Import of second-hand goods for repair, reconditioning or re-engineering and re-export

Remanufacturing is already big business globally. The European Remanufacturing Network estimated the value of remanufacturing in 2015 at just under €30bn in the European Union, followed by Japan (€3.8bn), Malaysia (€825m) and South Korea (€670m). Known Indian business examples are in the heavy-duty and off-road sector including Volvo, which remanufactures construction equipment at its facility in Bangalore, and Cummins, which operates two remanufacturing facilities, including the ReCon India facility at Phaltan, Pune. [Source: https://www.greenindustryplatform.org/blog/india-building-back-better-through-remanufacturing]

India allows the import of used goods for repair and refurbishing on condition that the imported items are exported. Para 2.31 of the Foreign Trade Policy, 2023 [https://www.dgft.gov.in/CP/?opt=ft-policy] governs the import of Second-hand goods for repair / refurbishing / re-conditioning or re-engineering. Further, Chapter 6 of the FTP deals with 100% EOU/STP/BTP units (collectively referred as ‘EOU’) and para 6.00 thereunder allows EOUs to be set up for repair, re-making, reconditioning, re-engineering, etc. To align with the provisions in the Foreign Trade Policy, the Customs has notified 2 Notifications, covering such processes to be carried out in an EOU or in a MOOWR unit, respectively. Above activities can be also carried out by an SEZ upon approval by the Board of approval.

Notification 134 of 1994 dated 22 June 1994 – MOOWR unit

Activities such as repairs, reconditioning or re-engineering, testing, calibration or maintenance (including service) are permitted to be carried out in a licensed private bonded warehouse, called as MOOWR unit.
The imported goods are mandatorily required to be exported within three years and should not be cleared outside the MOOWR unit. However, waste generated must be treated as per environmental, safety, health norms. Additionally, the MOOWR related provision under the Customs Act provides for payment of duties on such waste and refuse cleared for home consumption.
The following imports are also covered under said notification:
Capital goods and spares thereof,
Material handling equipment, namely, forklifts, over-head cranes, mobile cranes, crawler cranes, hoists and stackers and spares thereof.
Captive power plants, including captive generating sets and their spares, fuel, lubricants and other consumables for such plants and sets.
Office equipments, spares and consumbles thereof.
Raw Materials.
Components.
Consumables.
Packaging materials.
Tools, Jigs, gauges, fixtures, moulds, dies, instruments and accessories and spares thereof.
However, this notification is clouded by a sunset clause vide Notification 134 of 1994 and the same shall make the notification ineffective from 31st March, 2024.

Notification 52 of 2003 dated 31 Mar 2003 – EOU

Units can be set up for manufacture, job-work for export of goods or services with a wide coverage of goods allowed to be imported.
DTA sale of resultant goods surplus power is permitted subject to positive NFE and relevant permissions.
Goods, which have been repaired, reconditioned, re-engineered shall not be allowed to be sold in the Domestic Tariff Area.

Rule 18(4)(d) of the SEZ Rules – SEZ unit

In terms of proviso under Rule 18(4)(d) of the SEZ Rules the Board of approval may allow an SEZ unit to carry out reconditioning, repair and re-engineering in respect of second-hand goods.
As per Section 2(r) of the SEZ Act, 2005, the definition of manufacture covers the activities such as repair, remaking, re-engineering, among others.
All the reconditioned or repaired or re-engineered products and scrap or remnants or waste shall be exported and none of these goods shall be allowed to be sold in the DTA or destroyed

What Optitax’s offers –
Optitax’s offering on Imports for Refurbishing Remaking and Re-engineering for Re-export

Assistance in feasibility check or best suitability under EOU, MOOWR or SEZ schemes
Bond registration and licensing and follow-up and representation with authorities
Periodical compliance and advisory on closure of scheme

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