August 24 2020

India Issues Administrative Rules on Claiming Preferential Custom Duty Rates under Treaty Agreements

Source: IBFD Tax Research Platform News

The Ministry of Finance has issued administrative rules for importers of goods claiming preferential duty rates under treaty agreements.

The procedures in the Customs (Administration of Rules of Origin under Trade Agreements) Rules of 2020 (the Rules) require that an importer or his agent claiming the preferential duty rate:

  • declare that the goods qualify as originating goods for preferential rate of duty under an agreement at the time of filing the bill of entry;
  • indicate the respective tariff notification against each item on which preferential duty rate is claimed;
  • produce the certificate of origin (CO) covering each item on which the preferential rate is claimed; and
  • enter certain details from the CO in the bill of entry as prescribed by the Rules.

Importers claiming preferential rate of duty are expected to:

  • possess information as indicated in Form I of the rules;
  • keep all supporting documents related to Form I for at least 5 years from the date of filing of the bill of entry and submit the same to the proper officer on request; and
  • exercise reasonable care to ensure the accuracy and truthfulness of the information and documents.

The claim of preferential duty rate may be denied without verification if the CO:

  • is incomplete and not in accordance with the format prescribed in the Rules of Origin;
  • has an alteration not authenticated by the issuing authority;
  • is produced after its validity period has expired; or
  • is issued for an ineligible item.

The claim may also be disallowed without further verification when:

  • the importer relinquishes the claim; or
  • the information or documents furnished by the importer and available on record are sufficient to prove that the goods do not meet the prescribed origin criteria.

An importer must provide information or documents requested for verification by an officer within 10 working days from the date of request. Where the importer fails to comply by the prescribed date or where the information and documents are found to be insufficient, the officer shall forward a verification proposal for the CO from the designated verification authority in the exporting country or country of origin.

Where it is established that an importer has suppressed the facts, made wilful misstatement or colluded with the seller or any other person, with the intention to avail undue benefit of a trade agreement, his claim of preferential rate of duty will be disallowed and the importer will be penalised accordingly.

The Rules will come into force on 21 September 2020. Details are available here.