In re Tata Electronics System Solutions Private Limited (CAAR Mumbai)
Customs Authority for Advance Rulings (CAAR), Mumbai, delivered a ruling in the matter of Tata Electronics System Solutions Private Limited, concerning the applicability of Notification No. 57/2017-Customs (IGCR Notification) dated 30 June 2017, in the context of the Manufacture and Other Operations in Warehouse (MOOWR) Scheme. The applicant, a licensed MOOWR unit under Section 65 of the Customs Act, 1962, sought clarity on whether inputs or parts imported for the manufacture of cellular mobile phones, which subsequently become scrap during production, could still be eligible for concessional customs duty under the IGCR framework.
Background
The applicant imports and procures components, modules, and assemblies for mobile phones under the MOOWR, 2019 scheme, with deferred customs duty. Finished products are either exported (with duty remission) or cleared to the Domestic Tariff Area (DTA), where duty is discharged. In the course of manufacturing, some imported inputs are scrapped due to defects, quality failures, or testing rejections. The applicant has been paying full customs duty on such scrap under Section 65(2).
The company argued that Notification No. 57/2017-Customs, which grants concessional duty for mobile phone inputs, contains no restriction against applying the benefit where inputs are scrapped. This position was supported by CBIC FAQs (27 October 2020) and Circular No. 26/2024-Customs, which clarified that IGCR benefits could be availed simultaneously with MOOWR.
