The Central Board of Indirect Taxes and Customs has eased the paperwork for companies importing goods from the UK under the India-UK Comprehensive Economic and Trade Agreement .Under a circular dated September 24, the board said a valid Origin Declaration from the UK exporter or producer is sufficient proof of origin to claim preferential tariff treatment. Importers will not have to submit Form-I with every bill of entry as a precondition for getting the lower duty. Form-I can still be sought in specific cases where a consignment is flagged for origin-related scrutiny and the customs officer has reason to believe that the goods may not satisfy CETA's origin requirements. What are preferential duties?

Preferential duties are lower or zero customs duties available on goods imported from a partner country under a trade agreement. Under CETA, UK goods that meet the agreement's rules of origin can qualify for the preferential tariff rate when imported into India.

In simple terms, the benefit is available only when the goods meet the conditions laid down under the trade agreement to establish that they qualify as originating goods. What are rules of origin?

Rules of origin are the criteria used to determine where a product is considered to have originated. This matters because the customs duty applicable to a product can depend on its country of origin. In a free trade agreement, these rules determine whether a product qualifies for preferential treatment.

The rules can involve factors such as a change in tariff classification, a specified percentage of value addition or particular manufacturing or processing requirements. For India-UK CETA, the relevant origin rules are those specified under the agreement. What has CBIC changed?

The key clarification is that Form-I is not required to be submitted along with every bill of entry for an importer claiming CETA benefits.

The CBIC circular said a valid Origin Declaration completed by the UK exporter or producer constitutes proof of origin for claiming preferential tariff treatment.“Form-l under CAROTAR, 2020 is not required to be submitted with the Bill of Entry. Accordingly, it shall not be treated as a precondition for allowing preferential tariff treatment,” the circular read.

Therefore, a claim supported by a valid Origin Declaration can be processed without requiring Form-I. Form-I may still be requested when the bill of entry is flagged by the National Risk Management System for origin-related checks and the customs officer has reason to believe that the origin criteria may not have been met.

The CBIC said that the domestic customs framework should be applied in a manner that preserves the intent of the trade agreement. Why does paperwork matter?

Rules of origin can require information about how and where a product was manufactured or processed. Importers may not have access to all of that information held by the UK exporter or producer.

The CBIC has clarified that under India-UK CETA, an importer is not required to obtain confidential information from the exporter or producer.

The importer has to provide the information made available by the exporter or producer. Failure to provide such information alone cannot result in the denial of preferential tariff benefits.

If the available information is not enough to determine the origin of the goods, verification can instead be undertaken through the Verification Authority of the exporting Party under the trade agreement. Who stands to gain?

Importers: The immediate change is less routine paperwork when claiming the CETA concession.

They do not have to submit Form-I with every bill of entry or chase UK suppliers for confidential information as a standard requirement.UK exporters: The clarification reduces the need to provide sensitive production information to Indian importers simply to support every preferential-duty claim.

Consumers: If lower customs duties reduce the landed cost of eligible imported goods, there can potentially be an effect on prices. However, the circular itself does not guarantee that any customs-duty reduction will be passed on to consumers.

What if customs questions the origin?A customs officer can still question whether imported goods actually meet CETA's rules of origin. If the bill of entry is flagged by the NRMS and there is reason to believe that the origin criteria have not been met, customs can seek the relevant information specified in Form-I.

If the information available from the importer is insufficient, the origin can be verified through the authorities in the UK in accordance with CETA. What happens to subsequent imports of similar goods?

If customs has earlier denied preferential tariff treatment for goods imported from the same UK producer or exporter, that finding may also apply to later imports of identical goods. However, the earlier determination will not apply if sufficient information is provided to establish that the subsequent goods meet the country-of-origin criteria.A later shipment cannot automatically be treated as identical merely because it has the same description, tariff classification, exporter, producer or technical characteristics.

The importer must be given an opportunity to provide additional information. If the later goods differ in a material way relevant to origin, the new claim has to be examined independently. What if CAROTAR and CETA have different rules? The CBIC said each trade agreement has its own framework for determining and verifying the origin of goods, while Section 28DA of the Customs Act and CAROTAR, 2020 provide the domestic framework for implementing those rules.

The circular also stated that if CAROTAR conflicts with the rules of origin under a trade agreement, the rules under the trade agreement will prevail.