Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CARO TAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin - Customs - PUBLIC NOTICE NO. 27/2020

Ministry of Finance Department of Revenue Office of the Commissioner of Customs Custom House, New Harbour Estate C. No. VIII/48/03/2020-Cus.P01. Date: 25.09.2020 PUBLIC NOTICE NO. 27/2020 Subject: - Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CARO TAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin- reg. Attention of the Importers, Exporters, Customs Brokers and all-other stakeholders is invited to the above mentioned subject. Reference is drawn to Chapter VAA and section 28DA of the Customs Act, 1962, which has been inserted vide clause 11b 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. 8f/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 with immediate. effect. 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 CARO TAR, 2020, and further guidelines for implementation of aforementioned section and rules. 2. The CARO TAR, 2020 and Rules of Origin notified for a trade agreement tin 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 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(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 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. bf rule 6(1 )(a) or 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 irate 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 pourse 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 CARO TAR, 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: [email protected] 7.1 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. 8. Difficulty faced in this regard, if any, may be brought to the notice of this office. (DINESH K. CHAKRAVARTHY) COMMISSIONER OF CUSTOMS