Rules of Origin | CAROTAR 2020 | UPSC

Rules of Origin | CAROTAR 2020 | UPSC

      DEDICATED TO: 

RAHUL BORA ( Thank you for contacting IASbhai 🙂 )

Rules of Origin | CAROTAR 2020 | UPSC

      HEADLINES:

Rules of Origin : CAROTAR 2020

      WHY IN NEWS:

It was notified on 21st August 2020.

MINISTRY? :- Ministry of Finance
SYLLABUS COVERED: GS 3: Taxation

      LEARNING: 

For PRELIMS Rules of Origin and its components can be part of any MCQ !

For MAINS pros and cons of CAROTAR 2020 can be a potential question . Let us dive in .

      ISSUE: 

Hello Rahul , Let us understand what Rules of Origin mean .

RULES OF ORIGIN

  • Rules of origin is a criteria used to define the place where a product was manufactured / originated.

It is one of the important aspect that customs authorities around the world focus on.

  • In fact, in India, it is required to mention the country of origin for every products in the bill of entry filed upon importation.(You will find this on any imports).

WHAT HAPPENS WHEN YOU MENTION COUNTRIES OF ORIGIN?

Mentioning Countries of origin in the Bill is relevant for regulating various areas of customs.

Now Customs can decide :

  • About determining preferential tariff treatment
  • Arriving at the licensing requirements
  • Levying antidumping duty
  • Regulating quota restrictions, etc.

Now you must be thinking , what is the Role of CAROTAR 2020 !

To empower the Custom department/officials , Government of India came up with two laws:

RELEVANT ACTS

  1. Being such a key area, Indian Government, through Finance Act of 2020, introduced Section 28DA under the Customs Act, 1962 as an enabling provision for administration of Rules of Origin under trade agreements.
  2. In addition to the introduction of Section 28DA, Central Government also introduced Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (‘CAROTAR, 2020’) on 21 August 2020.

Purpose of these regulations is to provide specific provisions and outline roadmap for governance of claims made under the trade agreements by the importers of goods in India.

Rahul , now you must be having a question ! Sir why two laws for a similar purpose.

Both the laws are more or less same but CAROTAR 2020 is the latest version

Here,

  • SECTION 28DA – It has provided the enabling provisions.
  • CAROTAR, 2020 : Customs authorities will regulate the claims related to preferential duty has been outlined in the CAROTAR, 2020.

In CAROTAR, 2020, onus of maintaining the requisite documents and checking the correctness & accuracy of the Countries of origin is through reasonable care has been placed on the importer.

IMPLEMENTATION

  • In order to let the importers align themselves to this new rule, the implementation date of the CAROTAR, 2020 had been scheduled at 21 September 2020.

Let us dig a little into CAROTAR 2020 now,

CAROTAR 2020

DECLARATION BY IMPORTER/ HIS AGENT

  • Importer/ his agent needs to make a declaration in the Bill and enter the specified details of certificate of origin.
  • Details of whether the consignment has been shipped directly from the country of origin also need to be given in the Bill.
  • Necessary modifications in the format of bill of entry are being made to accommodate additional details.

CASES WHEN CLAIM MAY BE DENIED

Proper officer may deny the preferential duty claim without verification of details regarding Countries of origin and mark it ‘INAPPLICABLE’ in following cases:

i. It is incomplete and not in accordance with the format;

ii. It contains any alteration not authenticated by the issuing authority;

iii. It is produced after its validity; or

iv. It is issued for an item which is not eligible for preferential treatment.

  • Importer shall possess information in a form provided in the CAROTAR, 2020.

Documents in support of the information for a period of 5 years from the date of filing the bill of entry.

  • Information, which include regional value content, product specific criteria, etc. shall be possessed prior to import .

REQUISITION OF INFORMATION FROM THE IMPORTER

  • Proper officer has been authorised to call for information maintained in the form filled during the customs clearance or thereafter.
  • If the importer fails to provide the required details within the prescribed time, then the proper officer shall forward a verification proposal to the nodal officer of customs .
  • Nodal Officer (Director, International Customs Division) will take action after getting the required information from the issuing authority of the Countries of origin.

The preferential treatment may be suspended till the time verification is not concluded.

CHALLENGES WITH THE CAROTAR 2020

Some of the challenges of complying with the CAROTAR, 2020 could be:

a. Arranging for the information such as production process, components used in manufacturing/ production .

b. Exact nature of supporting documents that is to be maintained by the importer as per Form-I is not given.

c. What will constitute a reasonable care is not clarified (ambiguous; can lead to litigation).#Tribunal

      IASbhai WINDUP: 

Okay Rahul , Let us summarize this , it can be said that CAROTAR, 2020 will require importers availing the preferential duty benefit under the trade agreements to be much more diligent and cautious.

  • It can also be seen as a barrier in order to reduce the import of goods .
  • Alternatively , It can be a tool to promote the Make in India and other similar schemes to boost manufacturing in India.

It is important to note that availing the preferential benefit from the date of implementation of CAROTAR, 2020 won’t be sufficient.

  • A due diligence on the part of the importer prior to availing the benefit needs to be done to avoid any future risks.
  • A process needs to be in place to verify each and every certificate received from the exporter/ producer to check the correctness and the accuracy of the Rules of Origin.
     SOURCES:THE HINDU & PIB | Rules of Origin | CAROTAR 2020 | UPSC

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