Clarification on (MOOWR) Warehouse to Warehouse Transfer

 In an important update, CBIC vide. Instruction No. 16/2024-Customs dated June 25, 2024, has addressed the compliance issue faced by MOOWR unit for transfer of resultant manufactured goods from one warehouse to another.

 

CBIC Clarification

 

The CBIC has reiterated the MOOWR regulations and clarified that following compliances need to be done by the licensee:

 

·            Recipient/licensee should verify intactness of One-time-lock on the container carrying the goods.

 

·            Compliance relating to Transfer Form must be done properly, as under:

 

-           Licensee should reconcile the quantity of received goods from Form (‘Transfer Form’) appended to MOOWR regulations

-           Transfer Form under MOOWR has 2 parts – Part A (to be filled at dispatched warehouse) and Part B (to be filed by recipient)

-           Transfer Form shall be endorsed by Licensee or warehouse keeper of both the dispatching and receiving warehouse

-           Part A of Form shall contain the complete description of resultant goods and corresponding warehoused goods

 

·            Transfer must be intimated to the bond officer.

 

·            Triple duty bond of the transferee should be debited, and recredited to the transferor.

 

·            A Transit risk insurance policy is required to cover the customs duty involved in goods moved from one warehouse to another (Para 4 of the Circular 21/2016-Customs).

 

·            Further, as per Circular 34/2019 – Customs, prior permission of proper officer is not an essential condition for removal of warehoused goods, subject to filing of due documentation by licensee.

 

·            Monthly MOOWR return filing should be strictly implemented.

 

·            Licensees of despatching and receiving warehouses must account for resultant goods so transferred and dutiable goods contained therein, as well as corresponding duty amount, to intact deferred duty liability till it is paid upon clearance for home consumption.

 

. | Insights

 

·            It is to be noted that while the Customs Duty (including IGST) on warehoused goods contained in such resultant product shall not be payable on such MOOWR to MOOWR/Warehouse transfer, GST would be chargeable on such resultant product. This is because:

 

Para 8(a) of Schedule III of CGST Act provides that the supply of warehouse goods is not a supply chargeable to GST. Since, the expression used is ‘warehoused goods’, it would only cover the goods in ‘as such’ form when it was originally warehoused. Thus, if warehoused goods have undergone any change, supply of the same would be chargeable to GST.

 

·            Further, the value of resultant product for charging GST would be the governed by valuation provisions under GST i.e. Section 15 read with Rule 28 of CGST Rules.

 

·            The other aspect which needs due attention is transfer of goods from FTWZ area to MOOWR area. FTWZ is a bonded area under SEZ laws like MOOWR under Customs. However, under Customs laws, the definition of ‘warehouse’ does not cover an FTWZ. Thus, there is a huge confusion amongst the FTWZ players regarding following questions:

 

-           Whether GST is payable where goods are transferred within an FTWZ area?

 

-           Whether MOOWR regulations apply to transfer from FTWZ to MOOWR and vice-versa?

 

-           What are the customs implications on transfer from FTWZ area to MOOWR?

 

·            There is a recent decision by Tamil Nadu Advance Ruling which has raised taxpayers’ eyebrows with respect to FTWZ, MOOWR and GST implication, thereon.