Removal of Manufacturing goods from Section 65 unit operating under MOOWR,2019

[Abhijeet Mane]

Please clarify whether customs duty payable or not for the removal of Manufacturing Goods from a section 65 unit operating under Manufacture and Other Operations in Warehouse Regulations 2019 to a

1] Special Economic Zone unit ( 'SEZ unit') as defined under SEZ Act,

2] Export Oriented Unit ('EOU') as defined under Foreign Trade policy,

3] another section 65 unit operating under MOOWR 2019.

Also please refer the respective section under Customs Act for the same.

[KASTURI SETHI]

Section 65 of the Customs Act is not applicable to EOU, STP, HTP w.e.f. 13.8.2016. See M.F. (D.R.) Circular No. 6/2019-Cus., dated 20-2-2019.

The manufactured goods may be exported without payment of Customs duty. Clearance for home consumption is on payment of GST. Clearance to SEZ is to be treated as export. Zero rated supply.

Also see Circular No.48/20/Customs dated 27.10.20 and 3/19/customs dated 31.1.19

[Shilpi Jain]

BCD is payable when goods are cleared for home consumption from the warehouse.

1] Special Economic Zone unit ( 'SEZ unit') as defined under SEZ Act, - this is a place outside India as per Customs. Clearance to SEZ no liability.

2] Export Oriented Unit ('EOU') as defined under Foreign Trade policy - clearance to EOU would be on filing of a BoE for home consumption. So a view emerges that BCD would be liable when cleared to EOU but considering the intention of the MOOWR scheme, if the goods are being further exported by the EOU, ideally exemption should still be available. However, looks like a grey area.

3] another section 65 unit operating under MOOWR 2019. - Not liable as there is no clearance for home consumption.

[Raghunandhaanan rvi]

Sir,

Your supply to SEZ from your bonded warehouse is considered an "Export under Section 69 of the Customs Act". Thus, no duty is payable.

Whereas, your supply to EOU is termed as a supply to DTA. Thus, GST payable

Removal of goods from one bonded warehouse to another under transfer bond, duty is not payable

AI Summary

Removal to SEZ treated as export, exempting basic customs duty and qualifying as zero-rated supply for indirect taxes. Supplies from a Section 65 MOOWR unit to an SEZ are treated as exports and not subject to basic customs duty, being zero-rated. Clearance for home consumption attracts basic customs duty. Supplies to an EOU may be treated as home-consumption clearances (liable to basic customs duty and GST), though administrative guidance and the scheme's export intent create a gray area if the EOU subsequently exports. Transfers between bonded/Section 65 units under transfer bond do not attract customs duty.