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Para 6.8.2 - Duty Exemptions | KartavyaDesk

Goods Manual

Original Rule Text

3. However, to avail of such exemptions, the organisations are required to produce a "Customs Duty Exemption" certificate and a "Not Manufactured in India" certificate at the appropriate time. 4. The Manufacturing and Other Operations in a Warehouse Regulations (MOOWR) Scheme 2019 was introduced by the Central Board of Indirect Taxes and Customs (CBIC) to promote India as a global manufacturing hub and bolster the “Make in India” initiative. This scheme allows importers to bring raw materials and capital goods into the country without paying customs duties. Notably, the MOOWR Scheme is unique in that it is delinked from export obligations, extending benefits even to importers who intend to use goods for sale within the domestic market. These imported materials can then be utilized for manufacturing and other operations within private bonded warehouses. Under the MOOWR Scheme: a) Import duty is deferred when raw materials and capital goods are imported into India. b) If these materials are used for exports, the deferred duty is exempt. c) If the inputs are utilized for goods sold in the domestic market (i.e., Domestic Tariff Area), import duty for such inputs used for domestic clearance must be paid. d) Import duty on capital goods is paid if they are cleared for the domestic market.

What This Means

Para 6.8.2 of the Manual for Procurement of Goods, 2017, discusses exemptions from customs duties when procuring goods. To take advantage of these exemptions, organizations need to provide two key certificates: a "Customs Duty Exemption" certificate and a "Not Manufactured in India" certificate. This ensures that the government isn't unnecessarily foregoing revenue on goods readily available within the country. The rule also touches upon the Manufacturing and Other Operations in a Warehouse Regulations (MOOWR) Scheme 2019, which aims to boost domestic manufacturing.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

  • •Organizations need a "Customs Duty Exemption" certificate to avail duty exemptions.
  • •A "Not Manufactured in India" certificate is required to prove the goods aren't locally produced.
  • •The MOOWR Scheme allows duty deferment on imported raw materials and capital goods.
  • •Under MOOWR, duty is exempt if materials are used for exports but payable if used for domestic sales.
  • •MOOWR promotes domestic manufacturing by allowing duty-free import of materials for use in private bonded warehouses.

Practical Example

The Ministry of Textiles wants to procure specialized weaving machines. After checking the market, they find that these machines are not manufactured in India. To avoid paying customs duty, the Ministry applies for and obtains a "Not Manufactured in India" certificate from the relevant authority. They also secure a "Customs Duty Exemption" certificate based on their eligibility as a government entity. If the Ministry were importing raw cotton under the MOOWR scheme to produce fabric for export, the import duty would be deferred and eventually exempted upon export. However, if some of the fabric is sold within India, the Ministry would need to pay the import duty on the raw cotton used to produce that portion of the fabric.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

What is the purpose of the "Not Manufactured in India" certificate?▼
It verifies that the goods being procured are not produced within India, justifying the need for import and potential duty exemptions.
Who is responsible for issuing the "Customs Duty Exemption" certificate?▼
The issuing authority depends on the specific exemption being claimed. It's usually a department within the Ministry of Finance or a designated agency.
What are the benefits of the MOOWR Scheme?▼
The MOOWR Scheme promotes domestic manufacturing by allowing duty deferment on imported raw materials and capital goods. This reduces upfront costs for manufacturers and encourages investment.
If we import capital goods under MOOWR and later decide to sell them domestically, what happens?▼
You will need to pay the applicable import duty on those capital goods before they can be cleared for sale in the Domestic Tariff Area (DTA).
Where can I find the complete guidelines for the MOOWR Scheme?▼
The complete guidelines and notifications related to the MOOWR Scheme are available on the website of the Central Board of Indirect Taxes and Customs (CBIC).

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Test Your Knowledge

Question 1 of 3

According to Para 6.8.2 of the Manual for Procurement of Goods, 2017, which two certificates are required to avail customs duty exemptions?

Related Rules

Para 9.4Manual for Procurement of Goods, 2024 - Para 9.4 - Chapter 9Para 9.5.5Manual for Procurement of Goods, 2024 - Para 9.5.5 - Chapter 9Para 1.8.2Manual for Procurement of Goods, 2024 - Para 1.8.2 - Chapter 1Para 2.2.2Manual for Procurement of Goods, 2024 - Para 2.2.2 - Chapter 2Para 2.2Manual for Procurement of Goods, 2024 - Para 2.2 - Chapter 2

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