MOOWR: Duty Deferment Without an Export Obligation

MOOWR explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Every other scheme in this area buys a duty benefit with an export commitment. MOOWR does not. It defers duty until the goods leave the warehouse, waives it entirely if they leave as exports, and imposes no minimum export target at all — which is exactly why it has displaced older schemes for many manufacturers.

The Manufacturing & Other Operations in Warehouse Regulations (MOOWR), "Introduced in 2019 by the CBIC under the Customs Act", permit manufacturers "to import raw materials and capital goods into a bonded warehouse, conduct manufacturing or related processes, and defer payment of customs duty and IGST until the finished goods are cleared for domestic consumption. If the goods are exported, these duties are completely waived." It runs on section 58 (warehouse licence) and section 65 (manufacturing permission) of the Customs Act, 1962.

The six features

Duty and tax deferment. "No upfront payment of Basic Customs Duty, IGST, or IGST + BCD on inputs and machinery. Duties apply only upon domestic clearance; exports are duty-free."

No export obligations. "Manufacturers can sell 100% domestically or export — no minimum export target is required."

Flexible warehouse transfers. "Goods can be moved between bonded facilities without payment — you defer the duty with the goods."

Unlimited storage time. "No time limits for storing imported goods or machinery in the warehouse."

Long-term licence. "MOOWR licence is valid indefinitely unless surrendered or withdrawn."

Lower working capital needs. "Delaying duty payments improves cash flow, potentially saving 1–3% of sales costs."

Who can apply, and how

Eligibility. "Anyone holding a bonded warehouse licence under Section 58 of Customs Act, OR entities applying simultaneously for a warehouse licence and MOOWR permission under Section 65."

And the scope is wide. "This includes new/existing manufacturers, job workers, and even trader-manufacturers, and there are no minimum investment thresholds."

The workflow:

1. "Apply online (via Invest India or CBIC portal) and submit a bond and solvency certificate."
2. "Customs inspects your facility."
3. "Licence & warehouse code issued (typically within 4–7 weeks)."
4. "Import goods under warehousing status, store them in the facility."
5. "Process/manufacture inside warehouse."
6. Clear finished goods — "For domestic sale: pay duties only on used inputs and capital goods. For export: zero duties."

Ongoing compliance is "digital record-keeping, monthly returns, annual solvency/insurance renewals."

Note step 6's phrasing. Duty on domestic clearance is computed on the inputs and capital goods used, not on the finished product — so value added inside the warehouse never bears customs duty.

MOOWR against Advance Authorisation and EPCG

The comparison makes the trade-off explicit. AA and EPCG remove duty in exchange for an export commitment; MOOWR postpones it in exchange for nothing. A manufacturer selling mostly domestically gains cash flow but ultimately pays the duty; one exporting heavily gets substantially the same outcome as AA without the obligation.

And the Handbook says so plainly: "exporting is beneficial to avoid duty payment on inputs; chronic DTA sales simply mean the firm eventually pays normal import duties, nullifying the deferral advantage."

The limits

Goods stay under customs control until cleared. "until clearance, the warehoused goods (including finished goods) are under customs control and cannot be disposed outside the terms of Section 65 permission."

Job work is permitted — "inputs can be sent out for job work with permission."

Improper clearance is deemed home consumption. "If goods or scrap are cleared improperly, they are deemed cleared for home consumption and duties become payable with penalties."

Domestic purchases carry GST normally. "(Domestic purchases: GST paid, but GST credit available since unit is a regular GST registrant.)"

And one exit route is closed. "(Using another scheme to discharge the deferred duty, like EPCG, is not allowed as per AAR ruling.)" Contrast the EOU, which may discharge exit dues "through advance authorization and EPCG or in cash." EOU scheme →

The service sector is largely outside it. "MOOWR is fundamentally meant for manufacturing and processing of goods. Service providers per se do not fit, since there must be tangible warehoused goods." The Handbook gives two examples: "a software exporter cannot use MOOWR as there are no physical inputs to warehouse; a power generation unit was deemed ineligible for Section 65, as 'electricity' cannot be secured or removed under bond."

But it can support services indirectly — "e.g. a contract manufacturer producing goods for a service ."

Exit

"A MOOWR unit can choose to exit the scheme or remove particular goods from bond by filing an ex-bond Bill of Entry and paying applicable duties (and IGST) on remaining imported content. There is no additional penalty for exit (unless there were violations). Upon cancellation of licence, the entity must either export or pay duty on all goods in stock."

The absence of an exit penalty is the scheme's other quiet advantage. An AA or EPCG holder abandoning the scheme pays duty plus interest; a MOOWR unit simply pays the duty it had always been deferring.

When MOOWR is the right choice

Take MOOWR where the domestic-export split is uncertain or likely to shift, where the business wants no compliance obligation tied to future exports, where long storage or slow-moving capital equipment is involved, or where the value of deferred cash flow — 1% to 3% of sales cost — outweighs eventually paying the duty.

Take AA where inputs are certainly going into exports and the duty saving is to be permanent rather than deferred.

Take EPCG where the need is capital goods and the export programme can carry six times the duty saved over six years. EPCG →

Key takeaways

• MOOWR runs on sections 58 and 65 of the Customs Act, 1962, under regulations introduced by CBIC in 2019.
• No upfront BCD or IGST; duty falls due only on domestic clearance, and is waived on export.
• No export obligation, no minimum export target, no minimum investment threshold.
• No time limit on warehousing; the licence is valid indefinitely unless surrendered or withdrawn.
• Duty on domestic clearance is on the inputs and capital goods used, so value added in the warehouse is never dutiable.
• Open to manufacturers, job workers and trader-manufacturers; licence typically issued in 4–7 weeks.
• Goods remain under customs control until cleared; improper clearance is deemed home consumption with penalties.
• Exit by ex-bond Bill of Entry with no additional penalty — but EPCG cannot be used to discharge the deferred duty.
• Services are largely outside it — software and power generation both fail the tangible-goods test.

Read next

• EOU Scheme: Net Foreign Exchange and DTA Sale
• EPCG Scheme: Six Times Duty Saved, and the Average Export Obligation
• Advance Authorisation: Inputs, SION and Minimum Value Addition

Disclaimer: Positions stated as on 5 September 2026, based on sections 58 and 65 of the Customs Act, 1962, the Manufacture and Other Operations in Warehouse (No. 2) Regulations, 2019 and CBIC Circulars No. 34/2019 and 36/2020-Customs, as reproduced in the ICAI Handbook on Foreign Trade Policy – Incentives, Schemes & Related FAQs (November 2025, 2nd Edition).