0% Duty on Imported Machinery? Know How the MOOWR Scheme  Can Reduce Your Import Cost

MOOWR (Manufacture and Other Operations in Warehouse Regulations, 2019) lets eligible manufacturers import machinery and raw materials into a licensed bonded warehouse under Section 65 of the Customs Act, 1962, without paying customs duty upfront. Duty is deferred, with no interest,  until goods leave the warehouse for domestic sale, and is waived entirely if the finished goods are exported. There is no export obligation, so it suits businesses selling domestically, internationally, or both.

What Is the MOOWR Scheme?

MOOWR Scheme stands for Manufacture and Other Operations in Warehouse Regulations, 2019. It is a customs duty-deferment framework, introduced by the CBIC under Notification No. 69/2019-Customs (N.T.), that allows eligible manufacturers to convert their existing factory or a new facility into a licensed private bonded warehouse under Section 65 of the Customs Act, 1962.

Under the framework, businesses can:

• Import eligible machinery and capital goods without paying duty upfront
• Import eligible raw materials and inputs duty-deferred
• Carry out manufacturing or other permitted operations in the bonded facility
• Clear finished goods for domestic consumption, paying duty at that stage
• Export finished goods with the input duty fully waived

How Does MOOWR Work?

Import Machinery / Inputs → Bonded Warehouse → Manufacturing / Processing → Finished Goods → Domestic Sale (duty paid) or Export (duty waived)

Registration is a one-time process with no renewal requirement, and there is no minimum investment threshold; the scheme is equally accessible to MSMEs and large manufacturers.

Where Is Customs Duty Actually Payable?

This is the part most import-cost articles get vague on, so it’s worth being precise:

• On import into the bonded warehouse: no duty is paid.
• On clearance for domestic consumption: duty becomes payable at the rate prevailing on the date of ex-bond clearance, not the rate on the original import date.
• On export of finished goods: the duty on the imported inputs used in those goods is fully waived, not merely reduced.
• On deferred duty itself: no interest is charged, however long the goods remain in the warehouse; this applies to both capital goods and inputs.

MOOWR is a 100% duty-deferment scheme for domestic clearance, and a genuine 0%-duty route when the finished goods are exported.

Key Benefits of MOOWR

Working Capital Stays in the Business

Deferring duty payment,  with zero interest,  frees up funds that would otherwise sit locked in customs payments, for use in raw materials, operations, loan servicing, or expansion.

No Export Obligation

Unlike EPCG, Advance Authorisation, or SEZ/EOU schemes, MOOWR does not require businesses to meet any export targets. A unit can sell entirely in the domestic market, entirely abroad, or any mix of the two, and still retain full duty-deferment benefits.

Machinery and Capital Goods Imports

Manufacturers importing high-value plant and machinery can factor MOOWR into project-finance and cash-flow planning, since duty on capital goods is only assessed if and when the machinery itself is cleared into the domestic market,  not when it is used to manufacture goods that are exported.

Imported Inputs

Businesses dependent on imported raw materials can use the scheme to manage import-related cash flow across ongoing, repeat import cycles.

Domestic and Export Flexibility

Because there is no export obligation, the MOOWR scheme fits manufacturers serving a mixed customer base without forcing them into an export-first structure.

Who Should Consider MOOWR?

• Import expensive machinery or capital equipment
• Rely on imported raw materials for production
• Are setting up or expanding a manufacturing facility
• Have significant working-capital requirements
• Import regularly rather than as a one-off
• Serve both domestic and export markets, or plan to

Applicability depends on the specific business activity, goods involved, and current customs provisions; this is a starting point for evaluation, not a substitute for a scheme-fit assessment.

Compliance Requirements

MOOWR scheme is not a duty-saving shortcut; it comes with ongoing customs and warehouse compliance obligations, including:

• Inventory and stock records
• Import documentation
• Consumption and production records, based on declared input-output norms
• Movement records for warehoused goods, including inter-warehouse transfers
• Manufacturing records
• Periodic reporting and documentation as prescribed by CBIC

A Note on Recent Regulatory Changes

MOOWR provisions have been evolving in recent budget cycles: IGST deferral for goods cleared into the domestic market was restricted in a recent Union Budget, customs tariff slabs have since been simplified, and the requirement for prior permission on inter-warehouse transfers under Section 67 has been eased. Businesses evaluating MOOWR should confirm the current provisions rather than solely relying on the scheme’s original 2019 framing.

MOOWR vs EPCG

The suitable option depends on the business’s import volumes, export plans, domestic sales mix, and overall financial structure.

Key Takeaway

MOOWR is not a blanket 0% customs duty exemption on all imports. It is a duty-deferment and bonded-warehouse framework that:

• Defers duty, interest-free, on machinery and inputs cleared domestically
• Fully waives duty on inputs used in exported goods
• Carries no export obligation
• Improves working capital across both machinery and raw-material imports
• Is available to MSMEs and large manufacturers alike, with no minimum investment threshold

Conclusion

For manufacturers planning machinery imports or regularly sourcing inputs from abroad, MOOWR is worth evaluating as part of import and cash-flow planning. The core benefit is interest-free duty deferment, with a full duty waiver on the export side, but the scheme only pays off with proper bonded-warehouse compliance in place. Before implementing MOOWR, businesses should assess their import structure, sales mix, project cost, working-capital position, and compliance capacity,  ideally with an advisor who can confirm current provisions against the business’s specific activity.

Talk to SDS Fin Advisory LLP for a MOOWR scheme-fit assessment tailored to your import and manufacturing structure.

FAQ’s

Is MOOWR a 0% customs duty scheme?

Not automatically. MOOWR defers duty, interest-free, on goods cleared for domestic consumption. Duty is fully waived only on inputs used in finished goods that are exported.

Does MOOWR require any export obligation?

No. Unlike EPCG, Advance Authorisation, or SEZ/EOU schemes, MOOWR does not require a business to meet any export target. Domestic-only, export-only, and mixed sales are all permitted.

Is there interest on deferred duty under MOOWR?

No. Deferred duty under MOOWR carries no interest, regardless of how long the goods remain in the bonded warehouse; this applies to both raw materials and capital goods.

Is there a minimum investment to qualify for MOOWR?

No. MOOWR has no statutory minimum investment, turnover, or net-foreign-exchange threshold, so it is accessible to MSMEs as well as large manufacturers.

How is duty calculated if machinery is later cleared into the domestic market?

Duty on capital goods is assessed on the original CIF import value, with no depreciation adjustment and no interest, at the time the machinery itself is cleared for home consumption.