Manufacture And Other Operations In Warehouse Regulations (MOOWR) Scheme- Application Process

A.  INTRODUCTION

The MOOWR Scheme is based upon Section 65 of the Customs Act, 1962, which enables conduct of manufacture and other operations in a Customs bonded warehouse. This Scheme allows a ‘Private Bonded Facility’ to import goods (both inputs and capital goods) under customs duty deferment with no interest liability.

The following Act and Regulations governs the MOOWR Scheme:

1)     Customs Act, 1962 (“the Act”);

2)  The Manufacture and Other Operations in Warehouse (no. 2) Regulations, 2019 (“MOOWR Regulations”);

3)     Private Warehouse Licensing Regulations, 2016 (“Private Warehouse Regulations”); and

4)     Warehoused Goods (Removal) Regulations, 2016 (“Removal Goods Regulations”)

The MOOWR Scheme is beneficial for importers and exporters for the following reasons:

a)    Deferred Duty on Capital Goods

Duty of Capital goods used in Manufacturing or other operations is deferred until their clearance from the private bonded facility. Capital goods can be exported and duties can be avoided

b)    Deferred Duty on Import of Raw Material

Duty on import of raw material used in manufacturing or other operations is deferred until their clearance of finished goods.

Deferred duties will be waived in case finished goods are exported.

c)     Seamless Warehouse to Warehouse Transfer

Transfer of goods from a bonded facility to another bonded facility without payment of duty.

d)    No Export Obligation

No limit on the share of clearance of goods for the domestic market. An entity may manufacture in a bonded warehouse and sell 100% in the domestic market.

e)    License Validity

License once obtained is valid for permanence unless cancelled. No hassles of periodic renewals.

f)      No Interest upon removal of capital goods

After unlimited use there is no interest upon removal of capital goods itself for home consumption. Just pay customs duty and IGST on the capital goods – huge cash flow benefit in case of new setting up / expansion.

g)    Working capital savings

In case of manufacturing, no interest implication and the imported inputs / capital goods can remain in the warehouse without any time limit.

B.    APPLICATION PROCESS AND COMPLIANCES POST APPLICATION

S. No.	ACT/REGULATION	PARTICULARS	PROCEDURE
1.	Section 65 and Regulation 4(1) of the MOOWR Regulations	ELIGIBILITY CRITERIA	The following persons are eligible to apply for MOOWR Scheme in a bonded warehouse, - (i) A person who has been granted a licence for a private warehouse under Section 58 of the Act, in accordance with Private Warehouse Licensing Regulations, 2016. (ii) A person can also make a combined application for licence for a warehouse under Section 58, along with permission for undertaking manufacturing or other operations in the warehouse under Section 65 of the Act. The persons mentioned have to be a citizen of India or an entity incorporated or registered in India.
2.	Regulation 4(2) of the MOOWR Regulations AND Regulation 4 of Private Warehouse Regulations	DOCUMENTATION	The MOOWR application shall be made to the Principal Commissioner of Customs or the Commissioner of Customs, along with the mandatory documents and information. (LIST OF DOCUMENTS PROVIDED AFTER THE TABLE). To grant a MOOWR license, the Principal/Commissioner of Customs requires the applicant to: Insurance: Provide an all-risk policy covering natural calamities, riots, fire, theft, and commercial crime for the duty value of goods stored. Undertaking for Payments: Commit to paying duties, interest, fines, and penalties related to warehoused goods. Indemnity Undertaking: Indemnify Customs against losses from accidents, damage, or other causes during goods' handling or storage.
3.	Regulation 5 of the MOOWR Regulations	SECURITY FACILITIES AND FACTORY INSPECTION	The owner of the warehouse shall ensure that security facilities shall be in place at the warehouse before application - burglar alarm system, CCTV monitoring system installed to cover the surrounding area of the site and storage area, security personnel, fire security. Customs Officer visits the facility to evaluate the compliances in order to issue the license.
4.	Regulation 7 of the MOOWR Regulations	APPPOINTMENT OF WAREHOUSE KEEPER	Before applying for the license, the owner of the warehouse shall appoint a warehouse keeper who has sufficient experience in warehousing operations and customs procedures to discharge functions on his behalf. The warehouse keeper shall obtain a digital signature from authorities licensed by the Controller of Certifying Authorities for filing electronic documents required under the Act or the rules and regulations made thereunder.
5.	Regulation 5 of the MOOWR Regulations	GRANT OF LICENSE	Upon due verification and site inspection of the application made, the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, shall grant permission to operate under the provisions of these regulations. The License shall remain valid unless it is cancelled or surrendered
6.	Regulation 8 of the MOOWR Regulations	FACILITIES IN THE WAREHOUSE	After the grant of license, the owner of warehouse shall provide at the warehouse: (i) signage that prominently indicates that the site or building is a customs bonded warehouse; (ii) a computerized system for accounting of receipt, storage, operations and removal of goods; and (iii) such facilities, equipment and personnel as are sufficient to control access to the warehouse, provide secure storage of the goods in it and ensure compliance to these regulations by officers of customs.
7.	Regulation 9 of the MOOWR Regulations	CONDITIONS FOR TRANSPORT OF GOODS	Where after the grant of license the goods are transported from the customs station of import to a warehouse or from one warehouse to another warehouse or from the warehouse to a customs station for export, the load compartment of the means of transport shall be securely sealed with a one-time-lock.
8.	Regulation 11 of the MOOWR Regulations	RECEIPT OF GOODS FROM SECTION 65 WAREHOUSE	In case of goods received from or removed from a unit operating under Section 65, the Form appended to these regulations shall be filed by Licensee
9.	Regulation 3 of the Removal Goods Regulations	RECEIPT OF GOODS FROM NON-SECTION 65 WAREHOUSE	in case of goods received from or removed from a warehouse not operating under Section 65, the Form as prescribed under the Removal Goods Regulations.
10.	Regulation 14 of the MOOWR Regulations	REMOVAL OF RESULTANT GOODS FOR HOME CONSUMPTION	In case a licensee wished to remove the resultant goods from warehouse for home consumption he should file bill of entry for home consumption and must ensure the import duty, interest, fine and penalties payable, if any, in respect of such goods have been paid. The licensee shall retain a copy of the bill of entry filed and take into record the goods removed.
11.	Regulation 15 of the MOOWR Regulations	REMOVAL OF RESULTANT GOODS FOR EXPORT	A licensee shall remove the resultant goods from the warehouse for export, upon filing a shipping bill or a bill of export, as affixing a one-time-lock to the load compartment of the means of transport in which such goods are removed from the warehouse. The licensee shall take into record the goods removed.
12.	Regulation 16 of the MOOWR Regulations	INTIMATIONS AND ACKNOWLEDGEMENTS FOR MOVEMENT OF GOOD FROM WAREHOUSE	The licensee must provide the following acknowledgments within one month (or an extended period allowed by the officer): 1)  Deposit in Warehouse: Proof to the proper officer that goods have been deposited in the warehouse. 2)  Transfer to Another Warehouse: Proof to the bond officer that goods have arrived at the new warehouse. 3)  Export to Customs Station: Proof to the bond officer that goods have reached the customs station of export. Failure to comply will result in payment of full duty along with interest, fines, and penalties as per the Act.
13.	Regulation 17 of the MOOWR Regulations	MAINTENANCE OF RECORDS FOR WAREHOUSED GOODS	Record-Keeping: Licensee shall: (i) Maintain detailed records of the receipt, handling, storing, and removal of any goods into or from the warehouse, as the case may be, and produce the same to the bond officer in Form prescribed under the MOOWR Regulations; (ii) keep a record of each activity, operation or action taken in relation to the warehoused goods; (iii) keep a record of drawal of samples from the warehoused goods. Copies: Licensee shall keep copies of the: (i) bills of entry, (ii) transport documents, (iii) Forms for transfer of goods from a warehouse, (iv) shipping bills or bills of export or any other documents evidencing the receipt or removal of goods Into or from the warehouse and; (v) copies of the bonds executed. Preservation: Licensee shall keep records for at least five years from goods' removal and ensure availability for inspection. Digital Backup: Licensee shall store updated digital copies offsite to prevent data loss. Monthly Returns: Licensee shall submit a monthly report on warehouse activities to the bond officer within 10 days of month-end.
14.	Regulation 18 of the MOOWR Regulations	RISK AUDITS	There is no physical control of a unit licensed under Section 65 and Section 58 of the Customs Act, 1962, on a day-to-day basis. The unit will be subject to risk-based audits. There is no prescribed frequency for such audit.
15.	Regulation 8 of the Private Warehouse Regulations	SURRENDER OF LICENSE	A licensee can request license surrender in writing to the Principal/Commissioner of Customs. The license may be cancelled if: All dues to the government are paid. No goods remain in the private warehouse. No pending proceedings exist under the Act or related regulations.

C.  TIMELINES

Usually, it takes around 2-3 months for the issuance of a license under the MOOWR Scheme.