CBIC should review its MOOWR instructions to ease operations for units

In October 2019, the government introduced much liberalized regulations for manufacture in customs bonded warehouses. Five years later, some problems still persist.

 

Chapter IX (Sections 57 to 73) of the Customs Act, 1962, deals with warehousing i.e. deferment of import duties on goods deposited in bonded warehouses. Section 58 of the Customs Act, 1962, allows importers to get licenses for private bonded warehouses, where they can store their own goods imported without payment of duties. The Private Warehouse Licensing Regulations, 2016 (PWLR) prescribe the disciplines for licensing of such warehouses and conditions to be fulfilled by the licensees. Section 65 of the Customs Act, 1962, allows licensing the activities of manufacture and other operations on goods in bonded warehouses. The Manufacture and Other Operations in Warehouse (No.2) Regulations 2019 (MOOWR) prescribes the procedures and disciplines to be followed by the licensees and the Customs authorities having jurisdiction over the warehouse. The Central Board of Indirect Taxes and Customs has supplemented such legal provisions with useful circulars and frequently asked questions (FAQs).

 

Any unit seeking a license under MOOWR is first required to get a license under PWLR. The CBIC Circular no.18/2016-Customs dated May 14, 2016, requires the importer to execute a bond for three times the duty on the imported goods at the Customs station of import for clearance of goods under a bill of entry for warehousing and prescribes the formats for a consignment bond or a general bond that could be executed every year.  The CBIC Circular no.34/2019-Cus dated October 1, 2019, prescribes the format of a general bond serving the requirement of both MOOWR and PWLR to be furnished to the Customs authorities having jurisdiction over the premises licensed under MOOWR. The CBIC, however, has not said that a MOOWR unit need not furnish a bond at the Customs station of import. 

 

So, the Customs authorities at the ports/airports continue to insist and take consignment/general bonds from the MOOWR units before releasing the imported goods under bills of entry for warehousing after debiting running bond accounts with thrice the duty amount. They credit such running bond accounts after the MOOWR units submit proof of export of the goods manufactured from the warehoused goods. This procedure works when the all imports of a MOOWR unit take place from only one port/airport. 

 

However, when the imports take place from several pots/airports, a MOOWR unit has to furnish separate utilization statements at different customs stations for taking credit in each running bond account, which is time consuming and costly. So, the CBIC should enforce its instructions asking the MOOWR units to give a single bond to the jurisdictional Customs authorities and allow them to maintain the running bond accounts themselves subject to suitable reporting and audits.  

 

The CBIC Circular no.34/2019-Customs dated October 1, 2019, asks the MOOWR units to pay interest when they clear the imported goods as such in the domestic tariff area, whereas Section 61(2) of the Customs Act, 1962, does not require payment of interest when the imported goods are removed as such by a MOOWR unit.   

 

More such irritants persist for MOOWR units, although over five years have passed since the introduction of MOOWR 2019 regulations. The CBIC should now review its instructions and make it easier for the MOOWR units to carry on their activities.

 

tncrajagopalan@gmail.com