Yes, customs can revoke MOOWR approval, but only on specific statutory grounds and only after due process. The power sits in Section 58B of the Customs Act, 1962, which allows the Principal Commissioner or Commissioner of Customs to cancel a licence granted under Section 57, 58, or 58A where the licensee contravenes the Act, the rules or regulations made under it, or breaches a condition of the licence. A MOOWR licence has no fixed expiry and needs no periodic renewal, but it remains conditional on continuous compliance.
Crucially, cancellation is a quasi-judicial function. It cannot be directed by administrative instruction, a point the Delhi High Court has confirmed.
MOOWR operates under Section 65 of the Customs Act, read with Section 58 for the private bonded warehouse licence, and is governed by the Manufacture and Other Operations in Warehouse (No. 2) Regulations, 2019. The cancellation power, however, is not in Section 58 or 65. It is in Section 58B, which provides that where a licensee contravenes any provision of the Act, the rules or regulations, or breaches any condition of the licence, the Principal Commissioner or Commissioner may cancel the licence, after giving the licensee an opportunity of being heard.
Cancellation follows contravention or breach of licence conditions. In practice, the common grounds are:
Before moving to revoke MOOWR approval outright, Section 58B also allows the operation of a warehouse to be suspended pending inquiry, where the Commissioner considers it necessary. During suspension, no fresh goods may be deposited in the warehouse. Importantly, the provisions of the warehousing chapter continue to apply to goods already deposited, so the duty deferment on existing stock is not immediately extinguished by suspension alone. Suspension is a holding measure, not a determination.
The decision to revoke MOOWR approval is never automatic. Before a licence is cancelled, the licensee must be given notice setting out the alleged contravention or breach, and a reasonable opportunity of being heard. This is a statutory proviso to Section 58B, not a courtesy. A cancellation order passed without a show cause notice, or without a hearing, is open to challenge on that ground alone. The decision must be made independently by the customs officer on the facts of the case, per CBIC procedure.
This point is decisive and widely unknown. CBIC issued an Instruction stating that MOOWR is inapplicable to solar power generating units and directing customs officers to review existing licences and take follow-up action. Show cause notices seeking cancellation followed.
In ACME Heergarh Powertech, the Delhi High Court quashed both the Instruction and the consequent notice. The Court held that the power under Section 58B is placed independently in the hands of the customs officer, that granting or cancelling a licence is a quasi-judicial act, and that Section 151A cannot be used to dictate how a quasi-judicial authority decides a particular case. If your cancellation notice flows from an administrative directive rather than an independent finding on your facts, that is a defence.
If the licence is cancelled, the unit must account for all warehoused goods. Customs duty and IGST deferred on inputs and capital goods lying in the warehouse become payable, along with interest and any penalty. The bond executed under Section 59, typically a triple-duty bond covering the warehoused goods, may be enforced to recover the amount. Goods already deposited remain subject to the warehousing provisions, so they must be cleared for home consumption on payment of duty, or exported, or transferred to another licensed warehouse.
A licensee facing revocation has real remedies. You may respond to the show cause notice with evidence rebutting the alleged contravention, seek restoration after rectifying the lapse, appeal the cancellation order under the appellate provisions of the Customs Act, or challenge the order by writ where it was passed without jurisdiction, without a hearing, or under an unlawful administrative directive. The strongest position, of course, is a clean compliance record that never invites the notice.
At JPARKS INDIA, we help MOOWR units stay compliant so revocation never arises, and we defend those that receive a notice. We set up record-keeping that satisfies the 2019 Regulations, reconcile physical stock with the digital account, file monthly returns on time, and respond to show cause notices under Section 58B. Having served 500+ importers and exporters since 2018, we keep bonded facilities operating. Learn more about our MOOWR scheme services or book a free consultation.
Yes. Under Section 58B of the Customs Act, 1962, the Principal Commissioner or Commissioner may cancel the licence where the licensee contravenes the Act, rules or regulations, or breaches a licence condition, after giving an opportunity of being heard.
Section 58B. MOOWR itself operates under Sections 58 and 65, but the cancellation power for licences granted under Sections 57, 58, and 58A is contained in Section 58B.
No. A MOOWR licence has no fixed validity period and requires no periodic renewal. It remains valid unless suspended or cancelled for contravention or breach of conditions.
No. In ACME Heergarh Powertech, the Delhi High Court quashed a CBIC Instruction directing review and cancellation of MOOWR licences, holding that cancellation under Section 58B is a quasi-judicial function that cannot be dictated by an Instruction under Section 151A.
Deferred customs duty and IGST on goods lying in the warehouse become payable with interest and penalties. The Section 59 bond may be enforced. Goods already deposited remain governed by the warehousing provisions until cleared, exported, or transferred.
