Client Challenge
A manufacturing company importing capital goods and raw materials regularly was paying customs duty upfront on every shipment—standard practice, never questioned.
The Problem
- Duty was paid in full at the time of import, regardless of when goods were actually sold or used
- This locked up significant working capital for months—sometimes years—before any revenue was realized
- On capital goods especially, this meant duty paid upfront for assets with a 10-15 year life
- No one on the finance team had identified this as a solvable problem—it felt like a routine cost of doing business
Our Approach
We evaluated the client’s operations for eligibility under MOOWR (Manufacturing and Other Operations in Warehouse Regulations) and structured a transition:
- Set up the manufacturing unit as a bonded warehouse under MOOWR
- Restructured import documentation and compliance workflows accordingly
- For capital goods, ensured duty deferral applies for the entire life of the asset—not just until sale
The Result
- Customs duty on raw materials deferred until finished goods are sold domestically
- Duty on capital goods deferred for the asset's full operational life
- On a ₹1 crore machine, ₹10–15 lakhs stayed in working capital instead of going out upfront
- Across three clients in the last 12 months, ₹15 crores in customs duty deferred—fully compliant, sustainable structure
What This Proves
Customs duty isn’t always a “pay now” obligation. With the right structure, timing becomes a lever—and that lever can free up crores in working capital that would otherwise sit idle with the government.