Q. Custom duty on scrap generated during the process and exported under Bonded Warehouse "MOOWR 2019"

Question

Hello,  We are planning to obtain license under section 65 of Custom Act, 2962 for Custom Bonded warehouse under "Manufacturing and Other Operation in Bonded Warehouse Regulation" 2019 . My query is do we need to pay custom duty on the scrap generated during the manufacturing process and exported by us instead of sold in local market within India or destroyed by us considering below provision. Please guide.

As per Section 65(2) of the Custom Act :

 Where in the course of any operation permissible in relation to any warehoused goods under sub-section (1) there is any waste or refuse, the following provisions shall apply:—

(a) if the whole or any part of the goods resulting from such operations are exported, import duty shall be remitted on the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen from the operations carried on in relation to the goods exported: Provided that such waste or refuse is either destroyed or duty is paid on such waste or refuse as if it has been imported into India in that form;

(b) if the whole or any part of the goods resulting from such operations are cleared from the warehouse for home consumption, import duty shall be charged on the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen from the operations carried on in relation to the goods cleared for home consumption.