Reviewed by Ashish Shah, Managing Director29 October 20269 min readSource: MOOWR scheme guide · Customs Act, 1962 on India Code
The MOOWR scheme — the Manufacture and Other Operations in Warehouse Regulations, 2019, made under Section 65 of the Customs Act, 1962 — lets a Gujarat manufacturer run its own factory as a customs bonded warehouse. Imported machinery and raw materials enter the factory with no basic customs duty, surcharge or IGST paid at the port. Duty on inputs is paid only when the finished goods are cleared for sale in India; on exports it is never paid (Section 69). Duty on machinery stays deferred for as long as the machine works under bond: no interest, no export obligation, no time limit. On ₹10 crore of imported machinery at illustrative rates the deferred duty is about ₹2.77 crore; on ₹5 crore of inputs a year with 60% exported, about ₹83 lakh a year is never payable and ₹55 lakh is paid at clearance. The price is customs-grade compliance — a Section 58 licence, a triple-duty bond, digital stock records and a monthly return — and no drawback or RoDTEP on goods made in bond.
What the MOOWR scheme is: bonded manufacturing under Section 65
MOOWR is the Manufacture and Other Operations in Warehouse (No. 2) Regulations, 2019 — Notification 69/2019-Customs (N.T.) of 1 October 2019, with the procedure in Circular 34/2019-Customs. It rests on two sections of the Customs Act, 1962: Section 58, under which your factory is licensed as a private bonded warehouse, and Section 65, under which Customs permits manufacturing and other operations inside it. Any unit that manufactures, assembles, tests, repairs, re-conditions or packs goods at its own premises can apply, anywhere in India — no zone, no export requirement, no need to earn foreign exchange, which separates it from an EOU or an SEZ. The permission stays valid until surrendered or cancelled. Everything else follows from one idea: the duty is deferred, not waived. It becomes payable the day imported content leaves bond for the Indian market, and never on what is exported. Our MOOWR scheme service page carries the legal references, a calculator and the document list.
What a bonded factory defers, never pays and pays at clearance
Basic customs duty, the social welfare surcharge, IGST, compensation cess and other customs duties such as anti-dumping duty are all deferred on goods in bond. What happens next depends on where the goods go.
Swipe sideways to see every column
| Goods | At the port | While in bond | Cleared for sale in India | Exported |
|---|---|---|---|---|
| Imported machinerycapital goods used in the bonded factory | Nil — warehousing bill of entry | Deferredno interest, no time limit | Payable only if the machine is cleared out of bond for home consumption | — |
| Imported inputs in goods sold in Indiaagainst declared input-output norms | Nil | Deferredno interest | Duty on the imported content on an ex-bond bill of entry at clearance; GST on the sale as usual | — |
| Imported inputs in goods exported | Nil | Deferred | — | Never paidSection 69 — shipping bill |
| Waste and scrap from imported inputs | — | — | Applicable customs duty and GST on clearance | — |
| Goods bought in India | — | Brought in on payment of GST | Input tax credit as normal | — |
Honest maths: the IGST you no longer pay at the port would usually have come back as input tax credit, so there the gain is cash flow. The real saving is basic customs duty and surcharge on exported content, plus the financing cost of duty never paid upfront. Section 65A, inserted by the Finance Act, 2023, would allow IGST and cess to be collected when goods are brought in for Section 65 operations, but only from a date the Government notifies.
Who MOOWR suits in Gujarat, and what it costs you elsewhere
MOOWR earns its keep for units that import regularly or are importing large machinery, whether they export or not — auto components in Sanand and Becharaji, chemicals in Dahej and Ankleshwar, pharma in Vapi, steel and engineering in Hazira, imported kilns and presses in Morbi.
Machinery importers who sell in India
A project bringing in a production line for Indian customers cannot credibly carry an EPCG export obligation. Under MOOWR the duty is deferred for as long as the line runs under bond — on ₹20 crore of machinery at illustrative rates, about ₹5.55 crore kept in the business, worth about ₹55 lakh a year at 10%.
Import-heavy input users with part exports
A unit importing intermediates every month pays duty only on the domestic share and only at clearance. A Dahej chemical unit importing ₹30 crore of intermediates a year and exporting 40% never pays ₹3.33 crore of the ₹8.32 crore of annual duty; ₹4.99 crore is paid at clearance.
Units that can keep customs-grade records
Every receipt, operation and removal must sit in a computerised system that reconciles to bills of entry and clearances, with a monthly return. Very small or one-off importers may find the compliance outweighs the benefit.
Think twice if the premises will only trade — goods must undergo manufacturing or other operations — if imports are one-off, or if a product sits under specific CBIC restrictions.
The trade-off exporters must price in. Goods manufactured partly or wholly in a Section 65 warehouse are listed as ineligible for RoDTEP, and the All Industry Rate drawback notification excludes them (Notification 77/2023-Customs (N.T.), condition 9(i)). Weigh that loss against the duty MOOWR saves; the EPCG scheme or Advance Authorisation may work out better, and our MOOWR-versus-EPCG decision guide walks through the four questions that settle it.
An Ankleshwar pharma unit: ₹10 crore of machinery and ₹5 crore of inputs a year
Year-one cash at the port falls from ₹4.16 crore to nil, and ₹83.2 lakh of duty a year is never paid because 60% of output is exported.
- The unit: a formulations unit in Ankleshwar (Bharuch district), licensed under MOOWR, importing through Hazira.
- What it imports: ₹10 crore of processing and packing machinery once, then ₹5 crore of active ingredients a year.
- Where the output goes: 60% exported, 40% sold in India.
- Illustrative rates: 7.5% basic customs duty, a 10% surcharge on it and 18% IGST on the value including both — 27.7% in all. Every tariff line differs, and anti-dumping duty is extra where it applies.
| Duty | Amount |
|---|---|
| Basic customs duty, 7.5% | ₹75 lakh |
| Social welfare surcharge, 10% of it | ₹7.5 lakh |
| IGST, 18% | ₹194.9 lakh |
| Total, deferred while the machine stays in bond | ₹277.4 lakh₹2.77 crore |
| Duty a year | Amount |
|---|---|
| On the 60% exportednever paid | ₹83.2 lakh |
| On the 40% sold in Indiapaid at clearance | ₹55.5 lakh |
| Total | ₹138.7 lakh₹1.39 crore |
Without MOOWR the unit pays ₹2.77 crore + ₹1.39 crore = ₹4.16 crore at the port in year one; with MOOWR it pays nothing there and ₹55.5 lakh as goods are cleared for India. The price: no drawback or RoDTEP on goods made in bond.
Of the ₹83.2 lakh never paid, about ₹25 lakh is basic duty and surcharge that no credit would have returned; the other ₹58 lakh or so is IGST, which would have come back as input tax credit, so there the gain is cash flow. Not paying ₹2.77 crore upfront is also worth about ₹27.7 lakh a year at 10% interest. Run your own figures through the combined subsidy calculator, which models MOOWR alongside EPCG.
The State package is untouched: capital, interest and power tariff subsidy under the Viksit Gujarat Industrial Policy 2026, electricity duty exemption and EPF reimbursement are claimed as usual, and imported machinery counts toward eligible fixed capital investment whichever customs route it takes.
How to get a MOOWR licence: Section 58 and Section 65 in one application
Invest India’s online MOOWR facility was extended only until 15 November 2025 (Circular 27/2025-Customs). Applications now go to the jurisdictional Principal Commissioner or Commissioner of Customs — in Gujarat typically the Ahmedabad, Kandla or Mundra commissionerate — with CBIC moving them to its own digital module.
Get the premises ready
A bonded unit needs clear signage, a computerised system that records receipt, storage, operations and removal of goods, and enough control over access to keep goods in bond secure.
Before filingFile one combined application
Apply for a private warehouse licence under Section 58 and permission for manufacturing under Section 65, both in one form, with an undertaking to keep digital accounts and input-output norms for each final product. Enclosures run from IEC, GST and PAN through the site plan, process description and list of goods to be imported with tariff classification; the full checklist is on our service page.
Section 58 + Section 65Verification
Customs verifies the application and the premises. Answers should match the site plan, the process description and the input-output norms filed; loose norms cause disputes at clearance.
Premises visitExecute the bond and appoint the warehouse keeper
Sign the triple-duty bond, which covers both the regulations and Section 59, and appoint a warehouse keeper with warehousing and customs experience and a digital signature.
Triple-duty bondPermission granted
Licence and permission are issued together; they run until surrendered or cancelled.
No renewalImport into bond
File warehousing bills of entry at Mundra, Kandla, Hazira or Pipavav, or at an inland container depot such as ICD Khodiyar for the Sanand–Ahmedabad belt; move the goods to the factory under a one-time lock and acknowledge arrival to Customs within a month.
Arrival within 1 month
Compliance that keeps a bonded factory’s licence safe
- Digital records. Reconcilable records of receipt, handling, operations and removal of goods, in the format CBIC has specified, with a digital copy kept away from the warehouse.
- Monthly return. Receipts, storage, operations and removals reported to the bond officer within 10 days after the end of the month, nil months included; it must tie back to bills of entry and clearances.
- Retention. Records preserved for at least five years from the removal of the goods.
- Movements. Port, warehouse and export station are linked under a one-time lock; every transfer is documented and sealed.
- Clearances. Home consumption on an ex-bond bill of entry with duty paid; exports on a shipping bill. Duty on domestic sales is deferred, not waived.
- Audit and penalties. Customs may audit the unit; breaches attract penalties under the Customs Act.
Two related points. Circular 26/2024-Customs of 21 November 2024 confirmed that a MOOWR unit can claim concessional rates under the IGCR Rules alongside duty deferment if it meets both sets of conditions. And a capital good takes one route only: an EPCG authorisation or bond under Section 65, never both.
MOOWR scheme: frequently asked questions
What is the MOOWR scheme?
MOOWR is the Manufacture and Other Operations in Warehouse Regulations, 2019, issued under Section 65 of the Customs Act, 1962. A manufacturer licenses its own factory as a private bonded warehouse under Section 58 and brings imported machinery and inputs in without paying customs duty or IGST. Duty on imported content is paid when goods are sold in India and never on exports; there is no interest, no export obligation and no time limit.
What is a bonded warehouse?
A bonded warehouse is a place licensed by Customs where imported goods are kept without paying import duty until they are cleared. The Customs Act, 1962 provides for public warehouses (Section 57) and private warehouses for the licensee’s own imports (Section 58). A MOOWR factory is a Section 58 private warehouse with Section 65 permission to manufacture inside it. Duty is paid only on goods cleared for home consumption, on an ex-bond bill of entry (Section 68); goods exported from the warehouse pay no import duty (Section 69).
What are the main MOOWR scheme benefits?
Three. Duty on the imported content of exported goods is never paid (Section 69). Duty on inputs sold in India is paid at clearance, weeks or months after import, without interest. Duty on imported machinery stays deferred for as long as it works under bond, with no time limit — on ₹10 crore of machinery at illustrative rates, about ₹2.77 crore kept in the business. None of it depends on an export obligation.
Is there an export obligation or a time limit under MOOWR?
No. A MOOWR unit may sell its entire output in India; it simply pays duty on the imported content of whatever it clears for the domestic market, on an ex-bond bill of entry. Deferred duty carries no interest, and there is no limit on how long goods stay in bond. The permission itself stays valid until the unit surrenders it or Customs cancels it.
Which duties are deferred under MOOWR, and is IGST included?
Basic customs duty, the social welfare surcharge, IGST, compensation cess and other customs duties such as anti-dumping duty, for as long as the goods stay in bond. Section 65A, inserted by the Finance Act, 2023, allows IGST and cess to be collected when goods are brought in for Section 65 operations, but only from a date the Government notifies — confirm the position for your tariff lines before filing.
Can a MOOWR unit claim duty drawback or RoDTEP on its exports?
Not on goods manufactured partly or wholly in its Section 65 warehouse. Such goods are listed as ineligible for RoDTEP, and the All Industry Rate drawback notification excludes them (Notification 77/2023-Customs (N.T.), condition 9(i)). An exporter with meaningful drawback or RoDTEP rates should weigh that loss against the duty MOOWR saves; EPCG or Advance Authorisation may work out better.
How do I apply for a MOOWR licence in Gujarat?
File one combined application for a private warehouse licence under Section 58 and manufacturing permission under Section 65 with the jurisdictional Principal Commissioner or Commissioner of Customs — in Gujarat typically the Ahmedabad, Kandla or Mundra commissionerate. Invest India’s online facility ran only until 15 November 2025 (Circular 27/2025-Customs); CBIC is moving applications to its own digital module. After verification of the premises and a triple-duty bond, the permission is issued without renewal.
Does MOOWR affect Gujarat state subsidies on the same machinery?
No. Neither MOOWR nor EPCG touches the Viksit Gujarat Industrial Policy 2026 package. Capital, interest and power tariff subsidy, electricity duty exemption and EPF reimbursement are claimed as usual, and imported machinery counts toward eligible fixed capital investment whichever customs route it takes. The customs route decides when duty is paid; the State scheme decides what the unit gets back on the investment.
Importing machinery or inputs into Gujarat this year?
Send us what you import, what you make and where it goes. As a MOOWR consultant in Gujarat, we model MOOWR against EPCG and Advance Authorisation on your tariff lines, price in the drawback and RoDTEP you would forgo, and then set up the premises, the application, the bond and the monthly compliance.
Written by the NeoApex Saver advisory team · Reviewed by Ashish Shah, Founder and Managing DirectorNeoApex Saver Pvt Ltd (formerly Apex Consultants) has filed Gujarat industrial incentive claims for over twenty years — 300+ projects, 99% filing success. Legal references in this article are to the Customs Act, 1962, the MOOWR (No. 2) Regulations, 2019 and CBIC circulars; duty rates in the example are illustrative, and the worked example and the reading of grey areas are ours.Last reviewed 29 October 2026 · About the team · Report a correction