FAQs on CAROTAR 2020

by | Oct 15, 2020 | Insight | 0 comments

Vide our update titled NITYA Insight | Issue 169 | Introduction of rules for administration of preferential duty claims (click here), we apprised you regarding the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (‘CAROTAR 2020’).

In furtherance to the above, CBIC has recently issued FAQs on CAROTAR 2020. A gist of key clarifications provided under FAQs is as under:

  • Importers are not required to file Form I appended to CAROTAR 2020 at the time of filing customs declaration. This Form along with other supporting documents needs to be submitted if and when sought by the customs officer.
  • Details of production process in Form I can be used for import of identical products from the same manufacturer provided there is no change in production process.
  • If goods do not meet the prescribed origin criteria, then non-fulfillment of origin criteria shall also apply to identical goods imported from the same exporter. Such criteria shall not apply to other products imported from same exporter or identical products imported from other exporters.
  • The production process should include manner of fulfillment of prescribed originating norms. For example, in case of requirement of change in sub-tariff heading level (CTH), importer should be aware regarding process involved (distillation / assembly of components / stamping / cutting etc.) and should capture the same in Form I.
  • It is not mandatory for importers to submit cost break-up or proprietary production process if not available with them. For information pertaining to components which constitute value addition (Section III, Part B, Entry 2(d) of Form I appended to CAROTAR 2020), importer need not submit exact figures. Only description of major components considered while calculating domestic value addition e.g. material, labour, profit etc., can be submitted. If further details are required, customs will contact Verification Authority of exporting country.

NITYA Comments: The exporter may not be willing to provide breakup of labour and profit separately. Customs authorities may practically challenge absence of information of all items. 

  • Non-possession of origin-related information will not lead to restrictions in import. In case of doubt, customs officer will initiate overseas verification under Rule 6 of CAROTAR 2020 and allow clearance of goods under provisional assessment. Subsequent import of goods by same importer will not be facilitated by the Risk Management System of Customs.
  • The supporting documents required to be submitted by importer can include inter-alia email communication from exporter informing various origin-related details, photographs of production site demonstrating production process etc.

Trust you find this an informative read! In case of any clarifications, please feel free to contact. 

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