Presentation on Manufacture and other operations in warehouse regulations 2019(MOOWR, 2019) under Customs

1. 1
Make In India Schemes Under Customs
BondedWarehouseUnderSection65ofCustomsAct
Vineet Sahay, CS
founder partner of VRCorp Advisors LLP and
www.GSTIndiaPro.com

2. 2
Warehousing System under Customs Laws
It is a popular mechanisms for duty deferment across the globe.
Warehousing of finished goods is undertaken to comply with local
laws such as:
• Legal Metrology Act, 2009;
• Food Safety & Standards Act, 2006;
• Drugs & Cosmetics Act, 1940
If the packaging, labeling not in compliance with applicable laws of
India, the imported goods will not be permitted to be cleared for home
consumption by the Customs authorities.

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Warehousing Provisions under Custosms Act:
Warehousing Provisions is under under Chapter-IX of Customs Act.
Chapter-IX contains Sections 57 to 73A
These provisons deals with:
• Private: In Private Warehouses, only the goods belonging to the hold-
er of the Private Warehouse License can be stored.
• Public Ware houses : Only the goods belonging to third parties can
be stored

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Activities permitted inside the warehouse:
The Customs Laws permit the owner of the goods to carry
out various activities in the warehoused goods.
Section 64 of the Customs Act, specifically permits certan
activities without obtaining permission from customs dept.
• Inspection;
• Sorting;
• Displaying of the goods for sale to be carried out by the
owner
Any other activities licensee of warehouse need to ap-
ply to the principal commissioner

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Manufacture and Other Operations in Warehouse
Regulations, 2019
To revamp all such regulations and scheme and to boost the
manufacturing activity in the country. The CBIC came-up with a
simplified and more industry friendly vide Notification No. 44/2019
Customs (N.T.) dated 19th June, 2019 and further CBIC issued a
Notification No. 69/2019 dated 1st October, 2019, which repealed the
notification no. 44/2019 subsequently by the clarification vide Circular
No. 34/2019-Customs dated 1st October 2019.

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Manufacture and Other Operations in Warehouse
Regulations, 2019
Ease of doing business bring by introduction of MOOWR, (no. 2) 2019:
The introduction of Scheme under MOOWR (NO. 2) 2019 is expected to
ease the situation for the manufacturing sector as the manufacturing
and processing activity in a Customs Bonded Facility, is without
payment of duties/taxes upfront, on imported goods - both raw
materials and capital goods.

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Major Advantages of MOWR-2019
a) Deferred duty on imported capital goods and raw materials;
b) Seamless warehouse to warehouse transfer;
c) No fixed ratio for meeting the export obligation;
d) Domestic supplier also can avail the scheme;
e) Single point of approval;
f) Use Common form and forum;

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Major Advantages of MOWR-2019
g) No Applicability of Time Limit for Storing and Manufacture;
h) Movements of bonded goods for job-work allowed;
i) Easy compliance mechanism;
j) Availability of other incentives under of Foreign Trade Policy;
k) No compulsory regular audit prescribed.

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Eligibility for application for operating under these regulation
The regulation 4
(i) a person who has been granted a licence under Section 58;
(ii) a person who applies for a licence for a warehouse under Section 58 of the
Act.
It is to be noted that an applicant desirous of having manufacturing operations in
a bonded warehouse under Section 65 read with MOOWR, (no. 2) 2019 must also
have the premises licensed as a private bonded warehouse under Section 58 of
the Customs Act. Now by virtue of this regulation, the applicant can seek a license
under Section 58 and permission to operate under Section 65 synchronously, or
request for permission under Section 65, if they already have a warehouse licensed
under Section 58.

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Legal framework of “MOOWR, 2019” Scheme
1 Short title and commencement
2 Definitions
3 Scope
4 Eligibility for application for operating
under these regulation
5 Grant Permission
6 Validity of Permission
7 Appointment of warehouse keeper
8 Facilities, equipment and personnel
9 Conditions for transport of goods
10Receiptofgoodsfromcustomsstation
11 Receipt of goods from another
warehouse
12Receiptofdomesticallyprocuredgoods
13 Transfer of goods from a warehouse
14 Removal of resultant goods for home
consumption
15 Removal of resultant goods for export
16 Conditions for due arrival of goods
17 Maintenance of records in relation to
warehoused goods
18 Audit
19 Penalty
20 Power to exempt

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Application for license for warehousing for manufacturing
activities
Regulation 4(2): Application shall be made to the Principal Commissioner
of Customs or the Commissioner of Customs
It is important to note that an applicant desirous under MOOWR, 2019
must also have the premises licensed as a private bonded warehouse
under Section 58 of the Customs Act. Now by virtue of this regulation, the
applicant can seek a license under Section 58 and permission to operate
under Section 65 simultaneously, or request for permission under Section 65,
if they already have a warehouse licensed under Section 58.

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Online Application
The application shall be made online in the form as prescribed in
Annexure- A of the Circular No. 34/2019-Customs,
For online filing of the application, the CBIC has partnered with
Invest India under the Ministry of Commerce and Industry, to launch
a microsite for the promotion of the scheme and facilitation of
investors. The same can be accessed at https://www.investindia.
gov.in/bonded-manufacturing.The microsite also hosts a digitized
application that an applicant can fill online, upload the supporting
documents, submit online and also print the application form.

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Online Application
The application shall be made online in the form as prescribed in
Annexure- A of the Circular No. 34/2019-Customs,
For online filing of the application, the CBIC has partnered with
Invest India under the Ministry of Commerce and Industry, to launch
a microsite for the promotion of the scheme and facilitation of
investors. The same can be accessed at https://www.investindia.
gov.in/bonded-manufacturing.The microsite also hosts a digitized
application that an applicant can fill online, upload the supporting
documents, submit online and also print the application form.

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Processing of Application
1. The online application filed on the portal https://www.investindia.
gov.in/ will be transferred to the office of Principal Commissioner;
2. Deficiency will be communicated via physical letter only;
3. Furnishing of Bond and appointment of warehouse keeper;
4. The applicaiton shall be trasferred to the range office having
jurisidction over the location of the proposed warehouse;
5. The verification shall be done by the authorised officer of range and
the authorised officer will forward the report back to the princiapal
comminssioner;

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Processing of Application
6. Onthefavourablereportofrangeofficetheprincipalcommissioner
issue the warehouse licese as well as warehouse number/code to
the premise;
7. The warehouse number also appear on the portal of ICGATE
smultaneoulsy.
8. All approval and registration documents issued by the department
shall contain DIN (Documents Identificatin Number), the DIN is
important because you can track the truthfulness of the documents
by online verification.

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Steps for Clearance of Warehoused Goods
To Domestic Market for Consumption
• When warehoused goods are used for manufacturing or other
operations & finished goods are domestically consumed
• Warehoused goods are permitted for clearance after:
• All compliances are met by the owner of goods as per executed Bond.
• Deferred duty on imported raw materials or capital goods is paid.
• GST is paid on the finished goods.
• Any other compliance as per the Customs Act or any other applicable
regulations are met.

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Steps for Clearance of Warehoused Goods
To a Customs Station for Export
When warehoused goods are used for manufacturing or
other operations & finished goods are exported
• Follow Simple Steps to Transport Warehoused Goods
• Fill Form for Transfer of goods from a facility appended in Ware-
house Goods (Removal) Regulations Act, 2016 to transport ware-
housed goods.

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Steps for Clearance of Warehoused Goods
To a Customs Station for Export....
• Licensee of the originating warehouse affixes a one-time-lock, unless per-
mitted by the Commissioner of Customs to transport without the lock,
depending upon the nature of goods or the manner of transport.
• Produce ‘Acknowledgement’ received from the licensee of the recipi-
ent warehouse stating arrival of goods to Bond Officer of the originat-
ing warehouse.
• Acknowledgement is to be produced in 1 month

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Steps for Clearance of Warehoused Goods
To Another Bonded Manufacturing Facility*
Follow Simple Steps to Transport Warehoused Goods
• Fill Form for Transfer of goods from a facility appended in Warehouse Goods
(Removal) Regulations Act, 2016 to transport warehoused goods.
• Licensee of the originating warehouse affixes a one-time-lock, unless permit-
ted by the Commissioner of Customs to transport without the lock, depending
upon the nature of goods or the manner of transport.
• Produce ‘Acknowledgement’ received from the licensee of the recipient ware-
house stating arrival of goods to Bond Officer of the originating warehouse.
• Acknowledgement is to be produced in 1 month
* When goods are transferred from one bonded facility to another, incidence to
pay deferred duty is also transferred to the owner of the new facility.

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Essentials to Benefit from Bonded Manufacturing
Export goods
No duty is to be paid on imported raw materials or capi-
tal goods if the following are complied with:
• Documents of export declaration based on the mode of
transportation (Shipping Bill/ Bill of Export/ Form prescribed)
are produced
• Export duty, fines and penalties, if any, are paid
• Order of clearance of goods issued by the Customs Officer

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Goods for home consumption
• Importedrawmaterialstaxedasper Section9oftheCentralGoods
& Services Act.
• Duty also payable on imported raw materials through ex-Bond Bill
of Entry at the time of supply of finished goods manufactured (re-
cord of this to be maintained as per Annexure B).

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Waste/Refused Goods
Exported Goods
In case of export of finished goods, the duty on waste is paid as if
the waste was imported into India. Licensee can also get the duty
remitted by destroying the waste generated.
Domestically-consumed Goods
In the case of domestic consumption of finished goods, the import
duty (customs duty + GST) is paid on the quantity of the imported
goods contained in the waste and scrap.

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Maintenance of records
• Keep record of each activity, operation or action taken in relation
to the warehoused goods.
• Keep record of drawl of samples from the warehoused goods.
• Keep copies of the following documents:
* Bills of Entry
* Transport documents
* Forms for transfer of goods from warehouse
* Shipping Bills
* Bills of Export
* Any other documents indicating receipt/ removal of goods
from the warehouse

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Preservation of physical and digital records
• Update records and accounts accurately and preserve for a mini-
mum 5 years from the date of removal of goods from the facility.
• Preserve updated digital copies of records at a place other than the
facility to prevent loss of records due to natural calamities.
Filing of monthly Return
File monthly returns within 10 days of closing of the month.

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ThankyouVineet Sahay
Partner
VRCorp Advisors LLP
1007, Logics City Centre
Sector-32, Noida
+91-9990909550
www.GSTIndiapro.com
www.vrcorpadvisors.com