Summary: The 2024 Budget introduces key updates to the Manufacturing and Other Operations in Warehouse Regulations (MOOWR) scheme. The central government is empowered to specify certain goods that cannot be warehoused under this scheme. Originally introduced in 1996 and updated in 2019, the MOOWR scheme allows manufacturers to import raw materials and capital goods without paying duties upfront, thereby supporting the Make in India initiative. It aims to promote India as a manufacturing hub, attract foreign investment, and generate employment. Eligible participants include those holding or seeking a warehouse license under section 58 of the Customs Act. The scheme offers simplified paperwork, digital record-keeping, flexible business operations, and custom duty exemptions. However, challenges such as limited promotion, lack of awareness, and technical difficulties persist. Despite its benefits, such as deferred duty payment and no minimum investment requirement, the scheme requires further clarifications to enhance its efficiency, particularly on issues like the transfer of work-in-progress goods and depreciation on used capital goods.
Provision – According to the Budget of 2024, The central government will be empowered to specify certain manufacturing and other operations in relation to a class of goods that shall not be permitted in a warehouse under the MOOWR scheme.
Full Form – The meaning of MOOWR Scheme is Manufacturing and Other operations in Warehouse Regulations.
Meaning – The MOOWR Scheme allows manufacturers to import raw materials and capital goods without paying duty.
Purpose – 1. It was introduced in 1996 by CBIC – Central Board of Indirect Taxes and updated in 2019 to boost the Make in India campaign and provide a simplified approval process for manufacturing operations.
2. This scheme aimed to make India a manufacturing hub and defer custom duties on imported goods used for manufacturing or other activities.
3. This will help to gain huge foreign investment in India, and boost employment in the country.
Eligibility –
1. Anyone holding a license for a warehouse under section 58 of the Act, in compliance with the Private Warehouse Licensing Regulations, 2016.
2. Individuals seeking a license for a warehouse under section 58 of the Act, along with permission to conduct manufacturing or other operations within the warehouse under section 65 of the Act.
Benefits of MOOWR Scheme –
1. For reduced and simplified paperwork, there is a single form for license and permissions for the manufacturing operations.
2. To track the data easily, all records are maintained in a standardized form in a digital format.
3. Submission of monthly reports is required.
4. To make business flexible, no strict compliances are there for minimum exports or domestic sales.
5. Business gets exemption on custom duty for imported materials used in making finished products.
Investment Criteria for MOOWR Scheme –
There is no minimum investment required for the MOOWR scheme, making the warehouse to warehouse transfers easy.
Advantages of MOOWR Scheme –
1. It allows the postponement of Custom Duty on inputs used in goods sold in the domestic market, promoting ease of business.
2. It has easy compliance requirements.
3. It offers custom duty exemption on capital goods used in export products.
4. There is no requirement of periodic renewals, which means that license can be used till the time it is cancelled.
5. The scheme also offers a single point of approval for various processes.
Requirement of Audit –
The unit is subject to audit by a proper officer under Customs in accordance with the provisions of the stated law.
Application of the Scheme –
To apply for the scheme, a business must fill an online form and submit a bond to the Commissioner of the Customs.
Challenges under the MOOWR Scheme –
1. Failure of aggressive promotion of the MOOWR Scheme.
2. Lack of awareness about the MOOWR Scheme among officials in the departments.
3. Technical difficulties in MOOWR Scheme, making it difficult to trade.
4. Non-availability of depreciation on used capital goods.
5. Lack of clarification on transfer of WIP goods between the MOOWR units.
Conclusion –
Although the MOOWR scheme has increased the trade and employment in the country, it still needs clarification in certain areas for an effective trade in the country.
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