If enterprises are planning to import capital goods (plant and machinery) and/or input for manufacturing, they need to pay customs duty at the time of filing the bill of entry — which increases upfront costs. In such cases, the MooWR scheme can help save these import-related costs.
Businesses evaluating customs duty-saving options should compare the MooWR Scheme with other government incentive programmes such as the EPCG Scheme. While EPCG focuses on duty exemption linked to export obligations, MooWR allows duty deferment without a mandatory export commitment, making it suitable for manufacturers serving both domestic and export markets.
MooWR (Manufacture and Other Operations in Warehouse Regulations) offers a different approach: duty payable on imported input or capital goods can be deferred until the goods (machinery/input) are moved out of the warehouse. If the finished goods made using those inputs are exported, the proportionate duty amount need not be paid at all.
This article covers what the MooWR scheme is, how duty deferment works, the benefits worth knowing before you apply, and the compliance requirements for holding a MooWR licence.
What is the MooWR scheme?
MooWR is administered by the Central Board of Indirect Taxes & Customs (CBIC) under Section 65 of the Customs Act, 1962, read with the Manufacture and Other Operations in Warehouse Regulations. It allows a manufacturer to operate a private bonded warehouse under Section 58 of the Customs Act, 1962, where imported capital goods and/or inputs are stored and used, without paying customs duty at the time of filing the bill of entry.
Duty isn't waived at import — it's deferred until the input or capital goods are moved from the bonded private warehouse to the Domestic Tariff Area (DTA). Duty becomes payable at the time of filing the ex-bond bill of entry. If the finished goods (in which the inputs are used) or the imported capital goods are exported, the deferred duty need not be paid at all.
How the duty deferment actually works
The Section 58 private bonded warehouse comes with an additional layer — the manufacturing layer — where you're not only allowed to store imported goods but also permitted to manufacture or carry out other operations on them inside the warehouse.
A few distinguishing points worth noting:
- No interest liability during the deferment period. In an ordinary bonded warehouse, once the warehousing period lapses, the licence holder attracts interest on duty. Under MooWR, no such interest is charged as long as capital goods or inputs are held properly and accounted for in the warehouse.
- Deferred duty is proportionate, not on the full imported quantity. It becomes payable only in proportion to the percentage of domestic turnover, not exports. For example, if a MooWR licence holder exports 70% of manufactured finished goods and sells 30% in the domestic market, duty applies only on the imported goods consumed in that 30% domestic portion.
- No export obligation. Unlike schemes such as EPCG or Advance Authorisation, MooWR carries no condition of export obligation (EO). As long as the warehouse and licence conditions are complied with, the goods can remain in the warehouse.
Key benefits of the MooWR scheme
Working capital stays free: as duty is deferred, that amount can be used as working capital for the business instead of being locked up at the point of import.
No export obligation: licence holders under schemes such as EPCG and Advance Authorisation are required to monitor export performance to discharge their export obligation. In MooWR, there's no such obligation — you can export, sell domestically, or do both. Unlike the Advance Authorisation Scheme, which requires fulfilment of export obligations for duty exemptions, MooWR gives manufacturers greater operational flexibility by allowing both domestic sales and exports without a fixed export commitment.
Duty is forgone entirely on export: if finished goods or capital goods are exported, the duty saved value (DSV) on the imported input or capital goods is waived off completely.
Open to most manufacturing sectors: MooWR has no criteria for minimum investment or export performance, which makes it accessible to every category of manufacturer.
Can sit alongside other approvals: depending on your operational structure, MooWR can work alongside other customs facilitations and DGFT licenses or authorisations you already hold.
Who can apply for a MooWR licence
Any manufacturer aiming to manufacture or perform specified operations using imported capital goods and/or input can apply for a private bonded warehouse licence under Section 58, along with permission to manufacture under Section 65. This scheme applies to both setting up a new unit and converting an existing manufacturing facility into a private bonded warehouse.
The application is filed with the Jurisdictional Customs Authority (the Principal Commissioner or Commissioner of Customs having jurisdiction over the proposed warehouse premises), along with complete details of the manufacturing process, the premises, and the imported input or capital goods to be warehoused.
Compliance once you hold a MooWR licence
A MooWR licence is not a one-time approval — it comes with ongoing compliance:
- Digital records of receipt, consumption, and removal of warehoused goods, maintained in the format prescribed by CBIC
- Periodic returns filed with the jurisdictional customs office reporting stock movement and duty position
- Physical safeguards at the warehouse premises, including security and fire-safety measures as prescribed in the warehousing licence conditions
- Bond and security furnished at the time of licensing, covering the duty deferred on goods held in the warehouse
- Annual renewal of the Solvency Certificate, Insurance, and Triple Duty Bond
What this means for you
MooWR is a strong option for manufacturers, offering the choice of export, domestic sale, or a mix of both — with no commitment to an export obligation. It's less about a one-time saving and more about ease of doing business, with flexibility on target market, duration, timeline, and how much duty is paid or waived off.
Why Kireeti Group
Manufacturers that also export goods may require additional DGFT approvals such as an RCMC Registration Certificate and related authorisations. Kireeti Consultants provides comprehensive support for both customs and DGFT compliance under one roof.
Whether it's a new licence, monthly or annual compliance, or an existing licence you need help taking further, Kireeti Group can support you through all of it.
