TaxTMI 
TaxTMI 
2026 (7) TMI 1292
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....he 'MOOWR'). The MOOWR Scheme allows importation of capital goods into bonded manufacturing facilities without immediate customs duty payment. Such capital goods are permitted to remain the warehouse till their actual clearance from the warehouse in terms of Section 61(1)(a). Customs duty on such capital goods is payable only if the capital goods are cleared for domestic consumption. Further, no interest under Section 61(2) is payable at the time of payment of Customs Duty. 2. The Appellant was issued a License No. 02/SH/CCP/WH/2023 dated 25.01.2023 (enclosed as Annexure-1 to this Synopsis) under Section 58 read with Section 65 of the Customs Act, for Private Bonded Warehouse (hereinafter referred to as 'MOOWR warehouse') wherein the Appellant was granted the permission to undertake manufacturing and other operations in respect of the dutiable imported goods, which were deposited without payment of duty. One of the goods permitted to be imported under the said License by the Appellant was Cooler (gearbox) falling under Customs tariff heading 84195090 from Germany, which the Appellant imported. Upon its arrival, the Appellant filed into Bond Bill of Entry (BOE) No....
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....deposited, till their clearance from such warehouse, subject to satisfaction of the following conditions: i. Such goods are in the nature of capital goods; ii. Such capital goods are "intended for use" in the warehouse where manufacturing operations are permitted under Section 65. 5. Customs duty on such goods are paid are the time of clearance for home consumption from the warehouse licensed under Section 65. Since such goods are not covered under the ambit of Section 61(2) of the Act, hence no interest is payable at the time of clearance. 6. It is not in dispute that the goods in the present appeal are in the nature of capital goods which was transferred to the Appellant's licensed warehouse (viz. MOOWR warehouse) under Section 65 of the Customs Act. In fact, the Appellant imported the subject goods with the intent to use in the process manufacturing, which is evident from the fact that the goods were specified at S. No. 6 of the MOOWR license application of the Appellant as goods permitted to be imported for use in the manufacturing operations within the licensed warehouse. 7. The Learned Counsel submits that it is pertinent to appreciate the meaning o....
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....oms Act and paragraph 12 of the CBIC Circular dated 01.10.2019. In the aforesaid factual background, the Hon'ble CESTAT Delhi by placing reliance on the judgement of Dalmia Dadri (supra) observed that the Commissioner (Appeals) categorically noted that the solar modules were imported under section 65 of the Customs Act, 1962 and intended for use in the project, but could not be used. Therefore, the argument of the Appellant that if solar modules were not "intended for use", they should have been immediately ex-bonded and should not have remained in the warehouse for six to seven months cannot be accepted. The solar modules were imported with the intention to use, it is only when the Respondent could not adjust the solar modules that a decision was taken to ex-bond them from the warehouses and use them outside the warehouses. In view of the aforesaid observation, the appeal preferred by the Department was set aside. Therefore, on perusal of the aforesaid judgement it is clear that once the Appellant had unequivocally declared its intention to use the subject goods in the manufacturing operations within the bonded warehouse, and such declaration formed part of the application conside....
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....oods warehoused simpliciter under Section 58 of the Customs Act, 1962. The clarification recognizes that a warehouse licensed under Section 65 also possesses a license under Section 58 and, therefore, goods lying in such warehouse which are not intended to be used in manufacture will be cleared for home consumption under Section 68 on payment of applicable customs duty together with interest under Section 61(2). It is submitted that the said circular is not applicable to goods imported with the intention to carry out manufacturing operations in MOOWR licensed warehouses. 16. In view of the above submissions, it is prayed that the impugned order may be set aside and the appeal may be allowed. 17. The Learned AR appearing on behalf of the Revenue submits that the facility of deferred Customs Duty payment has been given only for manufacturing the goods out of the goods warehoused within the premises. As and when the imported goods are used for manufacturing purposes, the Customs Duty can be paid on a deferred basis, there being no need to pay any interest. But if the bonded goods are not used within the warehoused premises and they are removed out of the warehouse, the requisite....
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....imports is covered? For how long is duty deferment available? Is interest payable after some time? Response: A unit licensed under Sections 58 and 65 can import capital goods and warehouse them without payment of duty. Manufacture and other operations in a bonded warehouse is a duty deferment scheme. Thus, both BCD and IGST on imports stand deferred. In the case of capital goods, the import duties (both BCD and IGST) stand deferred till they are cleared from the warehouse for home consumption or are exported. The capital goods can be cleared for home consumption as per Section 68 read with Section 61 of the Customs Act on payment of applicable duty without interest. The capital goods can also be exported after use, without payment of duty as per Section 69 of the Customs Act. The duty deferment is without any time limitation. 23. I find that the clarifications issued, contradict each other. The 2019 Circular states that for the goods cleared for 'home consumption" would require payment of interest. On the other hand, the FAQ issued in 2020 categorically states that the capital goods can be cleared on payment of Customs Duty, without any interest. Therefore, these clarif....
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...."for use" must mean "intended for use". If the intention of the legislature was to limit the exemption only to such goods sold as were actually used by the undertaking in the generation and distribution of electrical energy, the phraseology used in the exemption clause would have been different as, for example, "goods actually" used or "goods used" 27. Similar issue had arisen in the case of Steel Authority of India Ltd. vs. Collector of Central Excise - 1996 (88) ELT 314 (SC), the Supreme Court again examined the words "intended for use" and the relevant observations are as follows: SAIL has a plant at Rourkela which manufactures fertilisers. For such purpose SAIL uses raw naphtha. Raw naphtha was, at the relevant time, excisable at a concessional rate of duty in terms of an exemption Notification (No. 187 of 1961), dated 23rd December, 1961, as amended from time to time. The concessional rate of duty stated therein was admissible provided "(i) it is proved to the satisfaction of an officer not below the rank of an Assistant Collector of Central Excise that such raw naphtha is intended for use in the manufacture of fertiliser; and (ii) the procedure s....
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....but had, at the interim stage of reformed gas, to be vented out. 28. The Supreme Court in BPL Display Devices Ltd. vs. Commissioner of Central Excise, Ghaziabad - 2004 (174) ELT 5 (SC), has held as under: The question in this appeal is whether the appellant is entitled to the benefit of Notification No. 13/97-Cus. as amended by Notification No. 25/99-Cus. These two Notifications provide for certain benefits to specified items if they are imported into India 'for use" in the manufacture of other items specified in the notifications. 2.xxxxxxxxxxxThe words 'for use" used in similar exemption Notifications have also been construed by this Court earlier in the State of Haryana v. Dalmia Dadri Cement Ltd., 1987 (Suppl) SCC 679 to mean 'intended for use". According to this decision the object of grant of exemption was only to debar those importer/manufacturers from the benefit of the Notifications who had diverted the products imported for other purposes and had no intention to use the same for manufacture of the specified items at any stage. 29. The Delhi Bench of the Tribunal, on an identical matter involving clearance of capital goods warehoused under MOOWR sch....
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....rted goods which were intended for use in the project of ACME can also be cleared for home consumption in terms of section 61(1)(a) of the Customs Act; and (v) The provisions of section 61(1)(a) of the Customs Act and paragraph 12 of the Circular dated 01.10.2019 have been erroneously applied. 19. The term "intended for use" is in contradistinction to the term 'actual use". This aspect has been highlighted by the Supreme Court in Dalmia Dadri Cement. The Supreme Court observed that the clause mentioned "for use" would mean "intended for use", and this is different from "goods actually used" or "goods used". 20. This decision of the Supreme Court in Dalmia Dadri Cement was followed by the Supreme Court in BPL Display Devices Ltd. vs. Commissioner of Central Excise, Ghaziabad. 21. In Steel Authority of India Ltd. vs. Collector of Central Excise, the Supreme Court again examined the words "intended for use". 23. It is not possible to accept the contention of the learned authorized representative appearing for the department that if 48,742 solar modules were not 'intended for use", they should have been immediately ex-bonded and should not h....