FAQ - MOOWR Scheme and Related Terms
1. What is the MOOWR scheme?
Answer: The MOOWR (Manufacture and Other Operations in Warehouse Regulations) scheme allows for the upfront deferment of customs duties on imported goods intended for use in manufacturing or other operations until the goods are removed from the MOOWR unit. If the output from the MOOWR unit is cleared in the Domestic Tariff Area (DTA), the customs duty liability is limited to the duty applicable on the imported goods' contents. Unlike SEZ units, MOOWR units do not have additional export performance requirements or the need to earn foreign exchange.
2. Is there an export obligation under the MOOWR scheme?
Answer: No, the MOOWR scheme does not impose any requirement for earning foreign exchange or obligatory export performances. This is in contrast to other schemes like EOU (Export Oriented Units), EPCG (Export Promotion Capital Goods), Drawback, or SEZ (Special Economic Zones) schemes.
3. Is the MOOWR scheme eligible for export incentives such as RoDTEP or all-industry rate of drawback?
Answer: No, the MOOWR scheme is not eligible for export incentives like:
- All-industry rate of drawback: As per Customs Notification 77/2023, goods manufactured partly or wholly in a MOOWR unit do not qualify for this drawback.
- RoDTEP (Remission of Duties and Taxes on Export Products): As stated in the Foreign Trade Policy 2023, products manufactured partly or wholly in a MOOWR warehouse are ineligible for RoDTEP.
4. How is net profit or loss determined in this calculator?
Answer: Net profit or loss is determined based on an analysis of factors such as the Net Present Value (NPV) of customs duties payable on capital goods after their intended use, and savings in working capital costs due to deferred customs duties.
5. what value should be entered as assesable value?
Answer: The assessable value can be considered as the CIF (Cost, Insurance, and Freight) value of the imported goods.
6. How do I determine the intended period of use?
Answer: The intended period of use should be filled in as the number of years the capital goods are expected to be used.
7. What are the scenarios for capital goods (CG) after their use?
Answer: After their intended use, capital goods can be:
- Sold in DTA
- Re-exported
- Retained
- Destroyed
Each scenario has specific implications with respective to duties & compliance.
8. Is duty payable on re-export of such imported capital goods?
Answer: Under Section 69 of the Customs Act, 1962, warehoused goods, including capital goods, can be cleared for export without payment of import duty upon filing of an ex-bond Shipping Bill.
9. Can capital goods be retained after their useful life?
Answer: Yes, there is no time limit specified for retaining capital goods within the MOOWR unit even after their useful life has ended. Duty remains deferred until the goods are cleared for home consumption or exported.
10. What happens if capital goods are destroyed?
Answer: If capital goods become obsolete, a MOOWR unit can obtain permission to destroy them within the unit. The applicable import duty may be remitted by the authorities as per Section 23 (1) of the Customs Act, 1962, provided reasonable grounds for destruction are shown.
11. What are the implications if capital goods are sold in DTA?
Answer: According to Section 68 read with Section 15 (1) (b) of the Customs Act, the imported capital goods can be sold in DTA on payment of applicable import duties. The rate of duty would be rate applicable on the date on which the Bill of Entry for home consumption is filed.
12. What if capital goods are sold in DTA as scrap?
Answer: For waste or scrap arising from permissible operations, Section 65(2) of the Customs Act applies. However, this does not extend to obsolete capital goods, and Section 65(2)(b) provisions are not applicable to them.
