Guidelines on Implementation CAROTAR, 2020

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]

1.	Name of the Commissionerate
2.	Name of the Free/ Preferential Trade Agreement
3.	Relevant Customs Notifications (Both Tariff and Non-Tariff notifications)
4.	Reference No. of the Certificate of Origin
5.	Issuing Authority
6.	Name of the Consignee
7.	Name of the Consignor
8.	Description of goods
9.	Origin criteria as mentioned in the certificate
10.	Revenue involved (forgone)
11.	Reason for requesting verification along with supporting documents, if any: Please enclose

 

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.

Sec - 28 DA of Customs Act, 1962

 Procedure regarding the claim of Preferential Rate of Duty

(1) An importer making claim for a preferential rate of duty, in terms of any trade agreement, shall,––

(i)    make a declaration that goods qualify as originating goods for preferential rate of duty under such agreement;

 

(ii)  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;

 

(iii) furnish such information in such manner as may be provided by rules;

 

(iv) Exercise reasonable care as to the accuracy and truthfulness of the information furnished.

 

(2) The fact that the importer has submitted a certificate of origin issued by an Issuing Authority shall not absolve the importer of the responsibility to exercise reasonable care.

 

(3) Where the proper officer has reasons to believe that country of origin criteria has not been met, he may require the importer to furnish further information, consistent with the trade agreement, in such manner as may be provided by rules.

 

(4) Where importer fails to provide the requisite information for any reason, the proper officer may,––

(i)    cause further verification consistent with the trade agreement in such manner as may be provided by rules;

 

(ii)  pending verification, temporarily suspend the preferential tariff treatment to such goods:

 

Provided that on the basis of the information furnished by the importer or the information available with him or on the relinquishment of the claim for preferential rate of duty by the importer, the Principal Commissioner of Customs or the Commissioner of Customs may, for reasons to be recorded in writing, disallow the claim for a preferential rate of duty, without further verification.

 

(5)   Where the preferential rate of duty is suspended under sub-section 28 DA(4), the proper officer may, on the request of the importer, release the goods subject to furnishing by the importer a security amount equal to the difference between the duty provisionally assessed under section 18 and the preferential duty claimed:

 

Provided that the Principal Commissioner of Customs or the Commissioner of Customs may, instead of security, require the importer to deposit the differential duty amount in the ledger maintained under section 51A.

 

(6) Upon temporary suspension of preferential tariff treatment, the proper officer shall inform the Issuing Authority of reasons for the suspension of preferential tariff treatment, and seek specific information as may be necessary to determine the origin of goods within such time and in such manner as may be provided by rules.

 

(7) Where, subsequently, the Issuing Authority or exporter or producer, as the case may be, furnishes the specific information within the specified time, the proper officer may, on being satisfied with the information furnished, restore the preferential tariff treatment.

 

(8) Where the Issuing Authority or exporter or producer, as the case may be, does not furnish information within the specified a time or the information furnished by him is not found satisfactory, the proper officer shall disallow the preferential tariff treatment for reasons to be recorded in writing:

 

Provided that in case of receipt of incomplete or non-specific information, the proper officer may send another request to the Issuing Authority stating specifically the shortcoming in the information furnished by such authority, in such circumstances and in such manner as may be provided by rules.

 

(9) Unless otherwise specified in the trade agreement, any request for verification shall be sent within a period of five years from the date of claim of preferential rate of duty by an importer.

 

(10) Notwithstanding anything contained in this section, the preferential tariff treatment may be refused without verification in the following circumstances, namely:––

 

(i)    the tariff item is not eligible for preferential tariff treatment;

 

(ii)  complete description of goods is not contained in the certificate of origin;

 

(iii) any alteration in the certificate of origin is not authenticated by the Issuing Authority;

 

(iv) the certificate of origin is produced after the period of its expiry,

 

        and in all such cases, the certificate of origin shall be marked as ‘‘INAPPLICABLE’’.

 

(11) Where the verification under this section establishes non-compliance of the imported goods with the country of origin criteria, the proper officer may reject the preferential tariff treatment to the imports of identical goods from the same producer or exporter, unless sufficient information is furnished to show that identical goods meet the country of origin criteria.

 

Explanation.––For the purposes of this Chapter,––

(a)   “certificate of origin” means a certificate issued in accordance with a trade agreement certifying that the goods fulfill the country of origin criteria and other requirements specified in the said agreement;

 

(b)  “identical goods” means goods that are same in all respects with reference to the country of origin criteria under the trade agreement;

 

(c)   “Issuing Authority” means any authority designated for the purposes of issuing certificate of origin under a trade agreement;

(d) “Trade agreement” means an agreement for trade in goods between the Government of India and the Government of a foreign country or territory or economic union.

CAROTAR, 2020

 

Notification No. 81/2020-Cus (N.T.)      Date: 21.08.2020

G.S.R. 521 (E).- In exercise of the powers conferred by section 156 read with section 28DA of the Customs Act, 1962 (52 of 1962), the Central Government hereby makes the following rules, namely:-

 

1. Short title, commencement and application -

(1)    These rules may be called the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020.

 

(2)    They shall come into force on 21st day of September, 2020.

 

(3)    They shall apply to import of goods into India where the importer makes claim of preferential rate of duty in terms of a trade agreement.

 

2. Definitions.-

(1) In these rules, unless the context otherwise requires, -

 

(a)   " Act" means the Customs Act, 1962 (52 of 1962);

 

(b)  "Preferential rate of duty" means rate at which customs duty is charged in accordance with a trade agreement;

 

(c)   "Preferential tariff treatment" means allowing preferential rate of duty to goods imported into India in accordance with a trade agreement;

 

(d)  "Rules of Origin" means rules notified for a trade agreement in terms of sub-section (1) of section 5 of the Customs Tariff Act, 1975 (51 of 1975);

 

(e)   "Tariff notification" means notification issued under sub-section (1) of section 25 of the Act specifying preferential rates of customs duty in accordance with a trade agreement;

 

(f)    "Verification" means verifying genuineness of a certificate of origin or correctness of the information contained therein in the manner prescribed by the respective Rules of Origin;

 

(g)   "Verification Authority" means the authority in exporting country or country of origin, designated to respond to verification request under a trade agreement.

 

(2) The words and expressions used herein and not defined in these rules but defined in the Act shall have the same meanings respectively as assigned to them in the Act.

 

3. Preferential tariff claim.-

(1) To claim preferential rate of duty under a trade agreement, the importer or his agent shall, at the time of filing bill of entry,-

 

(a)   make a declaration in the bill of entry that the goods qualify as originating goods for preferential rate of duty under that agreement;

 

(b)  indicate in the bill of entry the respective tariff notification against each item on which preferential rate of duty is claimed;

 

(c)   produce certificate of origin covering each item on which preferential rate of duty is claimed; and

 

(d)  enter details of certificate of origin in the bill of entry, namely:

 

                              i.     certificate of origin reference number;

 

                            ii.     date of issuance of certificate of origin;

 

                          iii.     originating criteria;

 

                          iv.     indicate if accumulation/cumulation is applied;

 

                            v.     indicate if the certificate of origin is issued by a third country (back-to- back); and

 

                          vi.     indicate if goods have been transported directly from country of origin.

 

(2) Notwithstanding anything contained in these rules, the claim of preferential rate of duty may be denied by the proper officer without verification if the certificate of origin-

 

(a)   is incomplete and not in accordance with the format as prescribed by the Rules of Origin;

 

(b)  has any alteration not authenticated by the Issuing Authority;

 

(c)   is produced after its validity period has expired; or

 

(d)  is issued for an item which is not eligible for preferential tariff treatment under the trade agreement;

 

and in all such cases, the certificate shall be marked as "INAPPLICABLE".

 

Explanation:

Clause (d) of sub-rule (2) includes the cases where goods are not covered in the respective tariff notification or the product specific rule mentioned in the certificate of origin is not applicable to the goods.

 

4. Origin related information to be possessed by importer –

The importer claiming preferential rate of duty shall-

 

(a)   possess information, as indicated in Form I, to demonstrate the manner in which country of origin criteria, including the regional value content and product specific criteria, specified in the Rules of Origin, are satisfied, and submit the same to the proper officer on request.

 

(b)  keep all supporting documents related to Form I for at least five years from date of filing of bill of entry and submit the same to the proper officer on request.

 

(c)   exercise reasonable care to ensure the accuracy and truthfulness of the aforesaid information and documents.

 

5. Requisition of information from the importer -

 

(1)     Where, during the course of customs clearance or thereafter, the proper officer has reason to believe that origin criteria prescribed in the respective Rules of Origin have not been met, he may seek information and supporting documents, as may be deemed necessary, from the importer in terms of rule 4 to ascertain correctness of the claim.

 

(2)     Where the importer is asked to furnish information or documents, he shall provide the same to the proper officer within ten working days from the date of such information or documents being sought.

 

(3)     Where, on the basis of information and documents received, the proper officer is satisfied that the origin criteria prescribed in the respective Rules of Origin have been met, he shall accept the claim and inform the importer in writing within fifteen working days from the date of receipt of said information and documents.

 

(4)     Where the importer fails to provide requisite information and documents by the prescribed due date or where the information and documents received from the importer are found to be insufficient to conclude that the origin criteria prescribed in the respective Rules of Origin have been met, the proper officer shall forward a verification proposal in terms of rule 6 to the nodal officer nominated for this purpose.

 

(5)     Notwithstanding anything contained in this rule, the Principal Commissioner of Customs or the Commissioner of Customs may, for the reasons to be recorded in writing, disallow the claim of preferential rate of duty without further verification, where:

 

(a)   the importer relinquishes the claim; or

 

(b)  the information and documents furnished by the importer and available on record provide sufficient evidence to prove that goods do not meet the origin criteria prescribed in the respective Rules of Origin.

 

6. Verification request.-

 

(1) The proper officer may, during the course of customs clearance or thereafter, request for verification of certificate of origin from Verification Authority where:

 

(a)   there is a doubt regarding genuineness or authenticity of the certificate of origin for reasons such as mismatch of signatures or seal when compared with specimens of seals and signatures received from the exporting country in terms of the trade agreement;

 

(b)  there is reason to believe that the country of origin criterion stated in the certificate of origin has not been met or the claim of preferential rate of duty made by importer is invalid; or

 

(c)   verification is being undertaken on random basis, as a measure of due diligence to verify whether the goods meet the origin criteria as claimed:

 

Provided that a verification request in terms of clause (b) may be made only where the importer fails to provide the requisite information sought under rule 5 by the prescribed due date or the information provided by importer is found to be insufficient. Such a request shall seek specific information from the Verification Authority as may be necessary to determine the origin of goods.

 

(2) Where information received in terms of sub-rule (1) is incomplete or non-specific, request for additional information or verification visit may be made to the Verification Authority, in such manner as provided in the Rules of Origin of the specific trade agreement, under which the importer has sought preferential tariff treatment.

 

(3) When a verification request is made in terms of this rule, the following timeline for furnishing the response shall be brought to the notice of the Verification Authority while sending the request:

 

(a)   timeline as prescribed in the respective trade agreement; or

 

(b)  in absence of such timeline in the agreement, sixty days from the request having been communicated.

 

(4) Where verification in terms of clause (a) or (b) of sub-rule (1) is initiated during the course of customs clearance of imported goods,

 

(a)   the preferential tariff treatment of such goods may be suspended till conclusion of the verification;

 

(b)  the Verification Authority shall be informed of reasons for suspension of preferential tariff treatment while making request of verification; and

 

(c)   the proper officer may, on the request of the importer, provisionally assess and clear the goods, subject to importer furnishing a security amount equal to the difference between the duty provisionally assessed under section 18 of the Act and the preferential duty claimed.

 

(5) All requests for verification under this rule shall be made through a nodal office as designated by the Board.

 

(6)   Where the information requested in this rule is received within the prescribed timeline, the proper officer shall conclude the verification within forty five days of receipt of the information, or within such extended period as the Principal Commissioner of Customs or the Commissioner of Customs may allow:

 

Provided that where a timeline to finalize verification is prescribed in the respective Rules of Origin, the proper officer shall finalize the verification within such timeline.

 

(7) The proper officer may deny claim of preferential rate of duty without further verification where:

 

(a)   the Verification Authority fails to respond to verification request within prescribed timelines;

 

(b)  the Verification Authority does not provide the requested information in the manner as provided in this rule read with the Rules of Origin; or

 

(c)   the information and documents furnished by the Verification Authority and available on record provide sufficient evidence to prove that goods do not meet the origin criteria prescribed in the respective Rules of Origin.

 

7. Identical goods.-

 

(1)     Where it is determined that goods originating from an exporter or producer do not meet the origin criteria prescribed in the Rules of Origin, the Principal Commissioner of Customs or the Commissioner of Customs may, without further verification, reject other claims of preferential rate of duty, filed prior to or after such determination, for identical goods imported from the same exporter or producer.

 

(2)     Where a claim on identical goods is rejected under sub-rule (1), the Principal Commissioner of Customs or the Commissioner of Customs shall,

 

(a)    inform the importer the reasons of rejection in writing including the detail of the cases wherein it was established that the identical goods from the same exporter or producer did not satisfy the origin criteria; and

 

(b)   restore preferential tariff treatment on identical goods with prospective effect, after it is demonstrated on the basis of information and documents received, that the manufacturing or other origin related conditions have been modified by the exporter or producer so as to fulfill the origin requirement of the Rules of Origin under the trade agreement.

 

8. Miscellaneous. –

(1)   Where an importer fails to provide requisite information and documents by the due date prescribed under rule 5, or where it is established that he has failed to exercise reasonable care to ensure the accuracy and truthfulness of the information furnished under these rules, the proper officer shall, notwithstanding any other action required to be taken under these rules and the Act, verify assessment of all subsequent bills of entry filed with the claim of preferential rate of duty by the importer, in terms of sub-section (2) of section 17 of the Act, in order to prevent any possible misuse of a trade agreement. The system of compulsory verification of assessment shall be discontinued once the importer demonstrates that he is taking reasonable care, as required under section 28DA of the Act, through adequate record-based controls.

 

(2)   Where it is established that an importer has suppressed the facts, made wilful mis-statement or colluded with the seller or any other person, with the intention to avail undue benefit of a trade agreement, his claim of preferential rate of duty shall be disallowed and he shall be liable to penal action under the Act or any other law for the time being in force.

 

(3)   In the event of a conflict between a provision of these rules and a provision of the Rules of Origin, the provision of the Rules of Origin shall prevail to the extent of the conflict.

 

(4)   The Central Government may, by notification in the Official Gazette, relax such provisions of these rules for such class of persons as may be deemed necessary.

 

Form I

 

(Please refer to rule 4)

 

Section I - (Guidance for filing up this Form)

 

1.   In terms of section 28DA of the Customs Act, 1962, an importer making a claim for preferential rate of duty is required 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.

 

2. For the above purpose, this Form contains a list of basic minimum information which an importer is required to possess while importing the goods.

 

3. Section 28DA of the Act further requires that the importer shall exercise reasonable care to accuracy and truthfulness of the information supplied and the preferential claim. Hence, any additional information, as deemed fit to ascertain correctness of the country of origin criterion, may also be obtained.

 

4. Wherever necessary, technical terms used in the Form have been explained as below for general guidance. Each trade agreement, however, has its own set of Rules of Origin, and precise definition of each of the term listed below may vary. Importers are, therefore, advised to refer to the respective Rules of Origin also, as notified in terms of sub-section (1) of section 5 of the Customs Tariff Act, 1975.

 

         i.       Goods Wholly Obtained (WO): Goods produced or obtained without any non- originating input material incorporated.

 

       ii.       Goods that are produced using non-originating materials, i.e. not Wholly Obtained, are required to undergo substantial transformation in a country for the good to be qualified as originating. This criterion can be met using following method in combination or standalone, depending upon the criteria assigned for a good,-

a.       Change in Tariff Classification (CTC);

b.       Regional or Domestic Value Content (RVC/DVC); and

c.       Process rule.

 

     iii.       Content Method: This rule requires that a certain minimum percentage of the good's value originates in a country for the good to be considered as originating. The components of value and formula for calculating such value addition may vary from agreement to agreement.

 

     iv.       Change in Tariff Classification (CTC) Method: To qualify under this origin criterion, non-originating materials that are used in the production of the good must not have the same HS classification (e.g. Chapter level, Heading level or Sub Heading Level as may be required in the Rules of Origin) as the final good. Depending on the Trade Agreement requirements, the good would have to undergo either a change in Chapter (CC), Heading (CTH) or Sub Heading level (CTSH) in order to qualify for preferential treatment under the FTA. Producers and/or exporters should know the HS classification of the final good and the non-originating raw materials.

 

       v.       Process Rule Method: This rule requires the good which is being considered as originating, to be produced through specific chemical process in the originating country.

 

Note: Same good may be assigned different originating criteria in different trade agreements.

 

     vi.       General Rule vs Product Specific Rule (PSR): Many trade agreements have a single rule for all goods that are produced using non-originating materials. In some agreements, for some or all tariff headings there are Product Specific Rules (PSRs). Depending on the HS classification of the good, it needs to be seen which criteria has been used to claim origin.

 

   vii.       De minimis: This provision allows that non-originating materials that do not satisfy an applicable rule may be disregarded, provided that the totality of such materials does not exceed specific percentages in value or weight of the good. This provision may or may not be there in an agreement and the percentage also varies from agreement to agreement.

 

 viii.       Cumulation/ Accumulation: The concept of "accumulation"/"cumulation" allows countries which are part of a preferential trade agreement to share production and jointly comply with the relevant rules of origin provisions, i.e. a producer of one participating country of a trade agreement is allowed to use input materials from another participating country without losing the originating status of that input for the purpose of the applicable rules of origin. Otherwise said, the concept of accumulation/cumulation or cumulative rules of origin allows products of one participating country to be further processed or added to products in another participating country of that agreement. The nature and extent of such cumulation is defined in an agreement and may vary from agreement to agreement. Cumulation can be bilateral, regional, diagonal, etc.

 

     ix.       Indirect/Neutral elements refer to material used in the production, testing or inspection of goods but not physically incorporated into the goods, or material used in the maintenance of buildings or the operation of equipment associated with the production of goods. For example, energy and fuel, plant and equipment, goods which do not enter into the final composition of the product, etc. Depending upon the trade agreement, these elements may be treated as originating or non-originating.

 

       x.       Rule on treatment of packages and packing materials for retail sale: Such rule provides the manner in which such material will be treated while calculating qualifying value content or tariff shift.

 

     xi.       Direct Consignment: Most agreements lay down the condition that good claiming originating status of a country should be directly transported from that country to the importing country. Certain relaxation may be provided in a trade agreement, subject to presentation of certain documents.

 

 

Section II

(To be filled after filing of Bill of Entry)

 

(a) Name of the importer:

 

(b) Bill of Entry (B/E)No. and Date:

 

(c) Customs Station where B/E was filed:

 

(d) Goods on which preferential rate of duty has been claimed:

 

S. No.	Description	Classification (8 digit)

 

Section III

(This information should be possessed before import of goods)

Part A:

1. Briefly describe the production process undertaken in country of origin with respect to production of the imported good. Also, state which of the originating criteria prescribed in the Rules of Origin has been claimed. For example, WO, RVC + CTH/CTSH or CTH or CC or RVC, etc.

 

[WO: Wholly Obtained; RVC: Regional Value Content; CTH: Change in Tariff Head; CTSH: Change in Tariff Sub-Head; CC: Change in Chapter]

 

Note 1: Where the good is claimed to be "Wholly Obtained'', mention the process through which it is claimed to fall under this category. Each trade agreement lists out such processes under a specific rule and may vary from agreement to agreement.

 

Examples:

o goods obtained by hunting or trapping within the land territory, or fishing or aquaculture conducted within the internal waters or within the territorial sea of the Party;

 

o goods produced on board factory ships from the goods referred to in preceeding paragraph, provided that such factory ships are registered or recorded with a Party and fly its flag.

 

Note 2: If the goods are not wholly obtained, the manufacturing/processing undertaken in country of origin must be ascertained.

 

Description of goods	Production process	Originating Criterion
1.
2.

 

Part B:

(To be filled if originating criteria is NOT wholly obtained, for each of such good under import, on separate sheets)

1. State the following information for each originating material or component used in production of good subject to this request. If no originating material/components were used, same should be indicated as "None".

 

Description of good under import and its classification (8 digit):

 

Description of the originating Materials or Component	Whether manufactured by producer of final good	Whether procured by producer locally from a third party	In case procured from third party, did producer of final good seek conformation and   documentary proof of origin of these components?
	(Yes/No)	(Yes/No)	(Yes/No)
1.
2.

 

Note: If origin of any of the components used in the manufacture of final good cannot be ascertained, same should be treated as non-originating.

2.

a.	Is the de minimis provision used to determine whether the good subject to this request qualifies as an originating good?	o Yes	o No
		If yes, describe such material and the percentage value or quantity as applicable.
b.	Is the accumulation/ cumulation provision applied to determine whether the good subject to this request qualifies as an originating good?	o Yes	o No
		If yes, describe the manner and extent of cumulation.
c.	Has any other additional criteria such as indirect/neutral materials, packing materials, etc. used in ascertaining whether the good qualifies as an originating good.	o Yes	o No
		If yes, provide the criteria used: Describe the material concerned:
d.	Is the originating criteria based on value content?	o Yes	o No
		If yes, provide the following: (i) percentage of local value content: (ii) components which constitute value addition (e.g. material, profit, labour, overhead cost, etc.):
e.	Has CTC rule been applied for meeting originating criteria?	o Yes	o No
		If yes, provide HS of non-originating material/components used in the production of good:
f.	Has process rule been applied in ascertaining origin of good subject to this request?	o Yes	o No
		If yes, provide the rule applied
g.	Has the CoO been issued retrospectively?	o Yes	o No
		If yes, provide reasons for same
h.	Has the consignment in question been directly shipped from the country of origin?	o Yes	o No
		If not, then has it been ascertained that same is as per provisions of the concerned agreement? How has it been ascertained that goods have met the prescribed conditions of Direct Shipment?

 [F. No. 15021/18/2020(ICD)]