Whether Duty-Free Import of Used Automation Equipment for Refurbishment Is Permissible? CAAR Clarifies

The Customs Authority of Advance Ruling (CAAR), Mumbai ruled that customs duty exemption shall be applicable on import various second-hand or used goods (Indian or Foreign origin) for refurbishment/ re-processing/ re-conditioning/ re-designing/ re-manufacturing/ re-assembling/ re-tooling/ re-pair/ Software or Programming uploading/ Integration/ tooling validation and other related activities subject to compliance with Hazardous Waste Management Rules, 2016, E-Waste (Management) Rules 2016, Battery Waste Management Rules 2022, Plastic Waste Management Rules 2016, and Solid Waste Management Rules 2016, and any other rules and regulations issued by the concerned state pollution control board and other regulatory bodies ensuring authorised disposal through registered recyclers. Records of disposal, contracts with authorized rccycl.crs, EPR (where applicable) and segregation procedures should be maintained and made available to customs and other regulators. In a detailed and consequential ruling for India’s automation and robotics industry, the Customs Authority for Advance Rulings (CAAR), Mumbai has addressed the central legal question of whether second-hand automation equipment can be imported duty-free for refurbishment and subsequent re-export under Notification No. 134/94-Cus, and whether such benefits can be availed in conjunction with the bonded-manufacturing framework under the MOOWR Scheme. Wipro Pari Robotics approached CAAR seeking clarity on whether it could import a wide range of used machinery—such as robots, conveyors, servo presses, control panels, gantry systems, module storage racks and other automation assemblies—for refurbishment, re-engineering, testing, integration and project-specific customisation, and thereafter re-export them to overseas customers. The company emphasised that the goods would not be consumed or sold in India, but would only undergo non-transformative value addition before being shipped out again. This raised a crucial interpretational issue as the Foreign Trade Policy permits imports of second-hand capital goods for repair or reconditioning, while the customs notification offers a specific duty exemption for goods brought in for similar purposes under Section 65 of the Customs Act. CAAR examined the legal scheme governing such imports in depth. The authority referred to Para 2.31 of the Foreign Trade Policy 2023, which permits import of second-hand capital goods for repair, refurbishment, reconditioning or re-engineering, subject to proper disposal of any waste generated. It then analysed Notification 134/94-Cus, which exempts goods imported for repair, reconditioning, re-engineering, testing, calibration or maintenance, provided the goods are re-exported after such operations and that the processes are carried out strictly in accordance with Section 65 of the Customs Act. CAAR noted that these operations by their nature must preserve the identity and essential character of the imported article. Any activity that transforms the goods into a new product or gives them a different character falls outside the scope of both the policy and the notification. A key question of law raised by the applicant was whether the duty exemption under Notification 134/94 could be availed simultaneously with the benefits of the MOOWR Scheme, which allows manufacturing and other operations in a bonded warehouse with duty deferment. CAAR answered this decisively in the negative. The authority clarified that the duty exemption under Notification 134/94 and the MOOWR Scheme function in distinct legal domains. While the notification provides full exemption from duty for goods imported solely for repair and mandatory re-export, MOOWR enables manufacturing and processing activities with deferred duties but does not mandate re-export. Because the nature, conditions and statutory foundations of both schemes differ substantially, CAAR held that they cannot be availed simultaneously. The applicant, therefore, must either avail the exemption under Notification 134/94 or opt for the MOOWR Scheme—but not both together. CAAR then addressed the treatment of waste or scrap generated during refurbishment. It held that all waste must be managed in strict compliance with environmental regulations including the E-Waste Management Rules, Battery Waste Management Rules, Plastic Waste Management Rules and Solid Waste Management Rules. From the customs perspective, CAAR reiterated that Section 65(2) of the Customs Act governs waste generated during operations on warehoused goods. If the refurbished goods are exported, duty on waste is remitted provided the waste is destroyed or cleared on payment of duty. If the resultant goods are cleared for home consumption, duty becomes payable on the proportion of imported material contained in such waste. CAAR noted that valuation of scrap may require technical certification, including Chartered Engineer reports, to establish the proportion of imported content. Finally, after examining the facts, legal provisions and submissions from the jurisdictional Commissionerate, CAAR concluded that Wipro Pari Robotics is indeed permitted to import used automation equipment for refurbishment and re-export, subject to the condition that the goods remain identifiable and that the operations do not result in creation of a new product. The CAAR held that company is eligible for duty exemption under Notification 134/94-Cus provided all conditions—including the three-year re-export requirement—are met. However, the authority reiterated that the benefits of this notification cannot be combined with the MOOWR framework. All waste generated during the operations must be handled in accordance with environmental laws, and applicable duty rules under Section 65 will govern any waste retained or cleared domestically. Ruling Details Applicant’s Name: Wipro Pari Robotics Pvt. Ltd. Ruling Date: 26/11/2025 Click Here To Read Ruling Read More: MOOWR scheme | Anti-Dumping Duty Applicable on Warehoused Aluminium Frames Cleared After September 27, 2024: CAAR

Whether Duty-Free Import of Used Automation Equipment for Refurbishment Is Permissible? CAAR Clarifies

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