MOOWR Scheme is Injured!

[Navjot Singh]

CBIC launched the MOOWR scheme to defer the Customs duties on imported goods that are used for the intended purposes of manufacture or carrying out other activities. The scheme is aimed at transforming India into a competitive manufacturing location and an attractive investment destination. Based upon Section 65 of the Customs Act, 1962, the scheme has clear and transparent procedures, simplified compliance requirements, and digital account keeping. 

Flashback Sequence!

In January 2023, Minister Piyush Goyal urged Industry to use the benefits conferred through a widely advertised Duty Deferment Scheme i.e. MOOWR quoting it as a “pretty practical, neat, simple solution to the problem that sometimes small exporters particularly face”.

Present Story

At present, all customs duties on goods imported in a customs-bonded warehouse under Manufacture and Other Operations in Warehouse Regulations (MOOWR) are deferred.

Our Hon'ble Finance Minister has presented Finance Bill, 2023 in Loksabha, wherein a new Section in Custom Laws has been proposed i.e. Section 65A.

According to this, the deferment is now being restricted to duties other than integrated tax (IGST) and compensation cess (Cess).

In other words, IGST and Cess are payable on the import of goods under MOOWR!

The amendment will not apply in respect of goods deposited or permitted to be removed for deposit in the warehouse before the effective date of the provision.

Possible Chances for such amendment!

1. If we see it practically, the scheme was widely multiple taxpayers for availing the benefit of Import of Duty-Free Raw Materials & Capital Goods.
2. Now, certainly, that has impacted the "भारत राजकोष", but if you see the Film's Credits, it was the whole idea. To Benefit the Import & Exporter Community and threaten the "Make in India".
3. Now, the new Foreign Trade Policy is also on the way, and it is anticipated that the present schemes of Advance Rulings and EPCG will be changed.

It will be interesting to see the memorandum of this bill to understand the rationale of this amendment.

Now Scheme is not beneficial?

1. It will be too early to say that, let new policy also come in, then we can do the comparative analysis. That includes in-depth analysis, especially when we are on the verge of waiting for a new foreign trade policy.
2. Also, the MOOWR is excluded from the RoDTEP. Now if the government wishes to benefit the Taxpayers, then they should extend the benefit of RoDTEP to MOOWRs.
3. Also, the new amended Section should come with certain conditions, so that it should be a "Beneficial Scheme", not like a Scheme which is just there but of no use.

CA. Navjot Singh

Partner at S U N G & Company

Principle Advisor at TaxTru Business Advisors

The author can be reached at navjot.singh@taxtru.in or at +91 99533 57999