: Clarification on certain aspects of origin procedures under Free Trade Agreements (FTAs)

CUS/1570/2024-Turant Suvidha Kendra-Oro Commissioner-Customs-Nhava Sheva-ill 2 OFFICE OF THE cOMMISsIONER OF CUSTOMS (NS-II) gre fQu dha, Vel ifol/TURANT SUVIDHA KENDRA, FIRST FLOOR u4IEelS 85 eH ENH, AI, JRUL, fotol: RTG, 4EIRI 400 707 JAWAHARLAL NEHRU CUSTOM HOUSE, NHAVA SHEVA, URAN DIST: RAIGAD, MAHARASHTRA - 400 707. 24-01-2025 3 al# Hui HEUI /PUBLIC NOTICE NO. 1D /2025

Subject: Clarification on certain aspects of origin procedures under Free

Trade Agreements (FTAs) - reg. Attention of the trade is drawn towards CBIC Instruction No. 23/2024-Customs dated 21.10.2024, issued vide F.No. 20000/6/2015 OSD(ICD) on the above-mentioncd subject, and the same is brought to the notice of all concerned (copy enclosed). guth sffa faqy z{^ES HI -20000/6/20 15-OSD(ICD) RI IIR0 aé ada tien 23/2024-Customs feais 21.10.2024 > 3gHR, FH HI Pursuant to the Board Instruction No. 23/2024-Customs dated 21.10.2024, Public Notice No. 55/2024 dated 24.06.2024 issued by this Custom House stands modified to the extent as written in the said Instruction. This Public Notice shall be considered as a Standing Order for the concerned officers and staff of this Custom House. I/26199H0/202S

Aurant Suvidha Kendra-O/0 Commissioner-Customs-Nhava Sheva Any difficulty faced in the implementation of this Public Notice may be brought to the notice of the Assistant Commissioner of Customs (In charge) of TSK at Email: tsk-jnch@gov.in 5 This issues is with the approval of the Chief Commissioner of Customs, Mumbai Zone-l. Encl: as above (SANJEEV KUMAR SINGH) Commissioner of Customs, NS-III, JNCH 1/261998BO/2025

-jnch@gov.in 5 This issues is with the approval of the Chief Commissioner of Customs, Mumbai Zone-l. Encl: as above (SANJEEV KUMAR SINGH) Commissioner of Customs, NS-III, JNCH 1/261998BO/2025

lo. E. No. 20000/6/2015-0SD(ICD) Government of India Ministry of Finance Department of Revenue Madam / Sir. Instruction No. 23/2024-Customs Central Board of Indircct Taxes & Customs International Customs Division All Principal Chiet Commissioners / Chief Commissioners of Customs / Customs (Preventive) Customs and Central Tax Room No. 227 A, North Block, New Declhi Dated the 21*October, 2024 All Principal Comimissioners / Commissioncr of Customs / Customs (Preventive) All Principal Directors General / Directors General ünder CBIC 3 Subjeet: Clarification on certain aspects of origin procedures under free trade agreements (FTAs) - regarding. The Board is in receipt of various representations. citing difficulties encountered in inport clecarance where third-party invoicing, allowed under the provisions of a trade agreement, has been used. It has been represented that certain field formations are questioning the origin status of products imported under FTAs with third-party invoicing. particularly under the ASEAN-India FTA (AIFTA), upon comparing the value recorded on the certificate of origin (CO0) and that declared on the third-party invoice.

r FTAs with third-party invoicing. particularly under the ASEAN-India FTA (AIFTA), upon comparing the value recorded on the certificate of origin (CO0) and that declared on the third-party invoice. Instances have also been brought to notice where preferential clains have been denied in such cases without conducting verification ofCO0 with the issuing authority to check its authenticity and / or accuracy of information contained therein. In this regard. it is to note that third-party invoicing is a common business practice and a few trade agreements explicitly provide for it. For example. Article 22 of Operational Cernification Proccdures for the Rules of Origin for the AIFTA states that: "The Customs Authority in the importing Party shall accept an AlFTA Certificate of Origin where the sales invoice is issued either by a company located in a third country or an AlFTA exporter for the account of the said company. provided that the product meets the requirements of the AlIFTA Rules of Origin." It is pertinent to underline here that the purpose of'a C00 is to serve as a proof that the goods quality as originating within the terms of an FTA. irrespective of whether third-party

of Origin." It is pertinent to underline here that the purpose of'a C00 is to serve as a proof that the goods quality as originating within the terms of an FTA. irrespective of whether third-party

invoicing is involed or not. On the other hand. the seller's invoice, including a third-party invOice where applicable. is the document relevant for customs valuation. 4. IWhere the proper oflicer has reason to believe that the subject product does not meet the rescribed originating eriteria. he/she may seek information and supporting documents in relation to the originating status of the product, as may be deemed necessary. from the importer. cmSistenm ith the trade agreement. When the requisite information is not provided by the inporter or the intormation furnished is insufficient to asscss origin criteria. the laid down process ol verilfication gets triggered in terms of the Customs (Administration of Rules of Origin under Ttde Agreements) Rules. 2020 (CAROTAR in brief) read with Section 28 DA of the Cusioms Act. for which a reference is to be made by the proper oficer to the issuing authority through the FTA Cell (under the Dircctorate of Intcrnational Customs). 5. Further. it may be noted that both - the information being sought and the process of verification must be consistent with the trade agreement. It may also be noted that CAROTAR does not obligate the importer to provide commercially confidential information. pertaining to the cxporter/third-party. Also.

consistent with the trade agreement. It may also be noted that CAROTAR does not obligate the importer to provide commercially confidential information. pertaining to the cxporter/third-party. Also. CAROTAR does not require an issuing authority or a seller to uSe a specific or same currency for declaring value in CO0 and invoice respectively. Rulc 5(5) of CAROTAR provides that the proper officer may deny a preferential duty claim wihout causing further verification on the basis of the information and documents lumished by the importer and available on record. llowever. il is emphasised that if the concerncd trade agreement does not allow for outright denial without causing a verification in accordance with provisions laid down in the subject agreement. the provision of the trade agreement shall prevail. CBIC vide its Instruction No. 19/2022-Customs dated 17.08.2022 has reiterated that in the event of conflict between the provisions of the trade agreement and CAROTAR read wvith Section 28 DA. the provisions of the trade agreement shall prevail to the extent of the conflict. 6. In cases where non-compliance of origin criteria is established after following the due process, an speaking order must be passed following the principles of natural justice as well as the specilic obligations in this regard covered in the respective FTA. Merely pointing out that the value addition is artificially inflated by wrongtully adding certain ineligible elements (e.g. ireight) may not be sufficient to reject a claim.

in the respective FTA. Merely pointing out that the value addition is artificially inflated by wrongtully adding certain ineligible elements (e.g. ireight) may not be sufficient to reject a claim. unless it is demonstrated that the value addition calculated as per formula prescribed in the trade agreement does not meet the threshold percentage point when such elements are removed. 7 It is requested that customs fornmations under vour jurisdiction may be suitablv sensitized on the issues elaborated above. Yours sincerely. (Ncetisha Verma) OSD (ICD)