New Delhi : As part of a drive to check misuse of free trade deals, India here has come up with a new mechanism to allow customs officials and their counterparts in free trade partner countries to generate and exchange key documents ahead of shipments. setting up the system. Said.
The proposed system allows customs officials to generate and exchange “country of origin” certificates, a key document based on which duty concessions available under free trade agreements (FTAs) are claimed by importers and granted by officials. Are.
This will help in removing the need for the customs department in the receiving country to verify the document submitted by the importers to be sure about the authenticity of the document and provide duty benefits. This will speed up the processing of shipments, said one of the two persons cited above.
The new system will also eliminate misuse of FTAs as traders will not be able to falsify documents and route products from other countries through trade deal partner countries to take advantage of duty benefits.
The Central Board of Indirect Taxes and Customs (CBIC) is working on implementing the system in 2023 as part of an agreement signed with South Korea last September to enhance customs cooperation, the person said, adding that India will sign other FTAs. Will start talking to partner countries. with Australia.
An email sent to the finance ministry on Friday seeking comment for the story remained unanswered at the time of publication.
Earlier, the South Korean government had enabled the facility for India to use the country of origin on a database to verify the authenticity of certificates of origin.
“But now we are going beyond that. We have entered into an agreement with the South Korean government so that the two of us can generate certificates of origin electronically and exchange them electronically. So, as long as the other import into the country is received, we will already have the relevant country’s Certificate of Origin, and we will know [if a document is falsified],” the person said. The arrangement with South Korea under the Comprehensive Economic Partnership Agreement is to share product origin information to promote preferential trade.
“We have not initiated discussions with other FTA partner countries, but we have proposed to do so,” the person said.
The government has noticed two ways in which FTAs are being misused by traders: the first is the use of fake documents and the second, more serious violation is the use of false information in such certificates.
CBIC has noticed and is probing several suspected cases of the latter type in the case of FTAs with ASEAN. After macro analysis, it was found that the extent of value addition claimed by the importers does not take place in the country of origin, as the basic raw material for those products was imported. The above person said that the use of such imports for manufacturing does not give the required value addition to those products.
The government has observed that in some cases, the country of origin certificate shows that the value addition criteria have been met, but the cost elements used to determine the value addition are highly inflated is, said the second person cited above, who also spoke on this. condition of anonymity.
The customs authorities want the importer to investigate such false claims in order to produce information necessary to justify claims of value addition under CAROTAR (Customs Administration of Rules of Origin under Trade Agreements) rules, which were introduced in 2020.
The second person also said that India will specify in the new FTA that imports may be subject to these rules if the need is felt.
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