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The MOOWR bond is not a B-17 bond. This confusion appears in a good deal of published guidance and it matters, because the two instruments belong to different schemes with different amounts, different formats, and different discharge conditions.
A MOOWR unit executes a triple duty bond under Section 59 of the Customs Act, 1962. The B-17 bond belongs to the Export Oriented Unit scheme and has nothing to do with Section 65.
B-17 is a general surety or security bond notified under Notification No. 6/98-CE(NT) dated 2 March 1998, revised post-GST by Notification No. 1/2018-CE(NT). It is executed by 100 per cent Export Oriented Units and units in EHTP, STP, and FTZ.
Its amount equals 25 per cent of the duty foregone on capital goods required over the next five years, plus duty foregone on raw materials for three months. Where a valid surety is not arranged, further security of 5 per cent of the bond amount is furnished. It is discharged on final de-bonding from the EOU scheme.
Section 59 requires the importer of goods entered for warehousing to execute a bond in a sum equal to thrice the amount of the duty assessed on those goods.
The bond binds the importer to comply with all provisions of the Act and the rules and regulations made under it, to pay all duties and interest payable under sub-section (2) of Section 61 on or before the date specified in a notice of demand, and to pay all penalties and fines incurred for contravention.
Regulation 4 of the MOOWR (No. 2) Regulations, 2019 provides that the applicant under Section 65 shall undertake to execute a bond in the format specified by CBIC.
The bond prescribed at Annexure C of Circular No. 34/2019-Customs serves the requirements of both the MOOWR Regulations and Section 59 of the Customs Act. One instrument, one format, covering both obligations.
This is a genuine advantage of the MOOWR bond over several other schemes. No bank guarantee is required to obtain MOOWR approval. The bond alone suffices.
Compare the B-17 bond, where a 5 per cent security must be furnished if a valid surety is not arranged, or EPCG, where default triggers duty recovery with interest at 15 per cent per annum.
The bond is executed with the jurisdictional Principal Commissioner or Commissioner of Customs as part of the combined Section 58 and Section 65 application, in the prescribed format duly approved and signed by the Deputy or Joint Commissioner.
It is a running instrument. Goods entering the warehouse debit the bond. Goods cleared for home consumption or exported re-credit it. Units that treat it as a one-time formality find it exhausted or misstated at audit.
When resultant goods move to another Section 65 unit, the transferee’s triple duty bond is debited under Section 59 and the supplier’s bond is re-credited. A transit risk insurance policy covering the customs duty involved must also be in place.
Note that on the ICEGATE Warehouse Module, a transhipment bond is separately mandatory for physical transfers between warehouses. A transit bond is not accepted by the system, and transit insurance does not substitute for it.
The bond executed by a Section 65 unit stays in full force notwithstanding the removal of goods for job work. Where any job work condition is violated, the goods are deemed to have been cleared for home consumption on the date they were cleared for job work, and duty, interest, and penalties are reckoned from that date.
An all-risk insurance policy including the deferred customs duty amount must be maintained throughout.
The bond is discharged on finalisation, once all bonded goods have been cleared, exported, or transferred, and any duty, interest, or penalty has been paid. Surrender of the licence follows the Private Warehouse Licensing Regulations, 2016, by written request to the Commissioner.
Where dues remain unpaid, the bond is invoked to recover them. A bond carelessly debited and re-credited across a series of transfers becomes a liability of its own.
At JPARKS INDIA, we execute the Section 59 bond in the correct Annexure C format, keep the debit and re-credit positions accurate across imports, clearances, and transfers, arrange transit and all-risk cover, and pursue discharge at surrender. Having served 500+ importers and exporters since 2018, we keep bond positions defensible. Learn more about our MOOWR scheme services or book a free consultation.
No. B-17 is a general surety or security bond for Export Oriented Units, notified under Notification 6/98-CE(NT). MOOWR units execute a triple duty bond under Section 59 of the Customs Act, 1962.
A triple duty bond under Section 59, in a sum equal to thrice the duty assessed on the warehoused goods, in the format prescribed at Annexure C of Circular No. 34/2019-Customs.
No. No bank guarantee is required to obtain MOOWR approval. This distinguishes it from the B-17 bond, where a 5 per cent security applies if a valid surety is not arranged.
Yes. The bond stays in full force notwithstanding removal of goods for job work. Breach of any job work condition deems the goods cleared for home consumption on the date they left for job work.
On finalisation, once all bonded goods are cleared, exported, or transferred and any duty, interest, or penalty is paid. Surrender follows the Private Warehouse Licensing Regulations, 2016.
If you want this done without the back and forth, we provide MOOWR approval support.
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