Rules of Origin
IN EXCERCISE OF THE POWER CONFERRED BY SUB-SECTION (I) OF SECTION 5 OF THE CUSTOMS TARIFF ACT, 1975 (51 OF 1975), THE CENTRAL GOVERNMENT HEREBY MAKES THE FOLLOWING RULES, NAMELY:
1. Short Title and Commencement
(1) These Rules may be called "Rules of Origin" for determining the origin of products eligible for the preferential tariff concessions pursuant to Comprehensive Economic Cooperation Agreement between Republic of India and Republic of Singapore (hereinafter referred to as "the Agreement), the following Rules shall apply;
(2) They shall come into force on the 1st day of August 2005
2. Definitions
For the purposes of this Chapter:
(i) carrier refers to any vehicle for air, sea, and land transport;
(ii) CIF price or CIF value refers to the price actually paid or payable to the exporter for the good when the good is loaded out of the carrier, at the port of importation. The price value includes the cost of the good, insurance and freight necessary to deliver the good to the named port of destination;
(iii) Customs Valuation Agreement means the WTO Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994;
(iv) FOB price or FOB value refers to the price actually paid or payable to the exporter for the good when the good is loaded onto the carrier at the named port of exportation. The value includes the cost of the good and all costs necessary to bring the good onto the carrier;
(v) generally accepted accounting principles refers to the recognised consensus or substantial authoritative support in the territory of a Party at a particular time as to which economic resources and obligations should be recorded as assets and liabilities, which changes in assets and liabilities should be recorded, how the assets and liabilities and changes in them should be measured, what information should be disclosed and how it should be disclosed, and which financial statements should be prepared. These standards may be broad guidelines of general application as well as detailed practices, and procedures;
(vi) Harmonised System means the Harmonised Commodity Description and Coding System;
(vii) identical and interchangeable materials means materials being of the same kind and commercial quality, possessing the same technical and physical characteristics, and which once they are incorporated into the finished product cannot he distinguished from one another for origin purposes by virtue of any markings etc;
(viii) indirect material means a good used in the production testing or inspection of a good but not physically incorporated into the good, or a good used in the maintenance of buildings or the operation of equipment associated with the production of a good, including:
(a) fuel and energy,
(b) tools, dies, and moulds;
(c) parts and materials used in the maintenance of equipment and buildings;
(d) lubricants, greases, compounding materials, and other materials used in production or used to operate equipment and buildings;
(e) gloves, glasses, footwear, clothing, safety equipment, and supplies;
(f) equipment, devices, and supplies used for testing or inspecting the goods;
(g) catalysts and solvents; and
any other goods that are not incorporated into the good but whose use in the production of the good can reasonably be demonstrated to be part of that production;
(ix) material means ingredients, raw materials, parts, components, subassemblies and goods that were physically incorporated into another good or were subject to a process in the production of another good;
(x) non-originating material used in production means any material whose county of origin is other than the Parties (imported non-originating) and any material whose origin cannot be determined (undetermined origin);
(xi) originating material means a material that fulfils the criteria set out in either Rule 4 or Rule 5.
(xii) production means methods of obtaining goods including manufacturing, producing, assembling, processing, raising, growing, breeding, mining, extracting, harvesting, fishing, trapping, gathering, collecting, hunting and capturing.
3. Originating Goods
For purposes of this Agreement, products shall be deemed originating and eligible for preferential treatment if they are consigned according to Rule 15 and conform to the origin requirement under any of the following conditions:
(a) Products wholly produced or obtained in the territory of the exporting Party, in accordance with Rule 4; or
(b) Products not wholly produced or obtained in the territory of the exporting Party, provided that the said products are eligible under Rule 5.
4. Wholly Obtained or Produced
For the purposes of this Agreement, goods wholly obtained or produced in the territory of a Party shall be treated as originating goods of that Party. The following goods only shall be considered as being wholly obtained or produced in a Party:
(a) a raw or mineral good
4-1/product extracted from its soil, waters, seabed, or beneath the seabed;
(b) a vegetable good
4-2 harvested or produced there;
(c) an animal born and raised there;
(d) a good obtained from animals referred to in (c) above
(e) a good obtained from hunting, trapping, fishing or aguaculture conducted there;
(f) a good of sea fishing and other marine goods taken from outside its territory/ territorial waters and Exclusive Economic Zone (EEZ) by vessels registered with a Party and flying its Flag;
(g) a good processed and/or made on board factory ships registered with a Party and flying its Flag exclusively from products referred to in paragraph (f) above;
(h) a good taken by a Party, or a person of a Party, from the sea bed or beneath the sea bed outside the territorial waters/sea of that Party, in accordance with the provisions of the United Nations Convention on the Law of the Sea;
(i) articles collected there which can no longer perform their original purpose nor are capable of being restored or repaired and are fit only for disposal or recovery of parts or raw materials, or for recycling purposes
4-3 and
(j) a good produced there exclusively from goods referred to in (a) through (i), or from their derivatives, at any stage of production.
5. Not Wholly Obtained or Produced
1. Within the meaning of paragraph (b) of Rule 3 and subject to the provisions of Rule 7, 10 and that the final process of manufacturing is performed within the territory of the exporting Party, products would be considered as originating if:
(a) (i) the total value of the materials, parts or produce originating from countries other than the Parties or of undetermined origin used in the manufacture of the product does not exceed 60% of the FOB value of the product so produced or obtained; and,
(ii) the product so produced or obtained is classified in a heading, at the four digit level, of the Harmonised System different from those in which all the non-originating materials used in its manufacture are classified; or
(b) the product satisfies the Product Specific Rules as specified in Annex B.
2. For the purposes of calculating the local value added content, either of the following methods can be applied:
(a) Direct Method
Value of
Originating
materials |
+ | Direct
Labour
Cost |
+ | Direct
Overhead
Cost |
+ | Profit | |
| x 100%= 40% |
| FOB Price | |
(b) Indirect Method
Value of Non-originating materials 4-4
______________________________________________________ x 100% = 60%
3. For the purpose of paragraph 2, if the material does not satisfy the requirements of paragraph 1, the nonqualifying value of the materials shall be that proportion which cannot be attributed to one or both of the Parties, provided that the requirements of Rule 7 at each stage of value accumulation are satisfied.
6. Indirect Materials
In order to determine whether a product originates in the territory of a Party, any indirect material used to obtain such products shall be treated as originating whether such material originates in third countries or not, and its value shall be the cost registered in the accounting records of the producer of the good.
7. Insufficient Operations
1. The following, operations or processes shall not be considered as sufficient transformation provided for in Rule 5:
(a) operations to ensure the preservation of products in good condition during transport and storage (such as drying, freezing, keeping in brine, ventilation, spreading out, chilling, placing in salt, sulphur dioxide or other aqueous solutions, removal of damaged parts, and like operations);
(b) simple operations consisting of removal of dust, sifting or screening, sorting classifying, matching (including the making-up of sets of articles), washing painting, cutting;
(c) changes of packing and breaking up and assembly of consignments;
(d) simple cutting, slicing and repacking or placing in bottles, flasks, bags, boxes, fixing on cards or boards, and all other simple packing operations;
(e) affixing of marks, labels or other like distinguishing signs on products or their packaging;
(f) simple mixing of products whether or not of different kinds, where one or more components of the mixture do not meet the conditions laid down in this Chapter to enable them to be considered as originating products;
(g) simple assembly of parts of products to constitute a complete product:
(h) disassembly;
(i) slaughter of animals;
(j) mere dilution with water or another substance that does not materially alter the characteristics of the goods; and
(k) a combination of two or more operations referred to in paragraphs (a) to (j)
4-1 Includes mineral fuels, lubricants and related materials as well as mineral or metal ores.
4-2 Includes agricultural and forestry products.
4-3This would cover all waste and scrap, including waste and scrap resulting from manufacturing or processing operation or consumption in the same Party, scrap machinery, discarded packaging and all products that can no longer perform the purposes for which they were produced and are fit only for disposal for the recovery of parts or raw materials. Such manufacturing or processing operations shall include all types of processing not only industrial or chemical but also mining, agriculture, construction, refining, incineration and sewage treatment operations.
4-4 As defined in Rule 2.
8. Value of Non-originating Materials
The value of a non-originating material used in the production of a good shall be:
(a) For imported materials, parts or produce, the CIF value at the time of importation determined in accordance with the Agreement on Customs Valuation; and/or
(b) For materials, parts or produce of undetermined origin, the earliest price as ascertained by the certifying authority to have been paid for in the territory of the Party where the working or processing takes place.
9. Determination of Origin
No product shall be deemed to be a produce or manufacture of either Party unless the conditions specified in these rules are complied with in relation to such products, to the satisfaction of the authority issuing the certificate of origin.
10. Accumulation
1. A product manufactured in one Party and used in the territory of the other Party as a material for the finished product shall be considered as a product originating in the territory of the latter Party provided that it:
(a) complies with the origin requirements provided for in Rule 4 or 5; and
(b) fulfils the criteria in Rule 7.
2. The origin of the finished product would be determined under Rule 5.
11. Accessories, Spare Parts and Tools
Each Party shall provide that accessories, spare parts and tools delivered with a good that form part of the good’s standard accessories, spare parts and tools, shall be treated as originating goods if the good is an originating good, and shall be disregarded in determining whether all the non-originating materials used in the production of the good indergo the applicable change in tariff classification, provided that:
(a) the accessories, spare parts and tools are not invoiced separately from the good;
(b) the quantities and value of the accessories, spare parts and tools are standard trade practice for the good in the domestic market of the exporting Party; and
(c) if the good is subject to a qualifying value content requirement, the value of the accessories, spare parts, or tools shall be taken into account as originating or non-originating materials, as the case may be, in calculating the qualifying value content of the good.
12. Treatment of Packing
(a) Packages and packing materials for retail sale:
(i) Packages and packing materials for retail sale, when classified together with the packaged product, according to General Rule 5(b) of the Harmonised System, shall not be taken into account for considering whether all non-originating materials used in the manufacture of a product fulfil the criterion corresponding to a change of tariff classification of the said product.
(ii) If the product is subject to an ad valorem percentage criterion, the value of the packages and packing materials for retail sale shall be taken into account in its origin assessment, in case they are treated as being one for customs purposes with the products in question.
(b) Containers and packing materials for transport:
The containers and packing materials exclusively used for the transport of a product shall not be taken into account for determining the origin of any product, in accordance with General Rule 5(b) of the Harmonised System.
13. Identical and Interchangeable Materials
1. Where identical and interchangeable originating and non-originating materials including materials of undetermined origin are used in the manufacture of a product, those materials shall be physically segregated, according to their origin during storage.
2. A producer facing considerable costs or material difficulties in keeping separate stocks of identical and interchangeable originating and non-originating materials including materials of undetermined origin used in the manufacture of a product, may use the so-called “accounting segregation” method for managing stocks.
3. The accounting method shall be recorded, applied and maintained in accordance with generally accepted accounting principles applicable in the Party in which the product is manufactured. The method chosen must:
(a) permit a clear distinction to be made between originating and non originating materials including materials of undetermined origin acquired and/or kept in stock; and
(b) guarantee that no more products receive originating status than would be the case if the materials had been physically segregated.
4. The producer using this facilitation shall only complete origin declarations for the quantity of products considered as originating and shall assume full responsibility for the origin declarations and for keeping all documentary evidence of origin of the materials. At the request of the competent authorities of the exporting Party, the producer shall provide satisfactory information on how the stocks have been managed.
5. Party may require that the application of the method for managing stocks as provided for in this Article is subject to prior authorisation.
14. Advance Rulings
1. Each Party shall provide for the issuance of written advance rulings, prior to the importation of a good into its territory, to an importer of the good in its territory or to an exporter or producer of the good in the exporting party, as to whether the good qualifies as an originating good. The importing Party may request, at any time during the course of evaluating the request for an advance ruling, additional information necessary to evaluate the request. The importing party shall issue its determination regarding the origin of the good within 120 days after receipt of all necessary information.
(2) The importing Party shall apply an advance ruling to importation into its territory of the good for which the ruling was issued, for such period, which may be specified in the ruling.
3. The importing Party may modify or revoke an advance ruling:
(a) if the ruling was based on an error of fact;
(b) if there is a change in the material facts or circumstances on which the ruling was based; or
(c) to conform with a modification of this Chapter.
4. Where the importing Party modifies or revokes an advance ruling, such modification or revocation shall only take effect 60 days after the date on which the modification or revocation is issued, and shall not apply to importation of a good that has occurred prior to the effective date.
5. Notwithstanding paragraphs 3 and 4 above, the importing Party may revoke any advance ruling ab initio, if the importer or exporter to whom the advance ruling was issued had provided false or incorrect information pursuant to the application for the ruling.
6. Apart from the advance ruling being revoked ab initio, the person who had provided the false or incorrect information shall also be liable to appropriate penalties under the domestic laws of the respective Parties.
15. Consignment Criteria
The originating goods of the other Party shall be deemed to meet the consignment criteria when they are:
(a) transported directly from the territory of the other Party; or
(b) transported through the territory or territories of one or more non-Parties for the purpose of transit or temporary storing in warehouses in such territory or territories, and the products have not entered into trade or consumption there, provided that
(i) they do not undergo operations other than unloading, reloading or operations to preserve them in good condition; or
(ii) the transit entry is justified for geographical reason or by considerations related exclusively to transport requirements.
16. Certificate of Origin
Products eligible for preferential concessions shall he supported by a Certificate of Origin issued by a government authority designated by the government of the exporting Party and notified to the other Party (referred to herein as “the certifying authority” in accordance with the Operational Certification Procedures, as set out in Annex A.
17. Co-operation on verification of Certificates of Origin
1. The Parties shall co-operate with each other to verify the authenticity and the correctness of the information given in the certificates of origin.
2. For the purpose of implementing the provisions of paragraph 1, the customs administration of the importing Party shall return the certificate of origin, or a copy of the document, to the certifying authority of the exporting Party, giving the reason for the enquiry. Any document and/or information obtained suggesting that the information given on the certificate of origin is incorrect shall be forwarded in support of the request for verification.
3. The verification shall be carried out by the certifying authority of the exporting Party.
18. Denial of Preferential Tariff Treatment
1. Export of consignments accompanied by an authentic Certificate of Origin will not be subjected to any detention or delays by the Customs Authorities of the importing country.
2. In case of reasonable doubt about the authenticity of Certificate of Origin, the Customs authority of the importing country may seek a clarification from the certifying authority of the exporting country, which will furnish the same within a period of 30 days. Meanwhile, the subject consignment will be allowed entry into the importing country on a provisional basis against a bond or a guarantee i.e. a legally binding undertaking as may be required. After examining the information so provided by the certifying authority, the Customs Authority in the importing country would take appropriate action to finalise the provisional assessment.
3. Where the clarification carried on in above paragraph 2 is not conclusive, the importing Party may, upon informing the exporting Party and with the knowledge of the importer concerned and with the consent of the exporter or manufacturer concerned, visit the exporter or manufacturer concerned for the purpose of verifying the preference claim. If no consent is given by the exporter or manufacturer concerned within a period of 45 days, the importing party may disallow the tariff preference for the particular Certificate of Origin.
19. Consultation and Modifications
These rules may be reviewed as and when necessary upon the request of either Party and may be modified by mutual agreement pursuant to Article 16.7 of the agreement on Comprehensive Economic Co-operation Agreement between Republic of India and Republic of Singapore.
Sd/-
(S.P. Rao)
Under Secretary to the Government of India
F.No.467/34/2005-Cus.V
ANNEX A
OPERATIONAL CERTIFICATION PROCEDURES
For the purposes of implementing the Rules of Origin, the following operational procedures on the issuance and verification of the Certificate of Origin and other related administrative matters, shall be followed:
(i) AUTHORITIES
RULE 1
The Certificate of Origin (Attachment 1) shall be issued by the government authority designated by the exporting Party and notified to the other Party.
RULE 2
(a) Each Party shall inform the other Party of the names and addresses of the government officials issuing this Certificate of Origin and shall provide specimen signatures and official seals used by the government officials.
(b) Any change in names, addresses, or official seals shall be promptly notified to the other Party.
RULE 3
For the purpose of verifying the conditions for preferential treatment, the government authority designated to issue the Certificate of Origin (hereinafter referred to as Issuing Authority) shall have the right to call for any supporting documentary evidence or to carry out any check considered appropriate.
(ii) APPLICATIONS
RULE 4
The manufacturer and/or exporter of the products qualified for preferential treatment shall apply in writing to the relevant Issuing Authority requesting for the pre-exportation verification of the origin of the products. The result of the verification, subject to review periodically or whenever appropriate, shall be accepted as the supporting evidence in verifying the origin of the said products to be exported thereafter. The pre-exportation verification may not apply to products, the origin of which can be easily verified, by their nature.
RULE 5
At the time of carrying out the formalities for exporting the products under preferential treatment, the exporter or his authorized representative shall submit a written application for the Certificate of Origin together with appropriate supporting documents proving that the products to be exported qualify for the issuance of a Certificate of Origin.
(iii) PRE-EXPORTATION EXAMINATION
RULE 6
The Issuing Authority shall, to the best of its competence and ability, carry out proper examination upon each application for the Certificate of Origin to ensure that:
(a) The application and the Certificate of Origin are duly completed and signed by the authorised signatory;
(b) The origin of the product is in conformity with the Rules of Origin of this Agreement;
(c) The other statements of the Certificate of Origin correspond to supporting documentary evidence submitted; and
(d) Description, quantity and weight of goods, marks and number of packages, number and kinds of packages, as specified, conform to the consignment to be exported.
(iv) ISSUANCE OF CERTIFICATE OF ORIGIN
RULE 7
(a) The validity of the Certificate of Origin shall be 12 months from the date of its issuance.
(b) The Certificate of Origin must be on ISO A4 size paper in conformity to the specimen shown in Appendix 1. It shall be made in English.
(c) The Certificate of Origin shall comprise one original and three (3) carbon copies of the following colours:
Original - light grey
Duplicate - white
Triplicate - white
Quadruplicate - white
(d) Each Certificate of Origin shall bear a reference number given separately by each place or office of issuance.
(e) The original copy, together with the triplicate, shall be forwarded by the exporter to the importer for submission of the original copy to the Customs Authority at the port or place of importation. The duplicate shall be retained by the issuing authority in the exporting Party. The triplicate shall be retained by the importer and the quadruplicate shall be retained by the exporter.
RULE 8
To implement the provisions of Rule 3, Rule 4 and Rule 5 of ‘Rules of Origin’ the Certificate of Origin issued by the exporting Party shall indicate the applicable Rules of Origin and the local value-added content, where applicable, in Box 8 of the Certificate of Origin.
RULE 9
Neither erasures nor superimpositions shall be allowed on the Certificate of Origin. Any alteration shall be made by striking out the erroneous materials and making any addition required. Such alterations shall be approved by an official authorised to sign the Certificate of Origin and certified by the Issuing Authority.
Unused spaces shall be crossed out to prevent any subsequent addition.
RULE 10
(a) The Certificate of Origin shall be issued by the relevant Issuing Authority of the exporting Party at the time of exportation, or within 3 working days from the date of shipment whenever the products to be exported can be considered originating in that Party within the meaning of the Rules of Origin.
(b) In exceptional cases where a Certificate of Origin has not been issued at the time of exportation or within 3 working days from the date of shipment due to involuntary errors or omissions or other valid causes, the Certificate of Origin may be issued retroactively but no longer than one year from the date of shipment, bearing the word “ISSUED RETROACTIVELY”
RULE 11
In the event of theft, loss or destruction of a Certificate of Origin, the exporter may apply in writing to the Issuing Authority which issued it for the certified true copy of the original and the triplicate to be made on the basis of the export documents in their possession bearing the endorsement of the word “CERTIFIED TRUE COPY” (in lieu of the Original Certificate) in Box 12 of the Certificate of Origin. This copy shall bear the date of the original Certificate of Origin. The certified true copy of a Certificate of Origin shall be issued within the validity period of the original Certificate of Origin and on condition that the exporter provides to the Issuing Authority the quadruplicate mentioned in Rule 7.
(v) PRESENTATION
RULE 12
The Original Certificate of Origin shall be submitted to the Customs Authority at the time of lodging the import entry for the products concerned.
RULE 13
The following time limit for the presentation of the Certificate of Origin shall be observed:
(a) Certificate of Origin shall be submitted to the Customs Authority of the importing Party within its validity period;
(b) Where the Certificate of Origin is submitted to the Customs Authority of the importing Party after the expiration of the validity of the Certificate of Origin, such Certificate is still to be accepted when failure to observe the time-limit results from force majeure or other valid causes beyond the control of the exporter; and
(c) In all cases, the relevant government authority in the importing Party may accept such Certificate of Origin provided that the products have been imported before the expiration of the validity of the Certificate of Origin.
RULE 14
The discovery of minor discrepancies between the statements made in the Certificate of Origin and those made in the documents submitted to the Customs Authority of the importing Party for the purpose of carrying out the formalities for importing the products shall not ipso-facto invalidate the Certificate of Origin, if it does in fact correspond to the said products.
RULE 15
(a) The importing Party may request a retroactive check at random and/or when it has reasonable doubt as to the authenticity of the document or as to the accuracy of the information regarding the true origin of the products in question or of certain parts thereof.
(b) The request shall be accompanied with the Certificate of Origin concerned and shall specify the reasons and any additional information suggesting that the particulars given on the said Certificate of Origin may be inaccurate, unless the retroactive check is requested on a random basis.
(c) The Customs Authority of the importing Party may suspend the provisions on preferential treatment while awaiting the result of verification. However, it may release the products to the importer subject to any administrative measures deemed necessary, provided that they are not held to be subject to import prohibition or restriction and there is no suspicion of fraud.
(d) The Issuing Authority receiving a request for retroactive check shall respond within three months after the receipt of the request.
RULE 16
(a) The application for Certificates of Origin and all documents related to such application shall be retained by the Issuing Authority for not less than two years from the date of issuance.
(b) Information relating to the validity of the Certificate of Origin shall be furnished upon request of the importing Party.
(c) Any information communicated among the government authorities shall be treated as confidential and shall be used for the validation of Certificates of Origin purposes only.
(vi) Special Cases
RULE 17
When destination of all or parts of the products exported to specified port is changed, before or after their arrival in the importing Party, the following Rules shall be observed.
(a) If the products have already been submitted to the Customs Authority in the specified importing port, the Certificate of Origin shall, by a written application of the importer, be endorsed to this effect for all or parts of products by the said authority and the original returned to the importer.
(b) If a change of destination occurs during transportation to the importing Party as specified in the Certificate of Origin, the exporter shall apply in writing, accompanied with the issued Certificate of Origin, for the issuance of new Certificate/s of Origin for all or parts of products.
RULE 18
For the purpose of implementing paragraph (b) of Rule 15 of ‘Rules of Origin’ where transportation is effected through the territory of one or more non-parties, the following shall be produced to the government authorities of the importing Party:
(a) A through Bill of Lading issued in the exporting Party;
(b) A Certificate of Origin issued by the Issuing Authority of the exporting Party;
(c) A copy of the original commercial invoice in respect of the product; and
(d) Supporting documents in evidence that the requirements of paragraph (b) of Rule 15 of ‘Rules of Origin’ are being complied with.
RULE 19
(a) Products sent from one Party for exhibition in the other Party and sold during or after the exhibition, for importation into the other Party shall benefit from the preferential tariff treatment provided in this Agreement, on the condition that the products meet the requirements of the ‘Rules of Origin’ and provided it is shown to the satisfaction of the relevant government authorities of the importing Party that:
(i) An exporter has dispatched those products from the territory of the exporting Party to the importing Party where the exhibition is held and has exhibited them there;
(ii) The exporter has sold the goods or transferred them to a consignee in the importing Party; and
(iii) The products have been sold during the exhibition or immediately thereafter to the importing Party in the condition in which they were sent for the exhibition.
(b) For the purpose of implementing the above provisions, the Certificate of Origin must be produced to the relevant government authorities of the importing Party. The name and address of the exhibition must be indicated, a certificate issued by the relevant government authority of the Party where the exhibition took place together with supporting documents prescribed in paragraph (d) of Rule 18 may be required.
(c) Paragraph (a) shall apply to any exhibitions, fairs or similar shows or displays where the products remain under Customs control during these events.
(vii) ACTION AGAINST FRAUDULENT ACTS
RULE 20
(a) When it is suspected that fraudulent acts in connection with the Certificate of Origin have been committed, the Issuing Authorities concerned shall cooperate in the action to be taken in the territory of each Party against the persons involved.
(b) Each Party shall be responsible for providing legal sanctions for fraudulent acts related to the Certificate of Origin.
RULE 21
In the case of a dispute concerning origin determination, classification of products or other matters, the government authorities concerned in the importing and exporting Parties shall consult each other with a view to resolving the dispute.