Manufacturers in India who rely heavily on imported capital goods and raw materials now have more clarity and flexibility in managing import duty costs. With the issuance of Circular No. 26/2024-Customs, the Central Board of Indirect Taxes and Customs (CBIC) has explicitly clarified that importers can simultaneously avail benefits under the MOOWR Scheme and the IGCRD Scheme, provided certain conditions are met.
Understanding the Two Schemes
The MOOWR Scheme (Manufacture and Other Operations in Warehouse Regulations, 2019) allows manufacturers to import capital goods and raw materials without upfront payment of customs duties. The duties are either deferred or waived depending on the nature of removal—exports get full exemption, and domestic clearances trigger duty payment at the time of clearance.
The IGCRD Scheme (Import of Goods at Concessional Rate of Duty Rules, 2022), on the other hand, allows importers to claim concessional duty on goods imported for use in specified end-use manufacturing, subject to conditions like submission of end-use bonds and consumption tracking.
Simultaneous Availment: What the Circular Says
As per Para 3.3 of Circular 26/2024, MOOWR units can claim IGCRD benefits concurrently, provided the following are ensured:
- The importer complies with all conditions under the IGCR Rules, such as filing proper intimation, maintaining consumption records, and meeting time-bound usage requirements.
- The goods imported under IGCR are tracked separately from other warehoused goods, and MOOWR-related compliances are also maintained.
- Documentation and traceability of inputs and value-added outputs are clearly maintained for supplies to DTA, SEZ, or other MOOWR units.
This makes it operationally possible for an importer to bring in goods under MOOWR (deferring duties), and simultaneously avail IGCR concessions (reduced duty rate) on eligible items, as long as they adhere to both sets of rules.
Practical Use Case: Mobile Phone Component Manufacturers
The circular also clarifies doubts on applicability in sector-specific scenarios. For example, manufacturers producing components for cellular mobile phones (as per Notification No. 57/2017-Cus) can import goods under MOOWR and claim IGCRD benefits even if they are not the final mobile phone manufacturer.
The key condition is that the goods must be used in the manufacturing process and eventually supplied to the mobile phone manufacturer. This opens a window for intermediate manufacturers—those who supply sub-assemblies or partially processed goods to larger OEMs—to benefit from concessional import rates.
Conclusion: Dual Benefits, Dual Compliance
The CBIC’s clarification now removes ambiguity and confirms that MOOWR and IGCRD benefits are not mutually exclusive. Importers can structure their supply chains more efficiently, reducing cash flow pressure and import cost—but only if they maintain strict procedural compliance under both schemes.
For businesses aiming to maximize duty savings while maintaining compliance, it is highly recommended to consult experienced advisors. At Global Tax Masters, we specialize in MOOWR registrations and provide end-to-end compliance support, including integration with IGCR benefits.
Reach out to us today to assess how both schemes can be leveraged for your manufacturing operations.
