In re Wipro Pari Robotics Private Limited (CAAR Mumbai)
The authority examined the application filed by the applicant seeking advance ruling on classification and eligibility for duty exemption in relation to the import of second-hand or used goods for refurbishment and related activities. The materials placed on record, written submissions, and comments from the jurisdictional Commissionerate were considered. The applicant sought rulings on six issues: whether second-hand or used goods may be imported for refurbishment or similar processes; eligibility for exemption under Notification No. 134/94-Cus. dated 22 June 1994 under the MOOWR Scheme; compliance requirements for handling waste generated during the processes; duty implications on goods imported only for repair or refurbishment and not cleared for home consumption; duty liability on waste generated; and determination of wastage or scrap value.
The authority noted that the matter relates to applicability of a Customs exemption notification and therefore falls within Section 28H(2) of the Customs Act. The applicant holds an IEC and is eligible to seek advance ruling. The applicant is engaged in automation solutions for automotive and EV sectors and proposes to import various second-hand machinery and equipment for refurbishment, re-engineering, testing, or integration at its DTA unit, with the refurbished goods intended solely for re-export.
Before examining each question, the authority reviewed the applicable legal framework under the Customs Act, the Foreign Trade Policy (FTP) 2023, the Handbook of Procedures, relevant notifications, and circulars. As per the import policy under Para 2.31 of FTP 2023, import of second-hand capital goods is free except for specific restricted items. Second-hand goods other than capital goods are restricted and require authorisation. Second-hand goods may be imported for repair, refurbishing, reconditioning, or re-engineering subject to treatment of waste as per domestic laws and re-export of the repaired item in accordance with the applicable Customs notification. FTP 2023 also defines “capital goods,” “manufacture,” and “restricted,” and the exemption notification covers goods imported for repairs, reconditioning, or re-engineering provided the operations are conducted under Section 65 of the Customs Act and the goods are re-exported.
The MOOWR Regulations, 2019, issued under Section 157, 143AA read with Section 65, allow operation of manufacturing or other activities in a private bonded warehouse with duty deferment until home consumption or remission on export. The authority observed that although both Notification No. 134/94-Cus. and MOOWR operate under Section 65, the schemes are not identical. Notification 134/94 grants duty exemption, applies only to goods imported for repair-related activities, and mandates re-export. MOOWR is a duty deferment regime allowing manufacturing, without mandatory export. Therefore, both benefits cannot be availed simultaneously.
On the first question, the authority noted two aspects: import of second-hand goods and the type of permitted operations. Para 2.31 of FTP 2023 permits import of second-hand capital goods except specified restricted items. Imports for repair or similar processes are allowed subject to waste-management compliance and re-export. The notification uses the terms repair, reconditioning, re-engineering, testing, calibration, and maintenance, none of which is defined in FTP or the Customs Act. Their general meanings indicate restoration or improvement while retaining the identifiable character of the goods. Operations that change the essential character into a new article fall outside the scope of the permitted activities, and manufacturing is not allowed under the notification. Therefore, import of second-hand goods for permitted activities is allowed provided the goods remain identifiable and are not transformed into new articles.
On the second issue, the authority held that exemption under Notification 134/94-Cus. cannot be claimed under the MOOWR Scheme. The two schemes operate independently, and simultaneous benefit cannot be availed. The exemption under Notification 134/94 is available only if the activities are undertaken under Section 65 and the goods are re-exported within three years. If the applicant wishes to operate under MOOWR, it must obtain the requisite licences under Sections 58 and 65.
On compliance obligations for waste management, the authority indicated that the applicant must follow applicable waste-management rules including Hazardous Waste Management Rules, E-Waste Rules, Battery Waste Management Rules, Plastic Waste Management Rules, Solid Waste Management Rules, and other requirements of state pollution control boards. Disposal must be through authorised recyclers with proper documentation and segregation procedures.
On the exemption for goods imported into a DTA unit for repair and not cleared for domestic consumption, the authority reiterated that Notification 134/94-Cus. grants exemption for the listed goods imported for repair or similar operations, subject to compliance with Section 65, due approvals, and re-export after repair or reconditioning.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI
