Source: Circular
No. 38/2020-Customs, Dated 21.08.2020
1. Reference
is drawn to Chapter VAA and section 28DA of the Customs Act, 1962, which has been
inserted vide clause 110 of Finance Act, 2020, and to Customs (Administration of Rules of Origin under Trade Agreements)
Rules, 2020 (hereafter referred to as the CAROTAR, 2020) issued vide Notification
No. 81/2020-Customs (N.T.) dated 21st
August, 2020.
1.1 The aforementioned section and rules aim
to supplement the operational certification procedures related to
implementation of the Rules of Origin, as prescribed under the respective trade
agreements (FTA/PTA/CECA/CEPA) and notified under the customs notifications
issued in terms of section 5 of the Customs Tariff Act, 1975 for each
agreement.
1.2 The
CAROTAR 2020 shall come into force on 21st September, 2020, to provide
sufficient time for transition and to ensure that the prescribed conditions in
terms of rule 4 are compiled with. Necessary modifications in bill of entry
format are being made to allow declaration in terms of rule 3(a) and 3(d) of
CAROTAR, 2020.
1.3 This
circular aims to provide procedure for sending verification request to the
Verification Authorities in exporting countries in terms of trade agreements,
section 28DA and CAROTAR, 2020, and further guidelines for implementation of
aforementioned section and rules.
2. The
CAROTAR, 2020 and Rules of Origin notified for a trade agreement in terms of
sub-section (1) of section 5 of the Customs Tariff Act, 1975, broadly provide
the following grounds for verification:
a)
In case of a
doubt regarding the genuineness of the Certificate of Origin (CoO) such as any
deficiency in the format of the certificate or mismatch of signatures or seal
when compared with specimens on record.
b)
In case of a
doubt on the accuracy of information regarding origin, i.e. where a doubt
arises on whether the product qualifies as an originating good under the
relevant Rules of Origin. In other words, these are cases where there is a
reasonable belief that a product is not grown or not produced/manufactured in a
particular country or required value addition/change in CTH/PSR etc., as the
case may be, has not been achieved for the goods to qualify as originating.
c)
Verification
could also be undertaken on random basis as a measure of due diligence. For
this purpose, factors such as the quantum of duty being foregone, the nature of
goods vis-a-vis the country of origin, commodities that are prone to mis-declaration
of country of origin, compliance record of the importer etc., may be given
regard while selecting Certificates of Origin for random verification.
3. The
Rules of Origin, by virtue of which a good attains origin of a country, have
evolved with subsequent reviews of trade agreements. Most trade agreements have
moved from single general rule to specific rule for most of the tariff lines,
with inclusion of vast array of processes which can confer origin. Section 28DA
makes it incumbent upon an importer to possess sufficient information as
regards the manner in which country of origin criteria, including the regional
value content and product specific criteria, specified in the Rules of Origin
in the trade agreement, are satisfied. For this purpose, CAROTAR, 2020 has
provided a form, containing list of basic
minimum information which an importer is required to obtain while
importing goods under claim of preferential rate of duty. Therefore, in case
there is a doubt with regard to origin of goods, information should be first called upon from the importer of the
goods, in terms of rule 5 read with rule 4 of CAROTAR, 2020, before
initiating verification with the partner country in terms of rule 6.
3.1 Section28DA of the Act further states that mere submission of a certificate of origin
shall not absolve the importer of the responsibility to exercise reasonable
care to the accuracy and truthfulness of the information supplied. In case an
importer fails to provide information in terms of section 28DA(1) (iii) of the
Act and as prescribed under CAROTAR, 2020, or does not exercise reasonable care
to ensure the accuracy and truthfulness of the information furnished, this fact
should be informed to Risk Management Centre of Customs (RMCC) through written
communication for the purposes of enabling compulsory verification of
assessment of all subsequent import consignments in terms of rule 8(1) of
CAROTAR, 2020. However, the compulsory verification of assessment should be
discontinued once the importer demonstrates that he has established adequate
system of controls to exercise reasonable care as required under the Act.
4. Verification
request should be forwarded to the Board based upon following standard
operating procedures:
i. In case several certificates pertaining to
identical item are under review or scrutiny, only representative certificates
should be forwarded to the Board to cause verification along with list of all
CoOs to which the field formation aims to apply the result of such
verification. Representative CoOs may be selected in such a manner to ensure
that they cover each of the exporters, importers and the prescribed originating
criteria. For instance, if there are several CoOs issued to a single exporter,
but originating criteria are different, then CoOs covering each of the
originating criteria may be considered to be forwarded for verification, with
specific queries.
ii. The verification proposal should be complete,
keeping in mind all components of the prescribed format of CoO and all relevant
aspects of the Rules of Origin, in order to avoid multiple queries to the
Verification Authority/exporting country. For instance, in case a CoO has been
issued retrospectively, it needs to be seen whether there are provisions in the
Rules of Origin to issue retroactive CoO and whether reasons for retroactive
issuance need to be provided by the Verification Authority. Similarly, should
the proper officer feel the need to verify documents to establish compliance of
'direct consignment' or third-party invoicing, if provided for in the Rules of
Origin, then the same should be included in the verification proposal.
iii. Requests for verification must be sent to the
Board with the approval of the jurisdictional Principal
Commissioner/Commissioner. The reference for verification must contain legible
copies of the Certificate of Origin, invoice and the Bill of Lading/Airway
Bill. The request should also contain the information listed in the Annex.
iv. Where verification is being considered for
goods not cleared or cleared provisionally on grounds of verification of
origin, such requests should be communicated immediately to the Board in case
requests are in terms of rule 6(1)(a) or 6(1)(c) of CROTAR 2020; and within 10
days from the date of receipt of requisite information and documents from the
importer in case the request is being considered in terms of rule 6(1)(b).
v. Mechanism should be devised to monitor the
requests which have been forwarded for verification, with special focus on
cases where the timeline for response from the Verification Authorities is
about to expire.
5. For
ascertaining correctness of a claim of preferential rate of duty under a trade
agreement, information may be sought from the importer during the course of
customs clearance or thereafter (e.g. during subsequent investigations or
post-clearance audit). Likewise, a verification request may be made to an
exporting country during the course of customs clearance of imported goods or
thereafter. While the Act provides that information may be sought within a
period of five years from the date of claim of preferential rate of duty by the
importer, this time limit is subject to any other time limit as may be
specified for this purpose under the trade agreement.
6. The
Rules of Origin under various trade agreements lay down the format of the
certificate of origin, the period of validity, manner of obtaining the
certificate and the procedure for verification of origin. One of the usual
conditions for accepting the certificate is that it should be signed by the
authorized signatories whose name, signature and seal have been communicated by
the partner country through agreed channels. At present, the signatures and
seals are received by the Board, either directly from the government of the
partner country or through the Department of Commerce.
6.1 The Directorate General of Systems has
built an online repository on ICES for storing the signatures/seals to
facilitate comparison by the assessing officers. DRI has been tasked with
uploading the data in the database.
6.2 For the benefit of non-EDI customs
locations, copies of specimen signatures and seals will be circulated by DRI.
For other locations, the ICES online repository may be utilized.
6.3 In case the specimen seal/signature is
not available in the ICES online repository, the issue may be referred to the
Board for verification.
7. In
terms of rule 6(5) of CAROTAR, 2020, Board has designated Director (ICD), CBIC
as the nodal point for taking up verification of origin with partner countries.
Hence all requests for verification should be addressed to:
Director
(International Customs Division),
Central
Board of Indirect Taxes & Customs,
Department
of Revenue, Ministry of Finance, Room No. 49, North Block, New Delhi -110001.
011- 2309
3380 (off); 011-2309 3760 (fax.) Email: ftaroo-cbic@gov.in
7.1 To help reduce time taken in
communication of requests for verification of preferential country of Origin, it is advised to email all
verification related correspondence to Board on ftaroo-cbic@gov.in. It may be
noted that request through nic/icegate email ids will only be accepted. Such
emails should include signed copy of the office letter and legible scanned
copies of all relevant documents.
7.2 Where the information requested in terms
of rule 6 is received, the proper officer should within the prescribed
timelines either restore preferential claim or issue notice for denying the
claim in terms of section 28DA, read with section 28 of the Act where required,
in order to conclude the verification.
7.3 Where a claim for preferential rate of
duty is denied, the CoO should be forwarded to the nodal point in the Board for
record and onward communication to the exporting country, where required.
8. It
is requested to conduct frequent training sessions in the zones to familiarize
the officers with provisions of Rules of Origin prescribed under various trade
agreements. Verification may also be sought based on data analysis, keeping in
mind any change in import trend of a commodity, exporter, importer or any
amendments to duty rates. Attention may also be drawn to the fact that where
originating criteria claimed is as per product specific rules (PSRs), the HSN
(harmonised system of nomenclature) version prescribed in the trade agreement
shall apply. The preferential tariff treatment should be extended only in terms
of the extant notification. For instance, provision for issuance of
Back-to-Back CoO is presently available only under ASEAN-India FTA, and hence
Back-to-Back CoO should not be accepted for goods imported under any other
trade agreement.
8.1 It is also requested to share policy
related feedback with the Board, through International Customs Division, to
help analyse provisions of trade agreements which may require policy review.
9. Instruction
no. 31/2016 - Customs dated 12.09.2016 stands superseded with the issue of this
Circular.
10. Suitable Standing Order may be issued.
Difficulties faced, if any, in implementation of this circular, may be
immediately brought to the notice of the Board.
Annex
[Please refer Paragraph 4(iii) of this
Circular]
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1.
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Name of the Commissionerate
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2.
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Name of the Free/ Preferential Trade Agreement
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3.
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Relevant Customs Notifications
(Both Tariff and Non-Tariff notifications)
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4.
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Reference No. of the Certificate of Origin
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5.
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Issuing Authority
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6.
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Name of the Consignee
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7.
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Name of the Consignor
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8.
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Description of goods
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9.
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Origin criteria as mentioned in the certificate
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10.
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Revenue involved (forgone)
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11.
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Reason for requesting verification along with supporting
documents, if any: Please enclose
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Please enclose:
1. A legible copy of the
Certificate of Origin, invoice and Bill of Lading/Airway Bill.
2. Questionnaire for the
Verification Authority, where required, with specific queries.
