Mining Is ‘Permissible Operation’ Under MOOWR, Quashes Cancellation of Private Bonded Warehouse Licences: CESTAT

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside the cancellation of private bonded warehouse licences and Manufacture and Other Operations in Warehouse (MOOWR) permissions granted to a mining contractor, holding that mining activities qualify as “other operations” under Section 65 of the Customs Act and are permissible under the MOOWR, 2019 framework. The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) ruled that the Commissioner has no power to review or withdraw a validly granted private bonded warehouse licence or MOOWR permission in the absence of any violation of law or licence conditions, thereby restoring the licences cancelled under Section 58B of the Customs Act. The appellant had been awarded contracts by Western Coalfields Limited (WCL) and South Eastern Coalfields Limited (SECL) for carrying out mining operations at Pathakhera (Madhya Pradesh) and Churcha (Chhattisgarh) respectively. For executing these projects, the company obtained private bonded warehouse licences under Section 58 of the Customs Act and permissions under the Manufacture and Other Operations in Warehouse (MOOWR) Regulations, 2019. These approvals enabled the appellant to import heavy mining equipment and deploy them within the mine premises without upfront payment of customs duty, in line with the MOOWR scheme. However, in April 2025, the Principal Commissioner of Customs issued show cause notices and subsequently passed orders in June 2025 cancelling both the private bonded warehouse licences and MOOWR permissions under Section 58B, alleging that the mining area was too vast for effective customs supervision. The appellant did not own the premises and lacked exclusive access control. Mining constituted a “service” and not “manufacture or other operations”. The resultant product (coal) was not capable of being cleared by the appellant for home consumption or export The Tribunal examined, among others, the crucial questions. Firstly, whether mining qualifies as “manufacture or other operations” under Section 65 of the Customs Act and MOOWR, 2019 Secondly, whether ownership of premises is mandatory for grant or continuance of a private bonded warehouse licence Thirdly, whether the Commissioner can cancel a licence merely because he later disagrees with the decision to grant it Lastly, whether providing mining services disentitles an entity from MOOWR benefits After a detailed analysis of the statutory framework and the amendments introduced by the Finance Act, 2016, the CESTAT delivered a clear and categorical ruling. The Tribunal held that the expression “manufacture and other operations” under Section 65 is broad and not restrictive, and there is no exclusion of mining activities either in the Customs Act or in the MOOWR Regulations. “We do not agree with the finding in the impugned order that the mining operations carried out by the appellant do not fall within the scope of ‘manufacture and other operations’. Mining of coal qualifies as ‘other operations’ which can be permitted under Section 65,” the tribunal said. The Bench also noted that the only exclusion notified by the Central Government under Section 65 relates to solar power projects generating electricity, and mining has never been barred. The Tribunal held that Section 58 does not require ownership of premises. What matters is lawful possession and use. Therefore, operating as a contractor in mines owned by PSU coal companies does not disqualify the appellant from holding a private bonded warehouse licence. A major highlight of the judgment is the Tribunal’s interpretation of Section 58B, post the 2016 amendment. The Bench emphasised that prior to 2016, licences could be cancelled with one month’s notice. Post-2016, a licence can be cancelled only if there is contravention of the Act, rules, regulations or licence conditions The Tribunal categorically ruled that “The Commissioner cannot review his own decision or the decision of his predecessor to grant the licence and cancel it. If the licence was wrongly granted, the remedy lies under Section 129D by way of appeal, not by cancellation under Section 58B.” Since no violation of the Act or licence conditions was alleged or proved, the Tribunal held that the cancellation orders were without authority of law. The Tribunal also rejected the argument that MOOWR is limited only to manufacturing or that it mandates export of resultant goods. It clarified that MOOWR 2019 permits both manufacture and other operations. There is no export obligation under MOOWR. There is no restriction on the nature of goods or services, unlike SEZ or EPCG schemes The Bench made the important observation that a MOOWR unit effectively operates as a “private duty-free zone”, where capital goods can be used for their entire life without payment of customs duty, unless removed from the warehouse. Concluding that the cancellation orders were based on assumptions, misinterpretation of law, and an impermissible review of an earlier decision, the Tribunal held that “The impugned orders cancelling the private bonded warehouse licence and the permission under MOOWR, 2019 are without authority of law.” Case Details Case Title: M/s JMS Mining Pvt. Ltd. Versus Principal Commissioner of Customs Case No.: CUSTOMS APPEAL NO. 51041 OF 2025 Date: 06.01.2026 Counsel For Appellant: B.L. Narasimhan Counsel For Respondent: Nikhil Mohan Goyal Click Here To Read Order Read More: No Unjust Enrichment If Duty Was Not Recovered from Buyers: CESTAT Allows Refund to Importer

Mining Is ‘Permissible Operation’ Under MOOWR, Quashes Cancellation of Private Bonded Warehouse Licences: CESTAT

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