MOOWR manufacturing operations are far broader than most guidance suggests. Section 65 of the Customs Act, 1962 permits manufacture and other operations in relation to warehoused goods, and it contains no words of qualification or limitation regarding the nature of the goods or the activity involved.
That is not an interpretation. It is the express holding of the Delhi High Court in ACME Heergarh Powertech, which rejected the argument that Section 65 is confined to a particular genre of goods or manufacturing.
Section 65 uses the word goods, which includes all kinds of goods: raw materials, components, consumables, and capital goods. The phrase manufacturing process or other operations is deliberately wide.
The Court held that reading Section 65 to cover only capital goods that themselves undergo a process of manufacture, or that are consumed in the resultant product, would place an extremely narrow construction on the statutory language. Neither Section 61 nor Section 65 incorporates an implied exclusion for any particular industry.
The expression in relation to, used in Section 65, conveys comprehensiveness. It suggests a causal link between the imported goods and the manufacturing activity undertaken in the warehouse.
Capital goods need not transform themselves. They need only be connected to, or contribute to, the manufacturing process or operations in the warehouse. This is why machinery installed and used inside a bonded facility qualifies, even though the machine itself never becomes part of the finished goods.
In practice, MOOWR manufacturing operations span the full range of value addition:
Here is the limit that genuinely bites when planning MOOWR manufacturing operations. Job work is permitted, but only inputs may be sent out to a job worker’s premises.
Imported capital goods cannot be shifted to a job worker. Only tools, moulds, drawings, and similar items may be provided. The main machinery must stay in the bonded facility. Capital goods may, however, be sent outside for repair with the permission of the bond officer.
The application under Regulation 4 requires the applicant to inform the input-output norms for raw materials and final products, and to report any revision. SION norms do not apply, so you declare your own.
Operating outside the declared scope is a breach of licence conditions and can attract cancellation under Section 58B. The point is not that customs pre-approves a narrow list, but that you must operate within what you declared and report changes.
This changes the picture for MOOWR manufacturing operations going forward. A proviso to Section 65(1), inserted by the Finance (No.2) Act, 2024 and administered by CBIC, empowers the Central Government to notify manufacturing processes and other operations, in relation to a class of goods, that shall not be permitted in a MOOWR unit.
Before that amendment, the breadth of Section 65 was the point, as the Delhi High Court confirmed. Exclusion can now occur by notification. A separate notification effective 17 December 2024 restricts warehousing where electricity is the resultant good.
Duty is payable on the portion of imported inputs attributable to scrap or refuse arising from operations. If scrap is destroyed, no duty is payable. If it is exported, duty is calculated as if the goods were originally imported in that form, on the transaction value of the scrap.
All such activity must be recorded in the prescribed accounts and reflected in the monthly return.
At JPARKS INDIA, we scope MOOWR operations correctly at the application stage, declare accurate input-output norms, structure job work within the permitted boundary, and keep the declared activity aligned with what actually happens on the floor. Where the 2024 proviso creates exposure for your class of goods, we say so. Having served 500+ importers and exporters since 2018, we keep bonded manufacturing compliant. Learn more about our MOOWR scheme services or book a free consultation.
Section 65 contains no words of limitation on the nature of goods or the activity. Assembly, processing, fabrication, packaging, testing, repair, and reconditioning are all undertaken, alongside use of imported capital goods.
The Delhi High Court in ACME Heergarh Powertech held that Section 65 cannot be read as restricted to a particular genre of goods. However, since 2024 the Central Government may exclude classes of goods and operations by notification.
No. Only inputs may be sent for job work. Imported capital goods cannot be shifted to a job worker’s premises, though tools, moulds, and drawings may be. Capital goods can be sent out for repair with the bond officer’s permission.
It conveys a causal link. Capital goods need not transform themselves, only contribute to or be connected with the manufacturing process or operations carried out in the warehouse.
Yes, on the portion of imported inputs attributable to the scrap. If the scrap is destroyed, no duty is payable. If exported, duty is computed on the transaction value of the scrap as if originally imported in that form.
