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Circular No. 38/2020-Customs
F.No.15021/18/2020 (ICD)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
North Block, New Delhi
Dated 21
st
August, 2020
To,
All Chief Commissioners of Customs/Customs (Prev.)
All Chief Commissioners of GST
All Chief Commissioners of GST and Customs
All Directors General under CBIC
Sir/Madam,
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.
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 21
st
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 21
st
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.
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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-à-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
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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
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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.
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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.
11. Hindi version follows.
(Mandeep Sangha)
Joint Commissioner (Customs)
International Customs Division, CBIC
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Annex to Circular No. 38/2020 – Customs dated 21
st
August, 2020
[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:
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.
