional Schemes
Existing Schemes: Limitations
Export Oriented Unit (EOU), Export Promotion Capital Goods (EPCG), and Advance Authorization (AA) schemes all impose strict export obligations, requiring manufacturers to export a specified portion of production to avail benefits.
These traditional schemes involve complex approval processes from multiple authorities like DGFT, SEEPZ, and Customs, creating administrative burden and delays.
MOOWR: Simplified Approach
The MOOWR Scheme addresses these limitations by providing greater operational flexibility without export obligations or minimum investment thresholds.
It features a simplified single-window registration process with fewer procedural hurdles and ongoing compliance requirements, making it more accessible to a wider range of manufacturers.
The MOOWR Scheme was specifically designed to overcome the limitations of existing schemes, providing a more flexible alternative for manufacturers seeking duty benefits without restrictive conditions.
Additional Advantages Over Traditional Schemes
The MOOWR Scheme offers superior flexibility compared to traditional schemes. It allows duty deferment for both domestic and export-oriented units without discriminating between market focus. The registration process is streamlined through a single application with fewer procedural hurdles. Perhaps most importantly, there are no time restrictions for using the deferred duty benefits, giving manufacturers unparalleled flexibility in managing their import and manufacturing timelines.
Who Can Register Under MOOWR?
All Manufacturing Sectors
Textiles, automobiles, food processing, refineries, electronics, pharmaceuticals, and more
Solar Power Units
Recently reinstated by Delhi High Court (ACME Heeragarh Powertech case, May 2024)
Job Workers
Entities performing manufacturing operations for other manufacturers
Trader-Manufacturers
Companies that both manufacture and trade goods (subject to additional conditions)
The MOOWR Scheme offers exceptional flexibility with no minimum investment threshold requirements. The scheme is designed to be inclusive, allowing manufacturers from diverse sectors to benefit. Even after the temporary exclusion of solar power generating units in July 2022, a landmark Delhi High Court judgment in May 2024 reinstated their eligibility, further broadening the scheme's accessibility.
Recent Regulatory Changes
Budget 2024 Proviso: New Restrictions
The 2024 Budget introduced a significant proviso to further regulate the MOOWR Scheme. This new provision specifies certain manufacturing processes and operations for specific classes of goods that would no longer be permitted in a bonded warehouse under the MOOWR Scheme.
The introduction of this proviso indicates a more nuanced approach to the scheme's application, potentially limiting benefits for certain industries or processes. However, as of now, no specific list of excluded goods or processes has been officially notified.
Impact on Manufacturers
These regulatory changes signal that while the MOOWR Scheme remains broadly inclusive, certain industries may face new restrictions or additional compliance requirements in the future.
Manufacturers should stay vigilant about regulatory updates and assess how these changes might affect their eligibility or benefits under the scheme. Consulting with customs experts or legal advisors is recommended to navigate these evolving regulations effectively.
Status of Solar Power Units
The exclusion of solar power generating units in July 2022 represented a significant limitation for companies in the renewable energy sector. However, this restriction was successfully challenged in court.
The May 2024 Delhi High Court judgment in the ACME Heeragarh Powertech case represents a significant victory for the renewable energy sector, reinstating solar power units' eligibility under the MOOWR Scheme.
Eligibility and Import Limits
₹1 Cr
Minimum Solvency
Typical minimum solvency certificate required for MOOWR registration
100%
Import Duty Limit
Of solvency amount can be deferred as duty
0
Min Investment
No minimum investment threshold required
Any manufacturer importing raw materials and capital goods can avail benefits under the MOOWR Scheme. This includes existing manufacturing units seeking duty deferment for subsequent imports. Even job workers performing manufacturing processes for other manufacturers can import capital goods under this scheme without immediate duty payment.
The amount a unit can import without paying import duties is determined by the solvency certificate provided. A solvency certificate of ₹1 crore allows duty deferment up to that amount. Manufacturers can submit additional solvency certificates as needed to increase their eligible duty deferment limit.
MOOWR Operational Mechanism
Conversion to Bonded Warehouse
Manufacturing facility becomes a Private Customs Bonded Warehouse
Duty-Free Imports
Raw materials and capital goods imported without paying duties
3
3
Manufacturing Operations
Processing of imported goods into finished products
Clearance
Duty payment only if cleared domestically; no duty if exported
Under the MOOWR Scheme, the manufacturing facility is converted into a Private Customs Bonded Warehouse. Imported goods can be deposited in this warehouse by filing a bill of entry for warehousing, without paying any Customs duty or IGST. Manufacturing operations can then be carried out on these goods, and the finished products can be removed for either domestic sales or export.
For domestic clearance, proportionate import duty is paid only on the imported materials used. For exports, both import duties and GST can be zero-rated, providing significant tax advantages.
Raw Material and Capital Goods Procurement Process
Domestic Purchases
CGST+SGST or IGST must be paid on domestic purchases for the MOOWR unit
Imports
Customs Duty and IGST deferred on imports through Bill of Entry for Warehousing
MOOWR Unit Storage
Both domestic and imported goods stored in the customs bonded warehouse
Manufacturing
Goods utilized in production process with precise record-keeping
The MOOWR Scheme creates a dual procurement system. For domestically purchased raw materials and capital goods, regular GST applies and must be paid at the time of purchase. However, for imported materials, the scheme offers significant advantages by deferring Basic Customs Duty and IGST until the materials are used in products sold domestically.
This differential treatment allows manufacturers to optimize their tax strategy based on sourcing decisions while maintaining proper documentation for both streams of materials.
Clearance Process for Manufactured Goods
MOOWR Unit Production
Manufacturing using duty-deferred imported inputs
Clearance Decision
Choose between export or domestic market
Export Pathway
No duties on imported materials if finished goods are exported
Domestic Pathway
Pay proportionate duties on imported inputs plus GST on finished goods
When manufactured goods are ready for clearance from a MOOWR unit, two pathways are available. For exports, the scheme offers maximum benefits—all duties on imported raw materials are permanently exempted, and the finished goods can qualify for zero-rated GST, creating a highly competitive export proposition.
For domestic sales, the manufacturer must pay the proportionate import duties on the raw materials used plus applicable GST on the finished goods. This selective duty payment system optimizes cash flow while ensuring appropriate revenue collection.
Capital Goods Clearance Process
Export of Capital Goods
When capital goods imported under the MOOWR Scheme are exported from the facility:
No Basic Customs Duty is payable
IGST is completely exempted
Proper export documentation must be maintained
Export must be verified and certified by customs officials
Domestic Clearance of Capital Goods
When capital goods are cleared for domestic use or sale:
Full Basic Customs Duty becomes payable
Complete IGST must be paid
Duty is calculated on original import value
No depreciation benefit is allowed for duty calculation
Rates applicable on the date of clearance apply
The MOOWR Scheme offers significant flexibility for handling capital goods. The duty deferment can continue for the entire lifespan of the equipment as long as it remains within the bonded warehouse. This aspect is particularly valuable for capital-intensive industries, as it allows businesses to defer potentially substantial duty payments for many years.
MOOWR Registration Process
Online Application
Submit application on Invest India portal followed by physical submission to jurisdictional Customs Commissionerate with all required documentation.
Application Verification
Customs authorities verify the application within 8-15 days, followed by a physical inspection of the proposed premises by the Customs Superintendent.
Security Assessment
The inspection focuses on security measures like CCTV coverage, fire protection equipment, security personnel, and other factors affecting the safety of duty-free goods.
Approval and Licensing
Based on the verification report, the Commissioner's office reviews the application and issues a MOOWR license if all requirements are met.
Warehouse Code Generation
Jurisdictional Customs officer generates a warehouse code that enables the unit to file bills of entry for warehousing to defer import duties.
Registration Timeline Overview
Standard Registration Process Duration
The entire registration process typically takes 4-7 weeks, depending on document preparation speed, construction status of the proposed unit, and customs processing time. There are no fixed statutory timelines, but this standard sequence is generally followed.
Week-by-Week Registration Timeline
1
Week 1
Application preparation and submission
During this initial phase, manufacturers must gather all required documentation including company registration papers, manufacturing license, GST registration, IEC certificate, site plans, and security protocols. It's advisable to have pre-consultations with customs consultants to ensure all documents are properly prepared to avoid future delays.
2
Week 2
Initial scrutiny and issuance of letter for physical verification
Customs authorities conduct a preliminary review of the application to ensure completeness and accuracy. Common issues include incomplete documentation, discrepancies in address details, or insufficient security measures in the proposed plan. Applicants should remain available to address any queries or provide additional information promptly during this period.
3
Weeks 3-4
Physical verification and submission of verification report
A team of customs officials visits the premises to verify the actual site against submitted plans and assess security measures. They evaluate factors such as perimeter security, CCTV coverage, access control systems, fire safety equipment, and segregation capabilities for bonded goods. This is often the most critical phase where applications face rejection if physical infrastructure doesn't meet requirements.
4
Weeks 5-6
Detailed scrutiny and approval
The verification report is thoroughly examined by senior customs officials who assess compliance with all regulatory requirements. They evaluate the manufacturer's financial standing, past compliance record, and proposed manufacturing operations. Approval at this stage may include specific conditions tailored to the nature of goods being imported and the manufacturing process.
5
Week 7
Warehouse code generation and bond execution
Upon approval, the manufacturer must execute a bond with customs authorities.The warehouse code generated becomes the unique identifier for all future transactions under MOOWR.
Planning Considerations for New Facilities
In practice, many units plan to import capital goods under MOOWR when setting up new manufacturing facilities. Since these goods are installed during initial setup, facility construction is often incomplete at application time, causing delays. Manufacturers should plan import shipments only after construction meets the basic security requirements for storing duty-free goods.
Key Documents for MOOWR Registration
Solvency Certificate
Must be addressed to Commissioner of Customs and include the proposed MOOWR unit address. Determines the duty deferment limit available to the unit.
Insurance Policy
An all-risk insurance policy in the name of President of India through Commissioner of Customs. Policy amount should always equal the solvency amount.
Site Plan & Additional Documents
Detailed layout marking entry/exit points, production and storage areas. Also required: warehouse keeper appointment letter with digital signature registration and fire safety audit report from an independent qualified agency.
MOOWR Import Procedure
Goods Arrival at Port
File Bill of Entry for Warehousing instead of Bill of Entry for Home Consumption
Documentation
Provide space certificate digitally signed by warehouse keeper and execute transit bond on ₹500 stamp paper with transit insurance
Transit to Warehouse
Transport goods directly from port to MOOWR unit with proper documentation
Re-warehousing Certification
Submit re-warehousing certificate to bond officer at import port within 30 days to confirm arrival and close transit bond
The import process under MOOWR differs significantly from regular imports. It begins with filing a Bill of Entry for Warehousing rather than for Home Consumption. A space certificate must confirm warehouse capacity, and a transit bond with insurance ensures safe transportation from port to warehouse.
Once goods arrive at the warehouse, a re-warehousing certificate must be submitted to the bond officer within 30 days. This certificate, digitally signed by the warehouse keeper, confirms receipt and enables the closure of the transit bond.
Duty Payment Under MOOWR
When Duties Are Paid
For raw materials: At time of domestic sale of finished goods
For exports: No duties payable on imported materials used
For capital goods: Only when physically removed from unit
Duty Payment Procedure
File Ex-bond Bill of Entry before clearance
Pay applicable duties on ICEGATE portal
Duties calculated at rates applicable on filing date
Calculation Basis
For raw materials: Pay only on value of imported materials consumed
For capital goods: Pay on original import value
No depreciation benefit allowed for duty calculation
The MOOWR Scheme's duty deferment mechanism significantly enhances cash flow by delaying duty payments until goods are cleared for domestic consumption. For exports, the duties on imported materials are permanently waived, creating a powerful incentive for export-oriented manufacturing.
MOOWR Compliance Requirements
Bond Register Maintenance
Maintain a detailed bond register as per customs format to track movement of duty-free goods, recording all inward entries (imports) and outward entries (goods used or cleared) with corresponding duty debits and credits.
Input-Output Records
Keep comprehensive records for each duty-free input and raw material, including stock levels, receipt documentation, issuance records for manufacturing, and details of any rejected goods or discrepancies.
Monthly Returns Filing
Submit monthly returns to customs authorities with detailed summaries of all transactions related to duty-free and duty-paid goods, capturing both inward movements and outward movements.
Annual Renewals
Provide updated solvency certificate, renewed insurance policy, and current fire safety audit report annually to maintain eligibility under the scheme and ensure continued compliance.
Compliance under the MOOWR Scheme focuses on maintaining transparency in the movement and usage of duty-free goods. Any significant operational changes or updates to the information submitted during application must be promptly reported to customs authorities.
Exiting the MOOWR Scheme
Inventory Clearance
Ensure all duty-free goods in the MOOWR unit are properly cleared, either through domestic consumption (by filing Ex-bond BOE and paying duties) or through exports.
Compliance Verification
Confirm all compliance requirements have been fulfilled, including submission of all monthly returns and settlement of bonds such as the transit bond.
License Surrender
Formally request surrender of the MOOWR license by submitting an application to jurisdictional customs authorities with all supporting documentation.
Final Inspection
Customs authorities may conduct a final inspection or audit to verify that all goods have been cleared and no outstanding duties remain unpaid.
Exiting the MOOWR Scheme requires following a structured process to ensure compliance with customs regulations and to settle all pending duties and obligations. Proper planning for the exit is essential to avoid complications or unexpected duty payments.
The exit process typically takes 1-2 months, depending on the inventory status and compliance history of the unit. Units with clean records and properly cleared inventory generally experience smoother and faster exits from the scheme.
Additional Considerations
Section 65A - IGST Deferment Status
Section 65A was introduced in Budget 2023 to potentially exclude IGST and compensation cess from duties that can be deferred under the MOOWR scheme. The section specifies that a class of goods will be notified to which this provision will apply.
However, this section has not yet been notified, meaning the benefit of IGST deferment currently remains available. When eventually notified, it is expected to apply only to inputs and raw materials, not capital goods.
Income Tax Implications
Capital goods imported under the MOOWR scheme are eligible for depreciation under Income Tax regulations. The Income Tax Act places no restrictions on claiming depreciation for capital goods imported under the scheme.
This creates an advantageous situation where companies can defer customs duties while still claiming depreciation benefits, optimizing both customs duty cash flow and income tax liability.