Solar power producers denied import duty deferral

The government, through a notification issued under Section 65(1) of the Customs Act, 1962 (CA 62), has prospectively legitimised the administrative bar on import, without payment of customs duties under the scheme for manufacture in a bonded warehouse, of goods for solar power generation projects which supply electricity.

- T N C RAJAGOPALAN

Sections 57 to 73A of CA 62 deal with warehousing of imported goods. Section 58 deals with licensing private bonded warehouses where imported goods belonging to the licensee may be deposited without payment of any Customs duties. Section 68 of CA 62 mandates payment of the duties when the imported goods are removed from the warehouse in the domestic tariff area (DTA). Thus, the bonded warehouse scheme is essentially a duty deferment scheme.

Section 65 of CA 62 deals with carrying on any manufacturing process or other operations in a warehouse in relation to such goods. The Central Board of Indirect Taxes and Customs (CBIC) has prescribed the 'Manufacture and Other Operations in Warehouse (no.2) Regulations, 2019' (MOOWR) providing for eligibility conditions for grant of license, bond execution, movement of goods etc. Many manufacturing units, including some power generating entities have obtained licenses under MOOWR.