BP Associates LLP

 [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
Government of India
Ministry of Finance
(Department of Revenue)
(Central Board of Excise And Customs)
 
Notification No. 43/2011-Customs (N.T.)
New Delhi, 1^st July, 2011
10 Asadha, 1933 (SAKA)

G.S.R. … (E) – In exercise of the powers conferred by sub-section (1) of section 5 of the Customs Tariff Act, 1975 (51 of 1975), the Central Government hereby makes the following rules, namely:-
 
1. Short title and commencement.- (1) These rules may be called the Customs Tariff (Determination of Origin of Goods Under the Preferential Trade Agreement Between the Governments of the Republic of India and Malaysia) Rules, 2011.
(2) They shall come into force on the 1^st day of July, 2011.
 
2. Definitions.- (1) In these rules, unless the context otherwise requires,-
(a)        “carrier” means any vehicle for transportation by air, sea and land;
(b)        “CIF value” means the price actually paid or payable to the exporter for goods including the cost of the goods, insurance, and freight necessary to deliver the goods to the named port of destination and the valuation shall be made in accordance with the World Trade Organisation (WTO) Agreement on Implementation of rule VII of General Agreement on Tariffs and Trade (GATT), 1994;
(c)        “FOB value” means the price actually paid or payable to the exporter for goods when the goods are loaded onto the carrier at the named port of exportation, including the cost of the goods and all costs necessary to bring the goods onto the carrier and the valuation shall be made in accordance with the World Trade Organisation (WTO) Agreement on Implementation of rule VII of General Agreement on Tariffs and Trade (GATT), 1994;
(d)        “goods” means any merchandise, product, article or material;
(e)        “Harmonised system” means the nomenclature of the Harmonised Commodity Description and Coding System defined in the International Convention on the Harmonised Commodity Description and Coding System including all legal notes thereto, as adopted and implemented by the State parties in their respective tariff laws;
(f)         “identical and interchangeable materials” means materials being of the same kind and commercial quality, possessing the same technical and physical characteristics, and which, once they are incorporated into the finished goods cannot be distinguished from one another for origin purposes by virtue of any markings, et cetera;
(g)        “materials” means ingredients, raw materials, parts, components, sub-assemblies or goods that are used in the production of other goods or are physically incorporated into other goods;
(h)        “originating goods” means goods that qualify as originating in accordance with the provisions of rule 3;
(i)         “Parties” means the Governments of the Republic of India and Malaysia collectively;
(j)         “Party” means the Governments of the Republic of India or Malaysia as the case may be;
(k)        “Product specific rules” means rules which specify that the materials have undergone a change in tariff classification or a specific manufacturing or processing operation, or satisfy qualifying value content criterion, or a combination of any of these criteria, as provided in Annexure-I to these rules; and,
(l)        “production” means a method of obtaining goods including growing, planting, mining, harvesting, raising, breeding, extracting, gathering, collecting, capturing, fishing, trapping, hunting, manufacturing, producing, processing, assembling or disassembling the goods.
3. Originating goods.- For the purposes of these rules, goods imported by a Party which are consigned directly as referred to in rule 9, shall be deemed to be originating and eligible for preferential tariff treatment if,-
(a)        the goods are wholly obtained or produced in the territory of the exporting Party as referred to in rule 4; or,
(b)        the goods are not wholly obtained or produced in the territory of the exporting Party but the said goods are eligible for preferential treatment under rule 5 or rule 6.
4. Wholly obtained or produced goods.- (1) For the purposes of clause (a) of rule 3, the following goods shall be deemed to be wholly obtained or produced in the territory of a Party, namely:-
(a)        the plant and plant products grown, planted and harvested there;
(b)        the live animals born and raised there;
(c)        the products obtained from live animals referred to in clause (b);
(d)        the goods obtained from hunting, trapping, fishing, aquaculture, gathering or capturing conducted there;
(e)        the minerals and other naturally occurring substances, not included in clauses (a), (b), (c) or (d), extracted or taken from its soil, waters, seabed or beneath their seabed;
(f)         the goods taken from the waters, seabed or beneath the seabed outside the territorial waters of that Party:
Provided that the Party has the rights to exploit such waters, seabed and beneath the seabed in accordance with the United Nations Convention on the Law of the Sea, 1982;
(g)        the goods of sea-fishing and other marine goods taken from the high seas by vessels registered with a Party and entitled to fly the flag of that Party;
(h)        the goods processed or made on board factory ships registered with a Party and entitled to fly the flag of that Party, exclusively from goods referred to in clause (g);
(i)         the articles collected there which cannot perform their original purpose and are not capable of being restored or repaired and are fit only for disposal or recovery of parts of raw materials, or for recycling purposes; and,
(j)         the goods obtained or produced in the territory of a Party solely from goods referred to in clauses (a) to (i)
(2) For the purposes of,-
(i) clause (a), the word “plant” shall mean all plant life, including forestry goods, fruit, flowers, vegetables, trees, seaweed, fungi and live plants;
(ii) clause (b) and clause (c), the word “animals” shall include all animal life, including mammals, birds, fish, crustaceans, molluscs, reptiles, and living organisms;
(iii) clause (c), the word “products” shall include those obtained from live animals without further processing, including milk, eggs, natural honey, hair, wool, semen and dung obtained from live animals referred to in clause (b); and,
(iv) clause (i), goods shall include all scrap and waste including scrap and waste resulting from manufacturing or processing operations or consumption in the same country, scrap machinery, discarded packaging and all products that can no longer perform the purpose for which they were produced and are fit only for disposal for the recovery of raw materials and such manufacturing or processing operations shall include all types of processing, which shall include industrial, chemical, mining, agriculture, construction, refining, incineration and sewage treatment operations.
5. Not wholly obtained or produced goods.- (1) For the purposes of clause (b) of rule 3, goods shall be deemed to be originating goods, when,-
(a)        such goods satisfy the criteria under the Product Specific Rules provided in Annexure-I of these rules; or,
(b) (i)    all non-originating materials used in the production of the goods have undergone a change in tariff classification in a sub-heading at the six digit level of the Harmonised system; and,
(ii)        qualifying value content of the goods is not less than thirty five per cent of the FOB value:
Provided that the final process of manufacturing is performed within the territory of the exporting Party.
(2) For the purposes of this rule, the following are the formulae for calculating the qualifying value content, namely:-
(a)        Direct Method:

(b)        Indirect Method:

(3)        The value of the non-originating materials shall be,-
(a)        the CIF value at the time of importation of the materials, parts or produce; or,
(b)        the earliest ascertained price paid for the materials, parts or produce of undetermined origin in the territory of the Party where the working or processing takes place.
(4)        The method of calculating the FOB value is as specified in Annexure-II of these rules.
(5) For the purposes of this rule,-
(a)        the Parties may adopt either the direct or indirect method of calculating the qualifying value content;
(b)        each Party shall adhere to one method;
(c)        any change in the method of calculation shall be notified to the other Party at least six months prior to the adoption of the new method; and,
(d)        any verification of the content by the importing Party shall be done on the basis of the method used by the exporting Party.
6. Cumulative rule of origin.- Unless the context otherwise requires, the goods which comply with the requirements of origin provided for in rule 3 and which are used in the territory of a Party as materials for the finished goods eligible for preferential tariff treatment under these rules shall be considered to be originating in the territory of the latter Party where working or processing of the finished goods has taken place.
7. De minimis.- (1) Goods that do not undergo a change in tariff classification pursuant to rule 5 and Annexure-I in the final process of production shall be deemed to be originating if,–
(a)        for the goods except for those falling within Chapters 1 to 14 and Chapters 50 to 63 of the Harmonised system, the value of all non-originating materials used in its production, which do not undergo the required change in tariff classification, does not exceed ten percent of the FOB value of the goods;
(b)        for the goods falling within Chapters 50 to 63 of the Harmonised system, the total weight of non-originating basic textile materials used in its production, which do not undergo the required change in tariff classification, does not exceed eight percent of the total weight of all the basic textile materials used; and
(c)        the goods meet all other applicable criteria set forth in these rules for qualifying as originating goods.
(2)        The value of such non-originating materials shall be included in the value of non-originating materials for any applicable requirement of qualifying value content for the goods.
8.         Minimal operations and processes.- (1) Notwithstanding anything contained in these rules, goods shall not be considered as originating in the territory of a Party if the following operations are undertaken exclusively by itself or in combination in the territory of that Party, namely:-
(a)        operations to ensure the preservation of goods in good condition during transport and storage including, but not limited to,  drying, freezing, keeping in brine, ventilation, spreading out, chilling, placing in salt, sulphur dioxide or other aqueous solutions, removal of damaged parts, and like operations;
(b)        simple operations consisting of removal of dust, sifting or screening, sorting, classifying, matching including the making-up of sets of articles, washing, painting, cutting;
(c)        changes of packing and breaking up and assembly of consignments;
(d)       simple cutting, slicing and repacking or placing in bottles, flasks, bags, boxes, fixing on cards or boards, and all other simple packing operations;
(e)        affixing of marks, labels or other like distinguishing signs on goods or their packaging;
(f)         simple mixing of goods whether or not of different kinds, where one or more components of the mixture do not meet the conditions laid down in this Chapter to enable them to be considered as originating goods;
(g)        simple assembly of parts of goods to constitute complete goods;
(h)        disassembly;
(i)         slaughter which means the mere killing of animals; and,
(j)         mere dilution with water or another substance that does not materially alter the characteristics of the goods.
(2)        For textiles and textile goods, an article or material shall not be considered to be originating in the territory of a Party by virtue of merely having undergone any of the following, namely:-
(a)        simple combining operations, labelling, pressing, cleaning or dry cleaning or packaging operations, or any combination thereof;
(b)        cutting to length or width and hemming, stitching or over-locking fabrics which are readily identifiable as being intended for a particular commercial use;
(c)        trimming or joining together by sewing, looping, linking, attaching of accessory articles such as straps, bands, beads, cords, rings and eyelets;
(d)        one or more finishing operations on yarns, fabrics or other textile articles, such as bleaching, waterproofing, decanting, shrinking, mercerizing, or similar operations; or,
(e)        dyeing or printing of fabrics or yarns.
Explanation.- For the purposes of this rule, the word “simple” means activities which do not require special skills or machines, apparatus or equipment especially produced or installed for carrying out the activity.
9. Direct consignment.- Originating goods shall be deemed to be directly consigned from the territory of the exporting Party to the territory of the importing Party if,-
(a)        the goods are transported without passing through the territory of any non-Party; or,
(b)        the goods are transported through the territory of any non-Party where,-
(i)         the transit entry is justified for geographical reasons or transport requirements;
(ii)         the goods have not entered into trade or consumption in the territory of such non-Party;
(iii)        the goods have not undergone any operation in the territory of such non-Party other than unloading and reloading or any operation required to keep the goods in good condition; and,
(iv)        the goods have remained under the control of the customs authority of such non-Party.
10. Treatment of packing materials and containers.- (1) If the goods are subject to the change in tariff classification criterion as provided in sub-clause (i) of clause (b) of sub-rule (1) of rule 5, packing materials and containers classified together with the packaged goods shall not be taken into account in determining the origin.
(2) If the goods are subject to qualifying value content requirement as provided in sub-clause (ii) of clause (b) of sub-rule (1) of rule 5, the value of the packing materials and containers, shall be taken into account in determining the origin of those goods:
Provided that the packing materials and containers are considered as forming a whole with the goods and the goods are packaged in such packaging materials and containers for the purposes of retail sale.
Explanation.- The packing materials and the containers in which the goods are packed for the purposes of shipment and used exclusively for the transportation of the goods shall not be taken into account in determining the origin of such goods.
11. Accessories, spare parts, tools and instructional or other information material.- (1) Any accessories, spare parts, tools, instructional or other information material delivered with the goods that form part of the standard accessories, spare parts, tools or instructional or other information material of the goods, shall be treated as originating goods if the goods are originating goods, and shall not be taken into account in determining whether all the non-originating materials used in the production of the goods undergo the applicable change in tariff classification subject to the following conditions, namely:-
(a)        the accessories, spare parts, tools or the instructional and other information material are not invoiced separately from the goods; and,
(b)        the quantities and value of the accessories, spare parts, tools or the instructional and other information material are standard trade practice for the goods in the domestic market of the exporting Party.
(2)        If the goods are subject to a qualifying value content requirement, the value of the accessories, spare parts, tools or the instructional and other information material shall be taken into account as originating or non-originating materials, as the case may be, in calculating the qualifying value content of the goods.
12. Indirect materials.- In order to determine whether goods originate in the territory of a Party, any indirect material, including power, fuel, plant and equipment, machines, tools or consumables used to obtain such goods shall be treated as originating, irrespective of the origin of the material and its value shall be the cost registered in the accounting records of the producer of such goods.
13.        Identical and interchangeable materials.- When goods are manufactured utilising both originating and non-originating materials, mixed or physically combined, the origin of such materials shall be determined on the basis of generally accepted accounting principles of stock control applicable or in accordance with the methods of inventory management practised in the exporting Party.
Explanation.- For the purposes of this rule, “generally accepted accounting principles” means recognized consensus or substantial authoritative support given in the territory of a Party with respect to the recording of revenues, expenses, costs, assets, and liabilities, the disclosure of information, and the preparation of financial statements and may encompass broad guidelines for general application, and detailed standards, practices, and procedures.
14. Certificate of origin.- A claim that the imported goods shall be accepted as eligible for preferential tariff treatment shall be supported by a certificate of origin issued by an authority or authorities designated by the Government of the exporting Party and notified to the other Party in accordance with the procedure stated in the Annexure-III and in the format specified in Annexure-IV to these rules.

[F. No. 456/13/2010-Cus.V]
 
(ABHINAV GUPTA)
Under Secretary to the Government of India