To promote the “Make in India” initiative and as part of the ease of doing business measures, the Central Board of Indirect Taxes and Customs (CBIC), had notified the Manufacture and Other Operations in Warehouse (No. 2) Regulations, 2019 (Scheme). This Scheme enabled businesses to import raw materials and capital goods without payment of duty for manufacturing and other operations in a bonded manufacturing facility for exports, while allowing import duty deferral for the domestic market.
The key features of the Scheme are as follows:
- Locational flexibility with no geographical limitation.
- One-time approval.
- Deferment of customs duty on imports and duty saving to the extent that final products are exported out of India.
- No export obligation with no limitation on export or domestic clearances.
- Minimal compliances, documentation and approval requirement.
The CBIC explained the modalities of the Scheme through Circular No. 34/2019-Customs dated 1 October 2019.
Basis inputs received in trade consultation, the CBIC has released a set of Frequently Asked Questions (FAQs) relating to undertaking manufacturing and other operations in a bonded warehouse. The FAQs have been summarised in this Tax Insight.
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Michaela Merz 