The Government of India has issued Bonded Warehouse Scheme, popularly known as the ‘MOOWR Scheme, 2019’ wherein an importer is permitted to perform manufacturing activity in the bonded warehouse, subject to fulfillment of certain conditions. For availing benefits of MOOWR, 2019, License for “Bonded Warehouse” along with application for conducting manufacturing activities in such “Bonded Warehouse” is required to be filed before the customs authorities (Section 58 read with Section 65 of the Customs Act, 1962).

Benefits of this Scheme: The capital goods and raw materials (which are used for manufacturing and other operations in a bonded manufacturing facility) can be imported, without payment of duties (i.e., without payment of Basic customs duty, Social Welfare Surcharge, Agriculture & Infrastructure Development cess & IGST). The benefit of deferment of payment of duties will be available as under:

a) Capital Goods:  Capital goods can be imported without payment of duty and the duty will be payable only when the capital goods are removed from the bonded warehouse to Domestic Tariff Area. In case the capital goods are exported, even after use, no duty is required to be paid.

In-bond manufacturing scheme

b) Raw materials: In case of imported raw material, custom duties are required to be paid (without interest) by filing “Ex-bond Bill of entry for Home consumption”, calculated in proportion of imported raw materials contained in the resultant product sold / transferred domestically (on the basis of input-output ratio). In case the resultant product is exported, no duty is required to be paid.

Following conditions are required to be fulfilled under the MOOWR scheme to avail the benefits:

Activities Compliances to be made

To file an application for obtaining a licence for bonded warehouse

To take permission from The Principal Commissioner of Customs or Commissioner of Customs along with an undertaking to

1. Maintain accounts of receipt and removal of goods in digital form and same to be furnished to the bond officer (officer of customs in charge of warehouse) on monthly basis.

2. Execute a bond equivalent to the thrice the amount of duty deferred.

3. To furnished security through bank guarantee equivalent to the duty involved in the warehoused goods. However, circular No. 21/2016 of customs provides exemption from requirement of security amount under section 59(3) of the Customs act for goods used in the unit’s operating under section 65 of the act.

4. Informs the input-output norms in case of conversion of raw material in finished goods.

The authority shall be granted permission after due verification of application and the same shall remain valid unless it is cancelled or surrendered.

To amend the registration certificate of GST To add the in-bond warehouse as Principle/ Additional place of business, as the case may be, in GST registration certificate.
Appointment of warehouse keeper To appoint a warehouse keeper who has sufficient experience in warehouse operations and shall obtain a digital signature for filling electronic documents as required.
Infrastructure facility required at custom bonded warehouse 1. Signage showing that site or building is a custom bonded warehouse.

2. Computerized accounting system is required.

3. Proper boundary wall, other equipment’s and personnel as are sufficient to control access to the warehouse to provide secure storage of the goods in it.

Imported goods to be warehoused 1. “Into bond Bill of Entry for warehousing” to be filed.

2. Load compartment of the means of transport shall be securely sealed with a onetime lock by proper officer\

Import of exempted/ nil rated goods Exempted / nil rate of duty, may be brought into the warehouse, upon a filling of bill of entry for home consumption and clearance, at the customs station of import. These goods will not be treated as warehouse goods.
Domestic procurement of goods to be used during manufacturing and other operations in warehouse For domestic procurement, applicable rate of taxes (GST/VAT, etc.) & exemption shall also be available, if any. The records of domestic procurement are required to be shown in the format prescribed.
Receiving of imported goods in warehouse from custom station / another warehouse 1. Licensee to verify the one-time lock and in case if it is not found intact, to be informed to the bond officer immediately.

2. In case of one-time lock is found intact, to verify the quantity of goods received with “bill of entry for warehousing” filed;

3. In case of any discrepancy in the quantity of goods received in the warehouse then the same to be communicated to the bond officer within 24 hours.

4. In case of receipt of goods from custom station, endorse the “bill of entry for warehousing” with quantity of goods received & also to endorse “the transportation document” and retain copies of both.

5. In case of receipt of goods from another warehouse, endorse the “form for transfer of goods from a warehouse” with quantity of goods received & also to endorse “the transportation document” and retain copies of both.

6. Take into records the goods received in warehouse after filing the prescribed form and thereafter, to give acknowledgement of goods received to the proper officer as well as to bond officer within one month.

Warehoused goods to be exported 1. By raising GST invoice and filing Shipping bill.

2. To affix a one-time lock to the load compartment of the means of transport

3. Take into records removal of the goods as per form prescribed.

4. Produce an acknowledge copy issued by proper officer, to bond officer, at the custom station of export, stating that the goods have arrived at that place, within one month.

5. No need to take prior permission before removal of the goods for export.

6. No duty is required to be paid in respect of imported goods (capital goods or raw material) contained in exported product.

Warehoused goods to be transferred to another warehouse 1. Warehoused goods should be transferred under the cover of “form appended to these regulations”.

2. Goods transported under one-time lock affixed by the licensee and the same to be endorsed on “form appended to the regulation” as well as on transport document and retain one copy thereof.

3. Retained copy to be delivered to the bond officer.

4. For supply of warehoused goods to another warehouse, GST Tax invoice is not required to be issued as the same is not a “supply” as per Schedule III of CGST Act, 2017. However, in this case, delivery challan is required to be issued.

5. Take into records the removal of the goods as per form prescribed

6. No need to take prior permission before removal of the goods from one warehouse to another.

7. No duty is required to be paid in respect of imported goods (capital goods or raw material) contained in exported product.

Removal of Warehoused capital goods for home consumption after use (including components/ parts thereof) 1. Clearance of capital goods for home consumption shall be treated as supply under GST and accordingly, tax invoices will be issued payment of applicable GST & Compensation cess is to be paid.

2. Ex-bond Bill of Entry for home consumption to be filed.

3. To pay Import duty (earlier deferred) at the time of clearance of used capital goods for home consumption

4. The warehoused goods should be identified on the basis of First in First out (FIFO) Method.

5. No depreciation is available in case imported capital goods are cleared for home consumption after use.

6. Retain copy of bill entry and taken into records as per form prescribed.

7. No need to take prior permission before removal of the goods from warehouse to home consumption.

Removal of resultant goods (in the form of finished goods) for home consumption – treatment of raw material contained in resultant finished goods 1. Clearance of inputs (raw material) contained in the finished goods shall be treated as supply under GST and accordingly, tax invoices will be issued payment of applicable GST & Compensation cess is to be paid.

2. Ex-bond Bill of Entry for home consumption to be filed in respect of warehoused goods contained in so much of resultant goods

3. To pay Import duty (earlier deferred) at the time of clearance of resultant goods cleared for home consumption

4. The warehoused goods should be identified on the basis of First in First out (FIFO) Method.

5. The inspection of goods by custom at the state of ex-bonding would be done, only if there is indication of risks and not as manner of routine practice.

6. Retained copy of bill entry and taken into the records as per form prescribed

7. No need to take prior permission before removal of the goods from warehouse to home consumption.

Wastage generated during the course of manufacture of the resultant product In case whole or any part of the goods resulting from manufacturing operations are cleared from the warehouse for home consumption, import duty shall be charged on the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen.
Maintenance of records in relation to the warehoused goods 1. Maintain digital records of receipts, handling, storing & removal of goods and to produce to the proper officer as when required.

2. To keep a record of each activity, operation or action taken in relation to the warehoused goods.

3. Keep the copies of the bill of entry, transport documents, forms for transfer of goods from a warehouse, shipping bills record of each activity.

4. Records should be preserved for minimum period of five years from the date of removal of goods from the warehouse.

5. Digital copies of records shall also be preserved at a place other than the place of bonded warehouse.

6. Monthly return shall file to the bond officer regarding receipts, storage, operations and removal of the goods in the warehouse within ten days after the close of the month.

7. The acknowledgment & communication to the proper officer & bond officer should be made through mail to the official e-mail id of government.

Audit requirement

The audit would be based on the risk criteria and there is no prescribed frequency for such audit.

Though the scheme was introduced by Government for manufacturing exporting majority for their production, this scheme can be used by any manufacturer to save the working capital as well as cost (since credit of BCD, Cess etc. is not available.)

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Qualification: CA in Job / Business
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Location: Navi Mumbai, Maharashtra, India
Member Since: 03 Sep 2023 | Total Posts: 1
A seasoned professional with more than 13 years of experience and expertise in Indirect Taxation (comprising of ersthwhile Excise, Service tax laws and now GST) View Full Profile

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5 Comments

  1. JEYAKUMAR A says:

    useful article sir, but I have a concern that I want to know whether GST registration is require for in-bond warehouse before home consumption.

    1. Sudeept Jain says:

      Sir, GST registration is required to be taken since:
      a) Under this scheme manufacturing activity will also take place in Bonded warehouse.
      b) For availing ITC on indegenous procurements

      Further, as per the return format for Bonded Warehouse, GST details of all the procurement (material wise, date wise, GST amount wise) is required to be provided.

      Hope the above clarifies your query.

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