Can a factory license under Section 65 of the Customs Act, 1962 import capital goods duty free? If yes, would any basic customs duty be payable on the goods manufactured in the bonded premises using the said capital goods and sold into the domestic tariff area?

Abhishek Abhishek
Answered on February 17,2020

A unit licensed under Section 58 and 65 can import capital goods and warehouse them without payment of duty. Please refer to Para 9 of Circular 38/2018, which refers to the entitlement of the unit, to import capital goods, machinery etc. by following the provisions under Chapter-IX. Duty on the capital goods would be payable when they are cleared up for domestic market (home consumption). Regarding the goods manufactured in the bonded warehouse using the capital goods, the payment of duty will be governed by Para-5 and 6 of the Circular 38/2018 dated 18/10/2018. No interest would be payable.