Inapplicability Of MOOWR Scheme On Solar Power Generating Units: Delhi High Court Says No Coercive Action

The Delhi High Court bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju issued notice and restrained the customs officer from taking any coercive action against the petitioners assailing the legality of Board Instruction No. 13/2022 dated 9.07.2022. The instruction was issued by the CBIC with regards to the inapplicability of the Manufacturing and Other Operations in Warehouse (no. 2) Regulations, 2019 (MOOWR Scheme) on solar power generating units.The MOOWR Scheme grants a benefit of duty deferment without any interest on capital goods and inputs imported by a person holding a licence under Section 65 of the Customs Act, 1962 for undertaking manufacturing or other operations in a bonded warehouse. The duty deferment is without any time limit. The instruction denied the benefit on the basis that the resultant good, i.e., electricity, cannot be stored in a warehouse and cannot be affixed with a one-time lock to the load compartment. The instruction further directed the officer of customs to review the licences granted under the scheme and take necessary action. The instruction directed the officer of customs to not grant any further permission. The petitioner contended that the instructions were in contravention of Section 151A of the Customs Act inasmuch as the instructions direct the officer of customs to review the licences already granted and not grant any further licences. The petitioner contended that it declared in its application for the licence under Section 65 read with the MOOWR Scheme that the bonded warehouse would be used to set up a solar power plant for the generation of electricity. The petitioner contended that the substantive conditions for the grant of a licence under Section 65 and undertaking manufacturing or other operations in a bonded warehouse have been fulfilled by the petitioner. The officer of customs performed due verification in that regard and granted the licence under Section 65 read with the MOOWR Scheme only after being objectively satisfied that the requisite conditions were satisfied. Moreover, the petitioner submitted that bonds amounting to Rs. 500 crores have been submitted in terms of Regulation 4 of the MOOWR Scheme to secure the interest of the department. The petitioner contended that if the circular is allowed to operate, its consignment for import of solar modules would be subjected to customs duty and IGST, contrary to the provisions of the MOOWR Regulations. The customs duty and IGST leviable on capital goods are deferred till such time as they are not removed for home consumption. "To our minds, the petitioner has set up a prima facie case. The balance of convenience also appears to be in favour of the petitioner, since the petitioner has operated under the scheme captured in the 2019 Regulations and, up until now, has obtained a deferral of customs duty and IGST," the court observed. The court listed the matter for 26.8.2022. Case Title: ACME Heergarh Powertech Private Limited vs. Central Board of Indirect Taxes and Customs and Anr. Citation: W.P.(C) 10537/2022 Dated: 13.07.2022 Counsel For Petitioner: Advocates Sujit Ghosh, Mannat Waraich, Shubh Dixit Counsel For Respondent: Advocate Satish Kumar Click Here To Read/Download Order

Inapplicability Of MOOWR Scheme On Solar Power Generating Units: Delhi High Court Says No Coercive Action

Mariya Paliwala

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