Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin - Customs - PUBLIC NOTICE No. 57/2020

OFFICE OF THE PRINCIPAL COMMISSIONER OF CUSTOMS CUSTOM HOUSE PORT AREA : : VISAKHAPATNAM - 530 035 F. No. P3/20/2019-AM(STAT) Date: 18.09.2020 PUBLIC NOTICE No. 57/2020 Subject: Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin- reg. Attention of Importers, Customs Brokers and all other Stakeholders is invited to Board Circular No.38/2020 dated 21.08.2020 on the above subject. 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 The Circular No.38/2020-Customs dated 21.08.2020, 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 (I) 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- -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. 4. Section 28DA 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(I) (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 will 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 will be discontinued once the importer demonstrates that he has established adequate system of controls to exercise reasonable care as required under the Act. 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. 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 is 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 is 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 will not be accepted for goods imported under any other trade agreement. 7. Trade may give feedback to help analyse provisions of trade agreements which may require policy review. 8. Difficulties, if any, faced in implementation of this Public Notice may be brought to the notice of the Joint/Additional Commissioner of Customs. (Dr. D.K. Srinivas) Principal Commissioner of Customs