Guide to Foreign Liabilities and As...
The Foreign Liabilities and Asset Return filing is mandatory to be made with the RBI and is man...
Learning » Finance Business » RBI Registration » FEMA »
The Central Board of Indirect Taxes and Customs notified the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 on August 21, 2020. It was enforced from September 21st, 2020. It was notified with a view to add to the existing operational certification procedures prescribed under different trade agreements like FTAs, Preferential Trade Agreements, etc. In this article, we shall have a detailed outlook on CAROTAR 2020.
The reasons for this can be summed as under:
The key features of CAROTAR 2020 are as follows:
The rules stated in CAROTAR 2020 are as follows:
1- Preferential Tariff Claim
The importer or his agent is required to make a declaration in the bill of entry stating that they qualify as originating goods to claim the preferential rate of duty under the respective agreement while filing a bill of entry. The importer is required to produce the certificate of origin, thus covering each item claimed under the preferential duty rate.
The importer must enter the following details of the certificate of origin in the bill of entry-
The preferential rate of duty claim can be denied without verification in case the certificate of origin is:
2- Origin related information to be possessed by the importer- Rule 4
An importer who seeks to claim preferential rate of duty should possess information as provided in Form I of the rules and submit it, when requested, to the proper officer. Form I contains the list of basic minimum information that an importer must know while claiming the preferential rate of duty for import of goods.
The importer should possess all the supporting documents related to Form I for a minimum 5 years period from the filing of the bill of entry. The importer should exercise due care to ensure truthfulness and accuracy relating to the information and documents obtained by him pertaining to Form I.
3- Requisition of Information from the importer
During customs clearance, the proper officer can seek information and documents from the importer in terms of Rule 4, in case he has reason to believe that the origin criteria are not met as prescribed under the respective rules of origin. The importer should provide information and documents to the proper officer on requisition within 10 days from the date of such requisition.
When the proper officer is satisfied that respective rules of origin are satisfied based on the documents and information obtained from the importer, the proper officer shall inform it to the importer in writing within 15 days. In case where the importer is unable to provide the information and documents or if it is found to be insufficient to conclude that the origin criteria are met, the proper officer shall forward a verification proposal to the nodal officer who is appointed in terms of Rule 6.
4- Verification Request- Rule 6
Requests for verification under Rule 6 is made through a nodal officer as designated by the Board. On the occurrence of the following, a proper officer can request for verification of certificate of origin from the verification authority:
When a verification request is initiated during the customs clearance process, the preferential tariff treatment of the imported goods may be suspended till the conclusion of the verification. The proper officer shall finish the verification in 45 days of the receipt of the information requested.
The proper officer can deny the preferential rate of duty claim without any further verification. The proper officer can deny the claim when:
5- Identical Goods
When it is determined that the goods of an importer don’t meet the origin criteria as provided in the rules of origin, the customs commissioner or the principal commissioner of the customs can reject claims for identical goods filed before or after the determination of rejected goods imported by the same importer or the producer without any verification further.
When a claim is rejected on identical goods, the customs commissioner or the principal commissioner of the customs can restore the preferential tariff treatment on identical goods with prospective effect. He may restore the same if the exporter or producer modifies the manufacturing or other origin-related conditions with a view to fulfil the origin requirements of the Rules of Origin.
These requirements are expected to impact the importers significantly, especially those who legitimately claim Preferential Tariff Treatment. A parallel amendment has been made to the Customs Act to allow the goods confiscation imported on a claim of preferential rate of duty which is in contravention to the provisions of CAROTAR 2020.
There are some other consequential implications due to the CAROTAR. They are as follows:
Apart from these, there are some positive impacts that can be expected:
The CAROTAR 2020 lays down minimum basic information that an importer should know before importing goods. These rules allow the importer to know the country of origin and help customs authorities in clearing the goods import under FTAs. It also strengthens customs to check for any misuse of the duty concession under FTAs.
Read our article: FEMA Guidelines for Export of Goods and Services (Amendment) Regulations, 2021