MOOWR is the short name of the Manufacture and Other Operations in Warehouse Regulations, 2019, made under Section 65 of the Customs Act. The scheme lets a factory that is licensed as a private bonded warehouse import inputs and machinery without paying duty at the port, and pay only when, and only to the extent that, the finished goods are sold in India. Goods exported from the unit never pay the import duty at all. This page is for a manufacturer deciding whether to take a Section 65 licence in 2026, and for the finance head of a unit that already holds one: what the licence gives, what it costs to run, and whether the new monthly duty payment scheme now does the same job for less.
What the MOOWR scheme is
Three provisions do the work. Section 58 lets the Commissioner of Customs license a private warehouse; Section 65 lets the licensee manufacture inside it; and Section 59 makes the licensee sign a bond for the duty on whatever is stored. Goods arrive on a warehousing bill of entry, so Basic Customs Duty and IGST are assessed but not collected. Inside the unit they are stored, processed, assembled or made into something else. What leaves the unit decides the duty:
- Exported on a shipping bill: no import duty on the imported content, ever.
- Sold in India on an ex-bond bill of entry: duty on the imported inputs contained in the goods, at the rate in force on that date, plus GST on the sale as for any manufacturer.
- Moved to another Section 65 unit or bonded warehouse: no duty, under the bond-to-bond transfer procedure.
- Waste and scrap: exported, or cleared in India on the duty that applies to the waste.
No interest runs on the deferred duty, there is no time limit on how long inputs or machinery may stay, there is no export obligation, no minimum investment and no location rule. An existing factory can be licensed where it stands. That is why the meaning of MOOWR to a manufacturer is working capital: the duty on a year's imports sits in the business until the goods are sold.
What changed by 2026
| Change | What it means for a unit |
|---|
| Eligible Manufacturer Importer scheme live from 1 April 2026 | A compliant manufacturer can now pay duty by the first day of the following month with no bond, licence or warehouse. The first real alternative to MOOWR for cash flow |
| Applications moved to ICEGATE 2.0 from 15 November 2025, Circular 28/2025-Customs | The Section 58 licence and Section 65 permission are applied for in one online module; the Invest India form is closed |
| Section 65A still not notified, as of September 2026 | IGST and compensation cess remain deferred with the Basic Customs Duty. Once notified, IGST would be paid at import and only BCD deferred, for goods deposited after that date |
| Solar power generation excluded, Notification 86/2024-Customs (N.T.), from 17 December 2024 | Goods imported to generate electricity for supply cannot be warehoused under Section 65. The Delhi High Court's May 2024 decision for ACME Heergarh is under appeal in the Supreme Court |
| Power to exclude any process by notification, Finance (No. 2) Act 2024 | Any activity can be taken out of the scheme in future by notification, which is what happened to solar |
| Concessional rates under IGCR may be combined with MOOWR, Circular 26/2024-Customs | A unit can warehouse goods at a concessional rate and defer that lower duty, if it meets the IGCR conditions as well |
MOOWR or EMI: the 2026 decision
Until this year the question was MOOWR against an SEZ or an EOU, and that comparison still holds. The question in 2026 is different. The EMI scheme gives a manufacturer with a clean record about thirty days of duty deferral on every consignment, with none of the bonded-warehouse apparatus. Put the two side by side and the choice is usually obvious:
| MOOWR, Section 65 | EMI, from 1 April 2026 |
|---|
| What is deferred | BCD and IGST, until the goods are cleared into India | BCD and IGST, until the first day of the next month |
| Duty on exported output | None on the imported content | Paid; recovered later through drawback or RoDTEP where eligible |
| Capital goods | Duty deferred for as long as the machine stays in the unit | Duty paid the next month |
| Who qualifies | Any person with premises Customs will license | Manufacturer with two years of operation, turnover above ₹5 crore, 25 bills of entry or shipping bills a year (10 for an MSME), clean GST and Customs record |
| Security | Bond under Section 59, insurance, solvency certificate | None |
| Records | Digital account per consignment, monthly return, bond officer checks | Ordinary import records |
| Premises | Licensed warehouse; imported and domestic stock kept identifiable | Anywhere |
| Ends | No end date, subject to Section 65A | 31 March 2028, as a bridge to AEO-T2 or T3 |
The rule that falls out of the table: EMI buys time; MOOWR buys time and, on exports and machinery, cancels the duty. A manufacturer that sells everything in India and turns its stock in a month gets most of the benefit from EMI at almost no compliance cost. A manufacturer that exports a real share of output, holds imported stock for months, or is about to import a large line of machinery, is leaving money on the table without a Section 65 licence.
What the duty saving looks like
Take a unit importing ₹10 crore of inputs a year at 10 per cent BCD and 18 per cent IGST, exporting 40 per cent of its output. The rates are illustrative; the shape is not.
| Paid at import, no scheme | Under EMI | Under MOOWR |
|---|
| BCD, ₹1 crore | At the port | Next month, in full | ₹60 lakh when domestic goods are cleared; ₹40 lakh on the exported share never paid |
| IGST, ₹1.98 crore | At the port, taken as credit | Next month, taken as credit | ₹1.19 crore on domestic clearance, taken as credit; nil on the exported share |
| Duty that is never paid | Nil | Nil | ₹40 lakh of BCD a year |
Add a ₹5 crore machine at 7.5 per cent BCD and the MOOWR column carries another ₹37.5 lakh of BCD and ₹97 lakh of IGST for as long as the machine runs in the unit. That is the case for the licence. The case against it is in the next section.
What a Section 65 unit owes: licence, bond and the register
The scheme runs on records, not on a Customs officer at the gate. A unit must:
- hold the Section 58 licence and Section 65 permission for the exact premises, and appoint a warehouse keeper;
- execute a bond under Section 59, which the Act sets at three times the duty on the goods, and insure the goods;
- keep the digital account in the Annexure B format of Circular 34/2019 for every consignment: receipt, processing, removal, stock;
- file a monthly return with the bond officer;
- keep imported goods, domestic goods and finished goods physically identifiable, and be able to show how much imported input went into each clearance;
- take permission before sending inputs out for job work, or capital goods out for repair, and bring them back within the period allowed;
- allow the bond officer's checks, which are risk-based rather than continuous.
The input-output relationship is the point every dispute turns on. Duty on a domestic clearance is charged on the imported inputs consumed, so the unit must prove that consumption from its own register. A unit that cannot will be assessed on a basis it will not like. Set the register up before the first import, not after the first query.
Capital goods, ex-bonding and the exit
Machinery imported under the scheme carries deferred duty for as long as it stays. If it is later cleared for home consumption, duty is charged on its value at import, without depreciation and without interest; if it is exported, nothing is charged. A unit that expects to sell or move a machine within a few years should price that in, because an EOU or SEZ unit would pay on a depreciated value. Ex-bonding of inputs is simpler: an ex-bond bill of entry for the imported content, duty at the rate in force that day, GST on the sale. Surrendering the licence means paying duty on everything still in bond, and nothing else; there is no NFE test and no exit approval, which is why MOOWR is the cheapest of the three schemes to leave.
Excluded activities and other schemes
Solar power generation for supply is the one activity excluded by notification, and the Supreme Court appeal will decide whether the earlier instruction was lawful, not whether the notification stands. Everything else is open, but the 2024 amendment means the list can grow. A Section 65 unit sits in the domestic tariff area, so it may also hold an Advance Authorisation or EPCG authorisation for particular inputs, warehouse goods at IGCR concessional rates, and supply an SEZ unit as a zero-rated export. A trader that only wants to hold imported stock without manufacturing uses a plain bonded warehouse or an FTWZ, not Section 65.
MOOWR licence: how to apply on ICEGATE 2.0
- Register the company on ICEGATE with its IEC and GST registration, if it is not already.
- Open the Section 65 module and file the combined application for the Section 58 licence and Section 65 permission, with the site plan, ground plan, insurance, solvency certificate from a scheduled bank, and the company's Customs and GST record. The port code to use is in the public notice of the jurisdictional Chief Commissioner.
- Premises verification by the jurisdictional Commissionerate: security, separate storage, and the record-keeping arrangements.
- Execute the bond and produce the insurance policy; the licence and permission are issued for the premises.
- Appoint the warehouse keeper, set up the Annexure B account and the monthly return, then file the first warehousing bill of entry.
Before applying
Three numbers decide it: the share of output exported, the months imported stock sits before sale, and the size of the next machinery import. If all three are small, take EMI and keep the compliance. If any one is large, the licence pays for itself. The firm's Customs advisors come from the department that licenses Section 65 units; send those three numbers and a year's import bill and a senior advisor will say whether MOOWR, EMI or an export-linked scheme costs you less.
