Clarification
on Third Party Invoicing in FTA Rules of Origin Mismatch Cases
CBIC has clarified
that third country invoicing is allowed in FTA. In
other words, the country in the certificate of origin and the country of
invoicing need not be the same.
Background
Please refer to our
Daily Index of Changes Issue No. 1471 dated 25 November 2020 in which we had
pointed out the Chennai Customs ruling that the country of invoicing and
country of origin must be the same for eligibility to the duty free provision
in the FTA Notification is not in order.
We wrote to the CBIC
saying that this is not as per CAROTAR, 2020. The invoicing country or the bank
can be anywhere in the country as provided in the corresponding WTO Rules or
Origin. We are glad to report that our contention has been accepted by the CBIC
in good time and a clarification circular has been issued by CBIC Circular No.
53 dated 08.12.2020.
The letter applies to
all past imports as well and in all ports in India with retrospective effect.
Old cases of mismatch between country of invoice and Country of Origin cannot
be reopened in the light of the Chennai Order which is
extinguished by the above Circular.
It may be noted that the Circular is aimed at DC Imports
at zero duty under notification 29/2015-Cus(NT) but
will be equally applicable mutatis mutandis to other FTA imports.
[CBIC Circular No. 53/2020- Customs dated 8 December
2020]
Subject: Third Party Invoicing in case of Preferential
Certificates of Origin issued in terms of DFTP for "wholly obtained
goods"
The Board has received representations from trade with
regard to use of third party invoicing while claiming preferential tariff
treatment in terms of Duty Free Tariff Preference Scheme for Least Developed
Countries (DFTP) in respect of "wholly obtained goods".
2. It has been learnt that Certificates of Origin (COOs)
issued in terms of customs notification no 29/2015-cus (N.T), dated 10.03.2015
and with third party invoicing were earlier being accepted by the proper
officer but that same has been discontinued after implementation of CAROTAR,
2020.
3. The matter has been examined. The notification no
29/2015-cus (N.T), dated 10.03.2015 is silent upon provisions for third party
invoicing, i.e. commercial invoice for goods originating in the LDC is issued
in the third country and not by the consignor in the exporting country. In some
other notified preferential rules of origin, where specific provision for third
party invoicing is provided, the origin of the good is nonetheless based upon
the value addition done in the country of origin alone, with Free on Board (FoB) in country of origin being the base for arriving at
the local value content.
4· With regard to notification no 29/2015-cus (N.T), read
with notification no. 9612008- Cus, dated 13.08.2008,
which offers unilateral tariff concessions to LDC, the Board is of the view
that where value of goods does not have impact on the originating status, i.e the originating criteria is 'wholly obtained', the
Certificate of Origin issued in terms of Duty Free Tariff Preference Scheme for
Least Developed Countries with third party commercial invoice may be accepted.
This is subject to ensuring that the goods referred to in the Certificate of
Origin, and the invoice correspond to each other and that the goods satisfy the
applicable rules of origin. The normal due diligence to check for authenticity
of COO and correctness of claim should continue to be observed. Needless to
state the existing stipulation of RBI in regard to third party invoicing, would
apply.
5. It is requested that necessary public notice may be
issued in this regard.
F. No. 21000/11/2013-Director (ICD)