Certificate of Origin

Table of Contents

International trade plays a notable role in the development of an economy. It is a major source of improving competitiveness, efficiency & innovation. With the rising focus on One World, One Market, Government of India has signed trade agreements in the recent past and are negotiating with western countries. Trade agreements provides access to new markets by offering reduction in tariffs on imported products and addressing issues affecting the free flow of goods & services.

The FTAs are believed to develop regional comprehensive framework & are expected to invite foreign Investment creating new market opportunities. To continue the streak, the Department of Commerce is proactively taking steps to extend India’s export to $2 Trillion by 2027.

But To guard against the misuse of tariff concession announced under the Free/Preferential Trade Agreement, the government rolled out Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR, 2020) under Section 28DA of the Customs Act in the Budget 2020. The Rules aim to ensure that the Government can monitor all the duty benefits availed by importers and no undue claims are made without fulfilling the requisite Rule of Origin Criteria.

Section 28DA mentions procedure regarding claim of preferential rate of duty which specifies that the Importer needs to declare that goods qualify as originating goods & shall 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.

In accordance with Section 5(1) of the Customs Tariff Act, each Trade Agreements signed by the Government should mention rules for determining if any article is the produce or manufacture of such foreign country or territory. Therefore each trade agreements specifies the “Rule of Origin” which is determined by the domestic value addition & substantial transformation of the goods during the manufacturing.

Therefore to avail the benefit under the trade agreement, the importer and exporter has to comply with the Rule of Origin conditions mention in the trade agreement along with the CAROTAR rules.

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