Advance Ruling Rejected as Warehousing Scheme Issue Falls Outside CAAR Jurisdiction

In re Royal Glitz jewel Tech Private Limited (CAAR Mumbai)

The Customs Authority for Advance Ruling (CAAR), Mumbai, received an application from the applicant under Section 28H(1) of the Customs Act, 1962 seeking an advance ruling on the applicability of Notification No. 69/2019-Customs and Notification No. 75/2020-Customs. The application was filed on 27.10.2025.

The applicant is a jewellery manufacturer operating in India and proposed to import advanced machinery from Italy and Germany for manufacturing gold jewellery. These machines included refinery units, furnaces, and other specialised equipment. The applicant stated that it manufactures jewellery using domestically procured gold sourced from authorised dealers and agencies, with all duties and taxes paid. The manufacturing process, from melting and alloying to finishing, is carried out within its facility, and the finished goods are sold domestically without any exports.

The applicant clarified that it does not import gold or avail any duty exemption schemes for inputs. The imports under consideration relate only to capital machinery required for manufacturing operations. Based on this, the applicant sought a ruling on whether it should operate under the Manufacture and Other Operations in Warehouse Regulations, 2019 (MOOWR) with a private warehouse licence under Section 58, or under the Manufacture and Other Operations in Special Warehouse Regulations, 2020 (MOOSWR) requiring a special warehouse licence under Section 58A.

During the personal hearing, the applicant reiterated that it intended to import only capital goods and not gold or other precious metals. It argued that since the warehousing benefit would apply only to capital goods and not to gold inputs, the case falls within the MOOWR framework and does not require compliance with the MOOSWR scheme.

The authority examined the relevant statutory provisions governing warehousing schemes. It noted that Section 58 of the Customs Act provides for licensing private warehouses, while Section 58A deals with special warehouses for specified goods such as gold, silver, and other precious metals, which require stricter controls. Section 65 permits manufacturing operations in bonded warehouses.

The authority observed that the MOOWR scheme provides a duty deferment mechanism for capital goods and raw materials imported into private warehouses, while the MOOSWR scheme applies to special warehouses dealing with specified goods notified under Notification No. 66/2016-Customs (N.T.), including gold and precious metals.

It further noted that MOOSWR applies only when the goods being warehoused fall within the category of specified goods, whereas MOOWR governs other cases involving import of capital goods and inputs for manufacturing.

However, the authority proceeded to examine whether the question raised by the applicant falls within the scope of advance ruling under Section 28H of the Customs Act. It observed that advance rulings are limited to specified matters such as classification, applicability of notifications issued under Section 25(1), valuation, determination of duty liability, and related issues.

The authority found that the issue raised by the applicant pertained to the interpretation and applicability of procedural and regulatory frameworks governing warehousing schemes, rather than determination of duty, classification, valuation, or exemption under Section 25(1). The notifications in question were issued under different provisions and relate to regulatory frameworks, not to exemption or rate of duty.

Accordingly, the authority held that the question raised does not fall within the jurisdiction of advance ruling as defined under Section 28H of the Customs Act. It concluded that the application is not maintainable, as it relates to procedural aspects of warehousing rather than issues eligible for advance ruling.

In view of this finding, the authority refrained from passing any ruling on the merits of the case. The application was disposed of accordingly.

FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI

Royal Glitz jewel Tech Private Limited (having IEC No. AAIVICR0666G) and hereinafter referred to as ‘the applicant’, in short) filed application (CAAR-1) for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR in short). The said application was received in the secretariat of the CAAR, Mumbai on 27.10.2025 along with enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’ also). The applicant is seeking advance ruling for Applicability of Notification 69/2019-Customs and Notification No.75/2020-customs.

2. Submission by Applicant-

2.1. M/s Royal Glitz Jewel Tech Pvt. Ltd (hereafter referred to as ‘the Applicant’) is a jewellery manufacturer in India with advanced imported technologies with mission to provide Indian people with jewellery of contemporary international designs in lightest weight possible.

2.2. The applicant commenced commercial production at their gold jewellery manufacturing facility. As part of their expansion plan, they have resolved to import certain advanced machinery from Italy and Germany to strengthen their manufacturing capabilities.

2.3. Thus, the applicant is proposing to import ‘Gold Jewellery Manufacturing Machinery,’ which are highly advanced machinery, used for gold jewellery manufacture. The details of the machinery being imported in this regard are tabulated below:

3.1. The applicant manufactures gold jewellery in various caratages such as 14K, 18K and 22K. The proposed manufacturing operations will be carried out at the applicant’s facility using specialised imported machinery and skilled manpower. The gold required for jewellery making will be sourced locally from authorised and registered bullion dealers and RBI nominated agencies like banks and MMTCs and is received as standard-purity bars. Each procurement transaction is duly recorded in the books of accounts, and the applicant complies with all applicable statutory requirements.

3.2. The applicant does not borrow, procure, or utilize gold under any DGFT- related schemes, including Advance Authorization, Duty-Free Import Authorization (DFIA), Export Promotion schemes, or other concessional arrangements. The pure gold procured and utilized in our manufacturing process is import duty paid and GST (IGST) paid gold only. This ensures full compliance with customs, GST, and related statutory obligations.

3.3. The procured pure gold is exclusively utilized for the purpose of manufacturing ornaments and jewellery within our unit. Thus, his raw gold procured will be melted in induction furnaces and where necessary, alloyed with permitted metals to achieve the desired caratage and colour. The alloyed gold will then be cast into bars or strips, which are further processed into strips and wires using rolling mills and wire-drawing machines as per production needs. These strips and wires are annealed in controlled-atmosphere furnaces with an ammonia cracker to improve malleability and ensure uniform workability. The softened gold is subsequently fashioned into jewellery through stamping, forming, soldering, joining, CNC machining or handcrafting, depending on the design.

Where required, gemstones or other embellishments are set, after which each piece is filed, polished, buffed and finished. Every item undergoes strict quality checks for purity, weight, finish and design accuracy before being cleaned, hallmarked where applicable and packed for dispatch.

3.4 The entire manufacturing process, right from melting and alloying to the finishing of ornaments, is carried out at the registered manufacturing unit. The sale of finished ornaments/ jewellery is purely indigenous and is made only within the domestic market. No exports are undertaken. Thus, the applicant reiterates that the proposed imports relate solely to capital machinery required for manufacturing gold jewellery. The gold required for the production will only be procured domestically and will not be imported availing any duty exemption/ concession. Further, no capital goods have been imported as of now.

4. Applicants’ interpretation of Law:-

4.1. APPLICANT’S ELIGIBILITY TO SEEK ADVANCE RULING:

The instant application is being made by the Applicant for the purpose of determining whether the capital machinery imported by the applicant, which are used in the process of manufacturing gold, is eligible to be imported free of duty and warehoused under the Scheme of Manufacture and Other Operations in Warehouse Regulation, 2019 (MOOWR) notified vide Notification 69/2019-Customs dated 01.10.2019 or under Manufacture and Other Operations in Special Warehouse Regulation, 2020 (MOOSWR) notified vide notification 75/2020 dated 17.08.2020. According, the issue that requires determination is the applicability of the notification 69/2019 dated 01.10.2019 covering the MOOWR scheme.

4.2. ISSUES REQUIRING ADVANCE RULING AND APPLICANT’S UNDERSTANDING. 4.2.1 In light of the aforementioned, the Applicant seeks to enter the following question for Advance Ruling and its interpretation of the question will be as under:

Question: Whether M/s Royal Glitz Jewel Tech Pvt. Ltd., proposing to import capital machinery from overseas and undertake manufacture gold jewellery in a customs-bonded facility, must obtain a Special Warehouse licence under Section 58A of the Customs Act, 1962 and operate under MOOSWR 2020 in view of the fact that gold and other precious metals are notified as “specified goods” under Notification No. 66/2016-Cus (N.T.); or alternatively, whether the applicant is instead eligible to operate under MOOWR 2019 with a private-warehouse licence under Section 58 and permission under Section 65 of the Customs Act, 1962?

5. Port of Import and reply from jurisdictional Commissionerate:

The applicant in their CAAR-1 indicated that they intend to import the subject goods from O/o Commissioner of Customs, Chennai —II (Import), Custom House No. 60 Rajaji Salai Chennai —600001. The application was forwarded to the jurisdiction of O/o The Commissioner of Customs, Chennai —II (Import), Chennai for comments on 31.10.2025, 19.11.2025, 10.12.2025 and 31.12.2025. However, no comments received from the said jurisdictional authority.

6. Details of Personal Hearing:

Sh. P. Sridharan appeared for PH in this matter. He reiterated the contention filed with the application that the applicant intends to import capital goods to be used in the process of manufacturing Gold etc. (but not Gold or Silver or Precious metals or articles thereof) and are eligible to be warehoused in term of MOOWR scheme 2019. They are not required to operate under the MOOSWR 2020 scheme.

6.2 Nobody appeared for hearing from the department side.

7. Discussion and findings:

7.1 I have considered all the materials placed before me in respect provisions of MOOWR &
MOOSWR scheme, I have gone through the submissions made by the applicant during the personal hearing.

7.1.2. I find that the Section 58 of the Customs Act, 1962 empowers customs authorities to license private warehouses for storage of dutiable goods, while Section 58A provides for licensing of special warehouses specifically for sensitive or high-value goods, which are required to be kept under customs lock.

7.1.3. Section 65 empowers the licensee of a warehouse to undertake manufacturing processes or other approved operations on the warehoused goods, subject to authorization by the jurisdictional  customs authorities. Duties become payable only when the goods, or waste/ refuse arising therefrom, are cleared for home consumption.

7.1.4. To regulate such operations, the Manufacturing and Other Operations in Warehouse Regulations, 2019 (“MOOWR”) were notified through notification 69/2019 dated 01.10.2019, establishing a duty deferment mechanism for the import of capital goods and raw materials into bonded warehouses.

7.1.5. Separately, for special warehouses, the Manufacture and Other Operations in Special Warehouse Regulations, 2020 (“MOOSWR”) was notified through Notification No. 75/2020-Customs dated 17.08.2020, with a more stringent compliance framework designed for sensitive and high-value goods.

7.2 Overview of the Schemes

7.2.1. The MOOWR scheme provides a duty deferment framework for import of capital goods and raw materials into a private warehouse licensed under Section 58 of the Customs Act. Section 58 is extracted below for reference:

“The Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, licence a private warehouse wherein dutiable goods imported by or on behalf of the licensee may be deposited”

7.2.2. Under the scheme, customs duties are not payable at the time of import for both inputs and capital goods required for the manufacturing operations. Instead, levy is deferred until the goods (or finished goods manufactured from them) are cleared for home consumption in India. Where the imported goods or finished products are exported, the deferred duty stands fully waived. Similarly, capital goods imported under this framework may also remain in the warehouse without any duty liability or may be re-exported after use without triggering duty, in accordance with Section 69 of the Customs Act.

7.2.3. Notably, there is no prescribed time limit for the duty deferment, which renders the scheme especially beneficial for capital-intensive industries. The duty liability on imported raw materials crystallizes only upon clearance of finished products for domestic sale. Similarly, imported capital goods continue to enjoy duty deferment until they are themselves cleared into the domestic market. In effect, the scheme ensures that no upfront customs duty outflow occurs at the time of import, thereby supporting working capital efficiency and export competitiveness.

7.2.4. The Manufacture and Other Operations in Special Warehouse Regulations, 2020 (“MOOSWR”) were notified to govern operations in warehouses licensed under Section 58A of the Customs Act, as extracted below:

“(1) The Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, licence a special warehouse wherein dutiable goods may be deposited and such warehouse shall be caused to be locked by the proper officer and no person shall enter the warehouse or remove any goods therefrom without the permission of the proper officer.

(2) The Board may, by notification in the Official Gazette, specify the class of goods which shall be deposited in the special warehouse licensed under sub-section (1).”

7.2.5. Thus, MOOSWR framework is designed for sensitive and high-value inputs referred to as the “specified goods”. It entails more stringent compliance requirements, including continuous customs officer supervision and prior approvals for movement of goods. For entities engaged in routine manufacturing activities, it is true that, given the nature of the specified goods notified under the MOOWSR framework, the compliance requirements are more demanding.

7.3 Legal Provisions on scope of MOOWR and MOOSWR

7.3.1 Regulation 3 of the MOOWR, 2019 provides that these regulations apply to units operating under Section 65 in respect of warehouses licensed under Section 58. That, any manufacturing unit intending to import capital goods or raw materials into a private bonded warehouse and carry out operations therein, is eligible to apply under MOOWR. Regulation 3 is extracted below for reference:

“3. Application. – These regulations shall apply to, –

(i) the units that operate under section 65 of the Act, or

(ii) the units applying for permission to operate under section 65 of the Act, in a warehouse licensed under section 58 of the Act.”

7.3.2 On the other hand, Regulation 3 of MOOSWR, 2020 states that the scheme applies to units operating under Section 65 in respect of special warehouses licensed under Section 58A. The same is extracted below for reference:

“3. Application. – These regulations shall apply to, –

(i) the units that operate under section 65 of the Act, or

(ii) the units applying for permission to operate under section 65 of the Act, in a special warehouse licensed under section 58A of the Act.”

7.3.3 Regulation 4 of the MOOSWR, 2020 further narrows its scope by clarifying that only entities warehousing goods notified under Clause (1) of Notification No. 66/2016-Cus (N.T.), are eligible.

Accordingly, the legal position is that MOOSWR Regulations, 2020 are attracted only where the goods to be warehoused are of a category notified under Notification No. 66/2016-Cus (N.T.) . The said notification is attached herewith as Annexure -3 for reference.” For all other goods, the MOOWR Regulations 2019 governs the operations.

7.3.4 Notification No. 66/2016-Cus (N.T.)dated 14.05.2016 provides that gold, silver, other precious metals and articles thereof, shall be deposited in a special warehouse licensed under section 58A (1) of Customs Act, 1962. Relevant portion of the notification is extracted below for reference:

“In exercise of the powers conferred by sub-section (2) of section 58A of the Customs Act, 1962 (52 of 1962), the Central Board of Excise and Customs hereby specifies the following class of goods  which shall be deposited in a special warehouse licenced under sub-section (1) of the said section namely:-

(1) gold, silver, other precious metals and articles thereof

(2) goods warehoused for the purpose of

(a) supply to duty free shops in a customs area.

(b) supply as stores to vessels or aircrafts under Chapter XI of the Customs Act, 1962;

(c) supply to foreign privileged persons in terms of the Foreign Privileged Persons (Regulation of Customs Privileges) Rules, 1957.”

7.3.5 While Section 58A (1) provides for licensing a special warehouse for deposit of dutiable goods, Section 58A (2) ibid lays down that the dutiable goods for purposes of Section 58 (A)(1) ibid would be specified by Government. Dutiable goods are defined in Section 2 (14) ibid to mean, “…any goods which are chargeable to duty and on which duty has not been paid”

As already discussed supra, Government notified such specified goods through Notification 66/2016 (NT) dated 14.05.2016. The Notification inter-alia specified gold, silver, other precious metals and articles thereof, as ‘specified goods’ for purposes of Section 58 A (1) ibid. Thus, a harmonious reading of these provisions would lead us to conclude that import of gold, silver, other precious metals and articles thereof, without payment of duty for manufacture would fall under the purview of the Special Warehouse to be licensed under Section 58A ibid.

The applicant submitted that the statutory condition precedent for the grant of a special warehouse licence under Section 58A is not satisfied. The applicant’s proposed operations—namely, import of capital goods with deferment of duty under the warehousing provisions, and undertaking manufacturing activities using duty-paid or otherwise non-dutiable gold and precious metals; squarely fall within the framework of Section 58 read with Section 65 of the Customs Act, 1962, as operationalised under the MOOWR, 2019 scheme. In such a scenario, the warehousing benefit is confined to the capital goods, while the inputs (gold/precious metals) do not enjoy any duty deferment where they are procured on payment of duty or are otherwise non-dutiable. The mere fact that the finished goods are jewellery made of gold does not, by itself, trigger the applicability of Section 58A, which is specifically attracted in cases involving warehousing of goods without payment of duty. Accordingly, in the absence of duty-free warehousing of gold, the provisions of Section 58A are not attracted to the present case.

Therefore, they contended that the applicant is entitled to operate under the MOOWR 2019 scheme by obtaining a private-warehouse licence under Section 58 of the Customs Act, 1962 along with permission under Section 65 for manufacturing operations. Compliance with Section 58A and the MOOSWR, 2020 is not required, and the applicant accordingly prays that this Hon’ble Authority be pleased to so rule.

7.4 Now, I come to examine the scope and extent of the Advance Ruling framework. Section 28H of the Customs Act provides that an applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and in such manner as may be prescribed, stating the question on which the advance ruling is sought. The question on which the advance ruling is sought shall be in respect of, –

a. classification of goods under the Customs Tariff Act, 1975 (51 of 1975);

b. applicability of a notification issued under sub-section (1) of section 25, having a bearing on the rate of duty;

c. the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act;

d. [ Applicability Of Notifications Issued In Respect Of Tax Or Duties Under This Act Or The Customs Tariff Act, 1975 Or Any Tax Or Duty Chargeable Under Any Other Law For The Time Being In Force In The Same Manner As Duty Of Customs Leviable Under This Act Or The Customs Tariff Act;] [Substituted By Finance Act, 2018 (Act No. 13 of 2018), Dated 29.3.2018.]

e. [ determination of origin of the goods in terms of the rules notified under the Customs Tariff Act, 1975 (51 of 1975) and matters relating thereto.] [ Inserted by Act 18 of 2005, Section 67 (w.e.f. 13.5.2005).]

f. [ any other matter as the Central Government may, by notification, specify.] [Inserted by Finance Act, 2018 (Act No. 13 of 2018), dated 29.3.2018.]

It is observed from a perusal of notification 69/2019-Customs and Notification No. 75/2020-Customs that these notifications prescribe the regulatory framework governing warehousing operations under the MOOWR and MOOSWR schemes, respectively. The said notifications have been issued in exercise of powers conferred under section 157 and section 143AA read with section 65 of the Customs Act, 1962, and section 157 read with sections 58A, 65 and 143AA of the Customs Act, 1962, respectively.

However, in the present case, the issue under consideration does not relate to the applicability or interpretation of any notification issued under sub-section (1) of section 25 of the Customs Act, 1962. Further, the matter does not involve determination of the rate of duty or eligibility to any exemption therefrom.

In this regard, it is pertinent to note that the jurisdiction of authorities in advance ruling and assessment proceedings is circumscribed by the specific questions permissible under the statute. Under section 28H of the Customs Act, 1962, advance rulings are confined, inter alia, to classification, applicability of notifications issued under section 25(1), and determination of duty liability. Similarly, assessment proceedings under section 17 are directed towards determination of duty leviable, classification, valuation, and applicability of exemptions.

Since the present issue pertains to the interpretation and applicability of procedural/regulatory provisions governing warehousing schemes, and not to the determination of duty liability, classification, valuation, or exemption, the same falls outside the limited jurisdictional scope of advance ruling. Accordingly, the applicant’s reliance on the aforesaid notifications for deciding the issue at hand is not legally tenable as far as the legal domain of the Advance Ruling Authority is concerned.

7.5 In view of the facts and circumstances of the case, the relevant provisions of the Customs Act, 1962, I am of the opinion that the questions raised in the present application do not pertain to any of the matters specified under Chapter VB of the Customs Act, 1962, in terms of section 28H thereof. Rather, the issues involved relate to procedural/regulatory aspects of warehousing and do not involve determination of classification, or determination of rate of duty, valuation, applicability of notification issued under section 25(1), or determination of duty liability.

I hold that the present application is not maintainable before this authority under the provisions of Chapter VB, read with section 28(I) 2 of the Customs Act, 1962. Thus, I refrain from passing any ruling in the matter.

8. The application is disposed of accordingly.