The MOOWR (Manufacture and Other Operations in Warehouse Regulations) scheme operates under Section 65 of the Customs Act, 1962. It was introduced through the Manufacture and Other Operations in Warehouse (No. 2) Regulations, 2019 and CBIC Circular No. 34/2019-Customs, both dated 1 October 2019. This scheme allows manufacturers to import capital goods and raw materials into a licensed private bonded warehouse without upfront payment of customs duty.
This is not a duty exemption scheme; it is a duty deferment scheme where duty becomes payable when the imported goods (or the finished products made from them) leave the warehouse for domestic sale. If the finished goods are exported, the duty is remitted. There is no deadline for submission of application under this scheme — it remains open-ended, and it brings ease in cash flows by deferring the upfront duty payment that would otherwise fall due at the time of import.
Practical Illustration: PSR Limited
PSR Limited, a Hyderabad-based auto-components manufacturer, wants to import precision machinery and certain inputs for a new production line from other countries. The details are given below:
| Particulars | Purchase Frequency | Amount (₹) |
|---|---|---|
| Capital Goods imported under the scheme | One-time | 20,00,00,000 |
| Imported raw material / components | Recurring | 60,00,00,000 |
| Domestic inputs | Recurring | 40,00,00,000 |
| Output — Export | — | 70% |
| Output — Domestic | — | 30% |
| BCD — Capital Goods (Assumption) | — | 7.50% |
| BCD — Raw Material (Assumption) | — | 10.00% |
| SWS | — | 10% on BCD |
| IGST on import (Assumption) | — | 18% |
| Opportunity Cost (Assumption) | — | 10% |
| Product Life Cycle (Input receipt to ex-bond / export) | — | 90 days |
Scroll left to see the full table
Assumptions:
- No Customs Duty, SWS, IGST, Anti-dumping or Safeguard duty exemptions apply on the imports.
- The unit is not currently under EPCG, Advance Authorisation, EOU or SEZ.
- No FTA preferential rate is being claimed.
Under the MOOWR scheme, PSR Limited can take advantage of the scheme in the following manner:
Capital Goods
| Particulars | Under MOOWR | Normal Import |
|---|---|---|
| Assessable Value | 20,00,00,000 | 20,00,00,000 |
| Basic Customs Duty (BCD) @ 7.5% | Deferred | 1,50,00,000 |
| Social Welfare Cess @ 10% of BCD | Deferred | 15,00,000 |
| IGST @ 18% | Deferred | 3,89,70,000 |
| Duty to pay at port | NIL | 5,54,70,000 |
The customs duty payable under normal circumstances is ₹5.5 crore, whereas under MOOWR, PSR Limited's customs duty payable is deferred. BCD and SWS are permanent costs under the normal route because they are not creditable or refundable — unlike IGST — though under MOOWR, the duty is deferred for as long as the machinery stays in the private bonded warehouse (generally for the whole operating life of the machinery).
Opportunity Cost of Not Availing MOOWR
| Particulars | Cost | Interest Rate | Opportunity Cost |
|---|---|---|---|
| BCD | 1,50,00,000 | 10% | 15,00,000 |
| SWS | 15,00,000 | 10% | 1,50,000 |
| Total | 1,65,00,000 | — | 16,50,000 |
If this opportunity cost is discounted over the life of the machinery, the economic saving works out to roughly ₹1.01 crore.
Assumptions:
- Opportunity cost is assumed to be 10%.
- Life of the machinery is 10 years.
Raw Material (Per Annum)
| Particulars | Under MOOWR | Normal Import |
|---|---|---|
| Assessable Value | 60,00,00,000 | 60,00,00,000 |
| Basic Customs Duty (BCD) @ 10% | Deferred | 6,00,00,000 |
| Social Welfare Cess @ 10% of BCD | Deferred | 60,00,000 |
| IGST @ 18% | Deferred | 11,98,80,000 |
| Duty to pay at port | NIL | 18,58,80,000 |
| Sales attributable to the 70% of exports | 4,62,00,000 | Remitted — Never Paid |
| Sales attributable to the 30% of domestic sales | 1,98,00,000 | Payable on ex-bond clearance |
With this illustration, you can see the financial benefits available under the MOOWR scheme — customs duty on both capital goods and raw materials stays deferred at the time of import, exported output is never subject to that duty, and only the domestic portion attracts duty on ex-bond clearance.
How Kireeti Consultants Helps
Kireeti Consultants helps manufacturers evaluate and implement the MOOWR Scheme, from understanding duty deferment and bonded warehouse requirements to documentation, customs coordination and ongoing compliance. Our team can also help businesses compare MOOWR with schemes such as EPCG and Advance Authorisation to identify the most suitable option for their import and export operations.
