• Recently, The Central Board of Indirect Taxes and Customs (CBIC)issued a circular, stating that custom officers should be sensitive in applying CAROTAR (Customs Administration of Rules of Origin under Trade Agreements) Rules, 2020 and maintain consistency with the provisions of relevant trade agreements or its Rules of Origin.
  • Exemptions specified in a Free Trade Agreement (FTA) with regard to country of origin will prevail in case of conflict between revenue department and importer.


  • CAROTAR, 2020 set guidelines for enforcement of the ‘rules of origin’ for allowing preferential rate on imports under Free Trade Agreements.
  • They supplement the existing operational certification procedures prescribed under different trade agreements.
  • They were notified in August, 2020 by the Ministry of Finance.


  • An importer is required to do due diligence before importing the goods to ensure that they meet the prescribed originating criteria.
  • An importer will have to enter certain origin related information in the Bill of Entry, as available in the Certificate of Origin.
  • Importers will have to ensure that imported goods meet the prescribed ‘rules of origin’ provisions for availing concessional rate of customs duty under Free Trade Agreements (FTAs).
  • Importers have to prove that imported products have undergone value addition of at least 35% in the countries of origin.
  • Earlier, merely a country of origin certificate, issued by a notified agency in the country of export was sufficient to avail the benefits of FTAs.
  • This was exploited in many cases, i.e., the FTA partner countries have been claiming to have produced the goods in question without having the necessary technological capacity for the required value addition. 


  • They will make the importer to correctly ascertain the country of origin, properly claim the concessional duty and assist customs authorities in smooth clearance of legitimate imports under FTAs.
  • The domestic industry will be protected from misuse of FTAs.
  • Under these rules, a country that has inked an FTA with India cannot dump goods from some third country in the Indian market by just putting a label on it.


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