CAROTAR, 2020: Declaration of Country of Origin of imported goods

The Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (“the Rules”), notified on 21st August, 2020, came into force from 21st September, 2020. A 30 day period was given to importers and other stakeholders to familiarize themselves with new provisions1. The Rules are primarily intended to prevent undue claims of benefits under Foreign Trade Agreements and consequently protect the domestic industries in India. The requirements prescribed under the Rules are clearly in furtherance of the ‘Go Vocal For Local’ campaign initiated by the Government of India to stabilise the domestic economy. The Finance Minister of India reportedly said, “Undue claims of FTA benefits have posed threat to domestic industry. Such imports require stringent checks. In this context, suitable provisions are being incorporated in the Customs Act, 1962.”

The Customs Act, 1962 provides for procedures to be followed by importers for claiming a preferential rate of (customs) duty sanctioned under Foreign Trade Agreements. The Rules define “Preferential rate of duty” as the rate at which customs duty is charged in accordance with the trade agreement between India and another country.

As per Rule 3 of the Rules, to claim a preferential rate of duty under a trade agreement, the importer has to mention certain information while filing Bills of Entry. This includes, the tariff notification against each product on which the preferential rate of duty is claimed, prescribed details (such as reference number, date of issuance, originating criteria) and copies of certificate of origin of each such item, details of production procedure adopted for the goods being imported. It must, inter alia, also indicate if the goods have been transported directly from country of origin or not. The importer is also required to obtain and store information as prescribed in FORM 1 of the Rules. This is to show 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. It is to be submitted to the proper officer on request.

1https://pib.gov.in/PressReleasePage.aspx?PRID=1656254