Unleashing India's Manufacturing Potential: A Deep Dive into MOOWR with ikargos

India is rapidly positioning itself as a global manufacturing hub and at the forefront of this ambition is the Manufacture and Other Operations in Warehouse (MOOWR) Scheme. This revolutionary scheme offers unparalleled benefits to businesses involved in import, manufacturing  and export. But navigating it’s intricacies can be complex. That is where ikargos steps in – your trusted partner for seamless MOOWR compliance and maximizing your business advantages.

1. Overview: What is the MOOWR Scheme?

The MOOWR Scheme, which is  introduced under Sections 65 of the Customs Act, 1962 by which we can  import raw materials, components and even capital goods without  paying Customs Duty  and Integrated Goods and Services Tax (IGST) immediately. These imported goods are stored in a Customs-bonded warehouse where manufacturing or other approved operations (like re-labelling, re-packing, grading, sorting, testing and repair) can be carried out.

The core principle is duty deferment: duties are only paid when the finished goods are cleared for domestic consumption. If the manufactured goods are exported, the deferred duties are entirely waived, providing a significant boost to export competitiveness. This scheme is a cornerstone of the "Make in India" initiative, designed to enhance liquidity, reduce working capital blockages and promote a favourable business environment.

2. Benefits: Why MOOWR is a Game-Changer for Your Business:

The MOOWR Scheme offers a plethora of advantages that can significantly impact your bottom line and operational efficiency:-

• Duty Deferment: The most significant benefit is the deferral of Customs Duty and IGST on imported inputs and capital goods.
• Duty Exemption on Exports: For goods manufactured in the bonded warehouse and subsequently exported, the deferred customs duties are completely exempted. This makes Indian products more competitive in the global market.
• No Interest Liability on Deferred Duty: Unlike other schemes, MOOWR typically comes with no interest implications on the deferred duties, further enhancing cost savings.
• Unlimited Warehousing Period: There is no time limit for storing imported goods (inputs or capital goods) in the bonded warehouse until they are consumed or cleared.
• Flexible Operations: The scheme allows for both manufacturing and other approved operations, offering versatility to various industries.
• No Export Obligation: Unlike some other export promotion schemes, MOOWR does not impose any minimum export obligation, providing flexibility to cater to both domestic and international markets.
• Streamlined Approvals: The process is designed for single-point approval, with the Commissioner of Customs acting as the primary authority.
• Digital Record-Keeping: MOOWR promotes digital record-keeping in a standardized format, simplifying compliance and auditing.
• Warehouse-to-Warehouse Transfer: Goods can be transferred between MOOWR-licensed facilities without payment of duty, facilitating complex supply chains.
• Improved Cash Flow: By deferring duty payments, businesses experience a significant improvement in their cash flow management.

3. Documents Required:

To ensure a smooth MOOWR application process, it is crucial to have the following documents ready:-

• Duly filled MOOWR application form (Annexure A).
• Certificate of Incorporation and other company registration documents.
• Memorandum of Association (MoA) and Articles of Association (AoA).
• Partnership Deed (for partnership firms).
• ID proofs of proprietors/partners/directors.
• Copy of Aadhaar Card of the Authorized Signatory.
• Documents supporting property-holding rights of the premises (e.g. rent agreement, ownership documents).
• Ground plan of the site/facility with detailed layout.
• Fire Safety Audit Certificate.
• Bank Solvency Certificate.
• Declaration under the Customs Act.
• Triple Duty Bond (as per Annexure C).
• Insurance in favour of Customs for the duty-saved amount.
• Import Export Code (IEC) copy.
• Details of the nature of manufacturing/operations.
• Particulars of anticipated imported inputs and finished products.
• Anticipated trade volume.
• SION (Standard Input Output Norms) for each type of finished product (if applicable).

We will help you meticulously prepare and organize all necessary documentation, ensuring completeness and compliance.

4. Process to Apply:

The application process for the MOOWR Scheme is designed to be straightforward and ikargos can guide you every step of the way:-

1. Online Application Submission:
   • File the online application in Annexure A through the Invest India portal or relevant Customs platforms.
   • Provide comprehensive details regarding the nature of manufacturing, particulars of imported inputs and anticipated trade volume.
2. Bond Execution and Submission:
   • Execute a Triple Duty Bond as per Annexure C. and submitted to your Jurisdictional Commissioner of Customs.
   • Note: A Customs Officer typically conducts a visit to the proposed facility to evaluate compliances before the bond is executed and the license is issued.
3. Grant of Sanction:
   • Upon satisfactory review of the application, documents and facility inspection, the Commissioner of Customs grants the permission for manufacturing or other operations in the bonded facility. This permission outlines the approved manufacturing processes and conditions.
4. Commence Operations:
   • Once the license is granted, you can commence your manufacturing or other operations in the bonded facility, enjoying the benefits of duty deferment.
5. Monthly Reporting:
   • Businesses are required to submit monthly consolidated reports on goods received, processed and removed.
   • Maintain detailed digital and physical records (Bills of Entry, Shipping Bills, Transport Documents, Transfer Forms etc.) and preserve them for a minimum of 05 years.

5. Fees and Timelines:

While specific government fees for MOOWR application are nominal, the primary investment lies in ensuring meticulous compliance and proper infrastructure:-

• Government Fees: These are generally minimal and related to application processing.
• Professional Fees: Engaging expert like ikargos is a wise investment. Our fees cover:
  • Consultation and eligibility assessment.
  • Documentation preparation and review.
  • Application filing and follow-up.
  • Assistance with facility setup and compliance checks.
  • Guidance on bond execution and statutory reporting.

Timelines: The processing period for an MOOWR license can vary based on the completeness of the application and the workload of customs officials. Typically, it takes several weeks to a few months from submission to approval. Factors like facility readiness, documentation accuracy and prompt responses to queries can significantly impact the timeline. ikargos strives to expedite the process through efficient communication and proactive problem-solving.

6. FAQs:

Q1: Can both new and existing manufacturing units apply for MOOWR?

 A1: Yes, both new manufacturing facilities can be set up as bonded warehouses or existing facilities can be converted into bonded manufacturing units, regardless of their location in India.

Q2: Is there a minimum export obligation under MOOWR?

 A2: No, unlike some other schemes, MOOWR does not have any minimum export obligation. You can clear goods for domestic consumption or export without restrictions.

Q3: Can I transfer goods from my MOOWR unit to another bonded facility?

A3: Yes, the scheme allows for duty-free transfer of goods from one MOOWR-licensed unit to another.

Q4: What happens, if I clear finished goods for domestic consumption?

 A4: When finished goods manufactured using imported inputs are cleared for domestic consumption, the applicable Customs Duty and IGST on the imported inputs (proportionate to the goods cleared domestically) become payable at the time of removal from the bonded facility.

Q5: Are capital goods also covered under MOOWR?

 A5: Yes, capital goods imported for use within the bonded manufacturing facility also enjoy duty deferment. If these capital goods are subsequently exported, the deferred duties are waived. If cleared for domestic consumption, duties become payable.

Q6: How long is a MOOWR license valid?

A6: A MOOWR license is valid indefinitely unless it is cancelled or surrendered. There are no hassles of periodic renewal.

Q7:  Are other export incentives like RoDTEP or Drawback applicable for MOOWR units?

 A7: This is a point of ongoing discussion and policy evolution. Presently, MOOWR units are not allowed to avail benefits like RoDTEP and Drawback. It is advisable to stay updated on the latest government notifications or consult with experts like ikargos for the most current information.

Q8: What, if there is waste or scrap generated during manufacturing?

 A8: Waste or scrap generated during manufacturing operations in the bonded warehouse can be cleared for home consumption upon payment of applicable duties, if any, before removal from the factory premises.