The Ministry of Finance has introduced the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (‘CAROTAR’) (with effect from September 21, 2020), which inter alia provide for the information that is required to be submitted by an importer to claim benefits under India’s free trade agreements, preferential trade agreements, etc. with several countries and blocs (‘Trade Partners’). The key aspects of CAROTAR are summarized below:

i.     Previously, in order to claim preferential duty, an importer was only required to submit to the customs authorities a Certificate of Origin (‘CoO’) issued by a competent authority of the Trade Partner. However, with the introduction of CAROTAR read with Section 28DA of the Customs Act, 1962 (‘Customs Act’), an importer claiming a preferential rate of duty is required to, inter alia, make a specific declaration in the bill of entry with regards to goods qualifying as originating goods, in addition to producing the CoO. Further, the bill of entry should also contain certain prescribed details of the CoO;

ii.    A comprehensive list of information, related to country of origin criteria, including the regional value content and product specific criteria, has been prescribed which the importer is required to retain for a period of five years, and submit the same to the relevant officer on request;

iii.   If an importer fails to provide the specified information, or if the information and documents are considered insufficient to conclude that the origin criteria has been met, a verification proposal is to be sent by the customs authorities in India to the relevant authorities of the Trade Partner to verify the genuineness or authenticity of the CoO and the information therein. Basis the response, the claim for preferential duty is to be processed;

iv.   The Principal Commissioner / Commissioner of Customs has been empowered to disallow the claim of preferential duty without further verification, where: (a) the importer relinquishes such claim; or (b) the information and documents furnished by the importer and available on record provide sufficient evidence to prove that the goods do not meet the origin criteria prescribed in the respective Rules of Origin;

v.     Separately, if it is determined that the goods originating from an exporter or producer do not meet the origin criteria prescribed in the Rules of Origin, the Principal Commissioner / Commissioner of Customs may reject other claims for preferential duty for identical goods imported from the same exporter or producer;

vi.   Failure of the importer to submit information or documents or to exercise reasonable care to ensure the accuracy and truthfulness of the information furnished can also result in the customs authorities suo moto verifying assessment of all subsequent bills of entries filed with the claim of preferential rate of duty;

vii.  If an importer has suppressed facts, made willful mis-statement or colluded with the seller or any other person, with the intention to avail undue benefit of a trade agreement, he would be liable for penal action under the Customs Act or any other law in force in addition to disallowance of his claim of preferential rate of duty.