Can EPCG benefits and MOOWR benefits be taken together?

The EPCG Scheme is an export-promotion mechanism under Chapter 5 of the Foreign Trade Policy, while MOOWR (Manufacture and Other Operations in Warehouse) Scheme operates under the customs warehousing framework, principally Section 65 of the Customs Act, 1962 and the MOOWR Regulations, 2019.

Before deciding if EPCG and MOOWR can coexist in the same business structure we must understand the benefits which each scheme has to offer.

1. What Are the Benefits Under EPCG?

The Export Promotion Capital Goods (EPCG) Scheme is intended to facilitate the import or domestic procurement of capital goods for pre-production, production and post-production activities.

Under the current Foreign Trade Policy, eligible capital goods can be imported under EPCG at zero customs duty, subject to the applicable export obligation

The EPCG authorisation generally carries an Export Obligation equivalent to six times the duties, taxes and cess saved, to be fulfilled within six years from the date of issue of the authorisation.

Therefore, EPCG provides a significant upfront duty exemption, but the importer undertakes a corresponding export commitment. This makes EPCG particularly attractive for manufacturers with a stable and predictable export business.

2. What Are the Benefits Under MOOWR?

MOOWR enables an manufacturer to operate a customs bonded warehouse and undertake manufacturing or other permitted operations in the warehouse.

The principal benefit is customs duty deferment on imported goods warehoused under the scheme.

Therefore, a manufacturer may import eligible capital goods, raw materials, components and other permitted goods into the MOOWR premises without paying the applicable customs duty upfront, subject to the requirements of the scheme.

SUMMARY OF BENEFITS

Duty deferment on imported capital goods, raw materials and O&M spares

Cash flow benefits as the customs duties are deferred

No interest is required to be paid on the deferred customs duties on the raw materials and capital goods

Savings on bank interest charges

No export obligation

Duties on raw material is waived off when the finished goods are exported

Duties on raw material is required to be paid on proportionate basis when the finished goods are sold in the domestic market

MOOWR is therefore particularly attractive for manufacturers who have a combination of domestic sales and exports or who do not want to take on a fixed EPCG export obligation.

The important conceptual distinction is:

3. Can EPCG and MOOWR Benefits Be Taken Together?

Yes, but not by simply applying both benefits to the same goods.

A company may operate a manufacturing facility under MOOWR while separately obtaining EPCG authorisations for eligible capital goods, provided the relevant conditions of the EPCG Scheme and MOOWR framework are independently satisfied.

The fact that a company operates under Section 65, MOOWR does not, by itself, automatically disqualify it from every other benefit under the Foreign Trade Policy.

CBIC's MOOWR FAQs dated 27th October 2020 has stated that eligibility for export benefits under the FTP depends upon the respective scheme. In other words, a Section 65 unit may avail another benefit where the relevant scheme itself permits.

Example: Suppose a manufacturer has a MOOWR facility and requires:

₹100 crore of imported raw materials; and

₹50 crore of new production machinery.

The company could potentially structure its imports so that:

Raw materials/components:

Imported under MOOWR, with customs duty deferred in accordance with the MOOWR framework.

Eligible capital goods:

Imported under a separately obtained EPCG authorisation, subject to EPCG eligibility, nexus, installation and export-obligation requirements.

In such a structure, the company is not taking two benefits on the same import. Rather, it is using two different schemes for two different categories of goods.

4. When Can EPCG and MOOWR Be Used Together?

EPCG and MOOWR can potentially coexist where the benefits are structured independently and the conditions of each scheme are met.

Scenario 1 – Different capital goods

A manufacturer may use EPCG for specific eligible machinery and MOOWR for other eligible imports, including raw materials and other capital goods, where permitted.

The documentation, Bills of Entry, authorisations and accounting records should clearly establish which goods are covered under which scheme.

Scenario 2 – Existing MOOWR facility with new EPCG imports

A company already operating under MOOWR may consider EPCG for new capital goods, subject to EPCG eligibility and the applicable customs procedures.

The company should import and record the capital goods under the EPCG authorisation from the beginning. It should not later try to convert goods already imported under MOOWR into EPCG imports.

Scenario 3 – Different business requirements

MOOWR may be used for imported inputs and machinery where the company values duty deferment and flexibility, while EPCG may be considered for particular machinery where the company is confident that it can fulfil the required export obligation.

5. When Can EPCG and MOOWR Benefits NOT Be Used Together?

EPCG cannot simply be used retrospectively to convert MOOWR duty deferment into an EPCG exemption.

A recent Customs Advance Ruling, in re Blue Star Climatech Ltd. (2025 (1) TMI 636 - AAR – Customs) considered a situation where the applicant proposed to debond capital goods already imported under MOOWR and use an EPCG authorisation to deal with the customs duty payable on such debonding.

The ruling did not permit such cross-utilisation.

The reasoning was that the relevant EPCG provisions did not expressly permit EPCG relief to be applied to capital goods on which MOOWR deferment had already been availed. In the absence of an express enabling provision, the benefit could not be extended by inference. There, a company should not assume that:

Capital goods imported under MOOWR → subsequently obtain EPCG authorisation → use EPCG to eliminate the deferred MOOWR duty.

6. Key Compliance

Businesses using EPCG and MOOWR together should pay particular attention to:

1. Correct identification of goods

Each import should clearly identify the applicable scheme.

2. Separate documentation

EPCG authorisations, MOOWR records, Bills of Entry, warehouse records and installation documentation should be properly maintained.

3. EPCG export obligation

The company must monitor both specific and applicable average export obligation requirements.

4. Installation certificate

EPCG capital goods are subject to prescribed installation and reporting requirements under the Handbook of Procedures. (DGFT)

5. No retrospective scheme conversion

Capital goods already imported under MOOWR should not be assumed to become eligible for EPCG merely because an EPCG authorisation is obtained later.

6. Customs records

MOOWR requires robust inventory and warehouse compliance. Businesses should maintain proper digital records and ensure that movement and clearance of warehoused goods are undertaken in accordance with the prescribed procedures.

7. Conclusion

Can EPCG benefits be taken along with MOOWR benefits?

Yes, EPCG and MOOWR can coexist in an appropriate business structure, but the same capital goods should not be treated as simultaneously enjoying both schemes merely to obtain a combined or retrospective duty benefit.

8. Need Assistance With EPCG or MOOWR?

Choosing between EPCG and MOOWR requires more than comparing the headline duty benefit. The proposed imports, HSN classification, capital-goods list, export projections, domestic sales, manufacturing process and future clearance strategy should all be examined.

A specialised EPCG consultant can assist with EPCG eligibility, capital goods nexus, authorisation application, installation compliance and export-obligation management.

Similarly, an experienced MOOWR consultant can assist with MOOWR feasibility, Section 58 licensing, Section 65 permission, customs documentation, bond requirements, warehousing procedures and ongoing compliance.

Businesses looking for the best EPCG consultant in India, best MOOWR consultant in India, EPCG consultant, or MOOWR consultant should evaluate the consultant's experience not only in obtaining the approval but also in managing the long-term customs and FTP compliance associated with the scheme.

Commercial Consultancy Counsel (CCC) assists manufacturers and importers with EPCG, MOOWR, Customs, DGFT and other foreign trade regulatory matters, including scheme selection, applications, amendments and ongoing compliance.