Chatroom: Importers must ensure genuineness of COO, says expert

Business Standard brings you the fortnightly Q&A on SMEs

We are starting a merchant exporting activity. We understand that we can source goods from domestic parties on payment of 0.1 per cent GST and export under LUT, but we have to give a shipping bill copy to our supplier. We are afraid this will reveal the name and address of our overseas customer to our local supplier. Is there any way to avoid that?

The DGFT Policy Circular no. 18/2006 dated September 4, 2006, says that in order to prevent leakage of confidential information, exporters are allowed to deface the name and address of foreign buyers in shipping bills and other documents when presented to the Regional Authorities for claiming benefits under various export promotion schemes. In my opinion, the other authorities also need have no objection in accepting shipping bills with the name and address of the foreign buyers defaced. You can discuss this matter with your local supplier upfront.

We intend to import a machine on duty payment and re-export it after using it for the manufacture of some items for a few quarters. Can we take input tax credit of the IGST that we have to pay on the machine?

Yes. You can take input tax credit of the IGST paid, so long as the conditions required for taking such credit are met. There is no bar on taking the credit merely on the premise that you intend to re-export the goods after some time.

We import stainless steel coils and sheets from Asean countries under the FTA. The supplier provides the Certificate of Origin (COO) in Form ‘A’, on the basis of which we claim exemption of basic custom duty. Are we obliged to verify the genuineness of form ‘A’, or is it incumbent on the Customs to check the authenticity of Form ‘A’ before allowing clearance? Does Customs (Administration of Rules of Origin under Trade Agreement) Rules, 2020 (Carotar) impose additional obligations on us to check the veracity of Form ‘A’?

First of all, please note that you have no right to present any non-genuine document and say that it is the job of the Customs to verify its genuineness. The Customs usually will accept the documents presented by you as genuine in good faith, unless they have specific reasons to doubt the genuineness of any document, in which case, they may initiate necessary enquiries before clearing the goods. If the Customs discover, after clearance, that you have presented any bogus documents, they can initiate necessary action to recover the duties and also punish you.

Regarding the COO, Carotar clearly spells out the obligations of the importer at Rule 4, which includes the obligation to exercise reasonable care to ensure the accuracy and truthfulness of the documents and information that the importer is required to possess. Rule 8 of the said Rules allows the proper officer to request for verification of COO from the verification authority in the exporting country, either during the course of customs clearance or thereafter.