The Finance Ministry has said that exemptions specified in a Free Trade Agreement (FTA) with regard to the country of origin would prevail in case of a conflict between the revenue department and an importer.
- In an instruction to chief commissioners, the Central Board of Indirect Taxes and Customs said customs field officers should be sensitive to applying CAROTAR and maintain consistency with the provisions of relevant trade agreement or its Rules of Origin.
- Customs (Administration of Rules of Origin under Trade Agreements) or CAROTAR Rules, came into effect from September 21, 2020.
- CAROTAR empowers officers to seek further information from an importer, consistent with the trade agreement, in case the officer has reasons to believe that the country-of-origin criteria have not been met.
- Where the importer fails to provide the requisite information, the officer can make further verification consistent with the trade agreement.
Rules of Origin
- “Rules of origin” are the criteria used to define where a product was made.
- “Rules of origin” are the criteria used to define where a product was made. Rules of origin are needed to attribute one country of origin to each product.
- They are the criteria used to define where a product was made and are important for implementing other trade policy measures, including trade preferences (preferential rules of origin), quotas, anti-dumping measures and countervailing duties (non-preferential rules of origin).
- GATT has no specific rules governing the determination of the country of origin of goods in international commerce.
- Each contracting party was free to determine its own origin rules, and could even maintain several different rules of origin depending on the purpose of the particular regulation.
Rules of origin are used:
- to implement measures and instruments of commercial policy such as anti-dumping duties and safeguard measures;
- to determine whether imported products shall receive most-favoured-nation (MFN) treatment or preferential treatment;
- for the purpose of trade statistics;
- for the application of labelling and marking requirements; and
- for government procurement.
