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  • 22 August, 2022

  • 9 Min Read



  • In a recent circular, the Central Board of Indirect Taxes and Customs (CBIC) advised customs officials to apply the CAROTAR (Customs Administration of Rules of Origin under Trade Agreements) Rules, 2020 with care and to ensure that their actions are consistent with the rules of any applicable trade agreements.
  • In the event of a dispute between the revenue department and the importer, the exemptions outlined in a Free Trade Agreement (FTA) with regard to the nation of origin will take precedence.


  • The Ministry has instructed customs field agents to be cautious when implementing CAROTAR and to preserve compliance with its Rules of Origin or the terms of pertinent trade agreements.
  • It also makes it clear that, in the event of a dispute between the tax department and an importer, the exclusions stated in a Free Trade Agreement (FTA) with regard to the nation of origin would take precedence.
  • India has signed FTAs with a number of nations, including the ASEAN states, the UAE, Mauritius, Japan, South Korea, and Singapore.
  • As part of the FTA, the trading partners also agree to loosen rules to encourage trade in services and investments and to considerably decrease or remove import/customs charges on the majority of goods traded between them.

Customs (Administration of Rules of Origin under Trade Agreements) or CAROTAR Rules

  • On September 21, 2020, these Regulations went into force.
  • It gives the customs officers the authority to request additional information from the importer in accordance with the trade agreement if the officer has grounds to suspect that the country-of-origin requirements have not been met.
  • If the importer doesn't supply the necessary information, the officer may conduct additional checks in accordance with the trade agreement.


  • Before importing the commodities, an importer must perform due diligence to confirm that they match the established origination standards.
  • An importer will have to submit certain origin-related information in the Bill of Entry, as accessible in the Certificate of Origin.
  • To qualify for a reduced rate of customs duty under free trade agreements, importers must make sure that imported goods comply with the established "rules of origin" (FTAs).
  • Importers must demonstrate that their items have undergone at least a 35% increase in value in the countries of origin.
  • To profit from FTAs in the past, all that was required was a country of origin certificate issued by an organization that had been notified in the exporting nation.


  • They will force the importer to accurately determine the nation of origin, properly claim the reduced duty, and help customs officials with the efficient clearance of legal imports made according to FTAs.
  • The home industry would be safeguarded from unfair FTA practices.
  • According to these regulations, a nation that has signed an FTA with India is not permitted to simply label goods imported from a third country and dump them on the Indian market

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Source: The Hindu

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