What is Duty Free Imports in Manufacturing / Warehousing / Freight Forwarding

DUTY FREE IMPORTS

A NEW SCHEME RELATED TO IMPORTS, EXPORTS AND WAREHOUSING

HISTORY

CBIC launched, amended and streamlined a program to attract investments into India and to promote the Make in India movement.
The Program was introduced in 2019 As MOOWR(Manufacture and Other Operations in Warehouse).
The Program enables handling (conduct) of manufacture and other operations in a customs bonded warehouse.
This Program allows manufacturing and other operations in a bonded manufacturing facility to promote India as the manufacturing hub globally and the commitment towards ease of doing business.
The most promising feature of this scheme is that unlike various existing schemes, the MOOWR scheme is delinked to the quantum / obligation of exports and the benefit is also extended to the importers who import the goods for domestic clearance / selling

HOW DOES THE SCHEME WORK ?

A Detailed View

A Manufacturer can import raw material and capital goods to the factory and carry out the manufacturing process and other operations in Bonded / Duty Free warehouse with these raw materials and capital goods.
Duty on these Capital Goods is deferred till their clearance from Bonded Warehouse. If Capital goods are further exported from India, then the duty is exempt on these goods.
To incentivize business entities through defined benefits that translate into savings in time and cost.
If Capital goods are cleared in the domestic market after their utilization, then there is no interest on duties. The company needs to pay Basic Customs duty and IGST. This provides the company with a massive cash flow benefit in case of setting up / expansion of a unit.
Similarly, Duty on Import of Raw Material used in Manufacturing or other operations is deferred until their clearance as Finished Goods.
Deferred duties are waived off in case these finished goods are exported.
Goods can be transported from one warehouse to another without any payment of duties.
There is no export obligation / limitation or conditions on clearance of goods. An Entity may manufacture in Bonded Warehouse and sell it in the Domestic Market .This scheme is different from the other export promotional schemes, from the perspective of fulfilling pre-determined export obligations.

Ease of Bonded Warehouse Manufacturing

There is Common and single application plus approval form for a license for private bonded facility. The same form can be used to get permission for manufacturing and other operations. Commissioner of Customs acts as the single point of contact for all Approvals.
Unlimited storage time - A Bonded warehouse licensee is allowed to keep his Capital and Non - Capital goods (raw materials, components, etc.) in the Warehouse right upto the clearance / consumption without any interest liability.
There is NO geographical limitation on where such units can be set up. New manufacturing facility can be set up or an existing facility can be converted into a bonded manufacturing facility irrespective of its location in India.
Stress-free Relations - Bonded warehouses are stress-free storage for importers that enable them to transport goods smoothly. They are under 24-hour surveillance. Due to the deferred duties and taxes there is no rush on paperwork or payments.

ELIGIBILITY FOR NEW UNITS

Any applicant desirous of manufacturing or carrying out other operations.
A person who has been granted a licence for a warehouse under Section 58 of the Customs Act, in accordance with Private Warehouse Licensing Regulations, 2016.
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 applying has to be a citizen of India or an entity incorporated or registered in India.

ELIGIBILITY FOR CURRENT UNITS

Any factory can avail a license under Section 58 of the Customs Act along with permission under Section 65 if they intend to import goods without upfront payment of Customs duty at the point of import and deposit them in the warehouse, either as capital goods or as inputs for further processing.
Any unit in the Domestic Tariff Area (DTA) is eligible for making an application for manufacture and other operations in a bonded warehouse that is an old factory in DTA is eligible for applying.

HOW WE CAN HELP YOU

Universal Channels can provide consultation and support in the following ways to acquire your Licence :

Consultation in reviewing your Security Plan, Safety Plan, Process Map and Site Plan
Reviewing your Genral and Legal Compliance
Generating a report, filling out application and collection of all documents required for filing the application for AEO status
Assistance in filing the application
Solving queries from the relevant authorities (if any)

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