1 EXECUTIVE INSTRUCTIONS FOR ISSUE OF CERTIFICATES OF ORIGIN UNDER INDO-SRI LANKA FREE TRADE AGREEMENT (ISFTA) 1. SCOPE 1.1 An agreement for establishing a Free Trade Area was signed on between the Republic of India and the Democratic Socialist Republic of Sri Lanka. Subsequently, on , a meeting between Secretary, Ministry of Commerce, Government of India and the Secretary, Treasury, Govt. of Sri Lanka was held in which it was intimated by the Indian side that Export Inspection Council (EIC) will be the authority to issue certificate of origin in India, under the agreement. 1.2 The objective of this Agreement are: a) To promote through expansion of trade, the harmonious development of the economic relations between India and Sri Lanka. b) To provide fair conditions of competition for trade between India and Sri Lanka. c) To contribute in this way, by the removal of barriers to trade, to the harmonious development and expansion of world trade. 1.3 As per the agreement, Government of Sri Lanka will accord tariff concessions to such Indian products upon their imports into Sri Lanka, except for products grouped in the Negative List of Sri Lanka, provided the products are originating in India and are directly consigned to Sri Lanka. 1.4 This version of Executive Instruction (Revision 2) shall come into force on Monday, the 1 st October 2001, superseding the earlier version (Revision 1) issued in June DEFINITIONS 2.1 manufacture means any kind of working or processing including assembly or specific operation; 2.2 material means of ingredient, raw material, component or part, etc., used in the manufacture of the product; 2.3 product means the product being manufactured, even if it is intended for later use in another manufacturing operation; 2.4 goods means both materials and products;
2 2.5 value of materials of undetermined origin means the c.i.f. value at the time of importation of such materials or, if this is not known and cannot be ascertained and proved, the first ascertainable price paid for the materials in India. 2.6 headings means the four-digit codes used in the nomenclature which makes up the Harmonized System;\ 2.7 classified refers to the classification of products or material under a particular heading; 2.8 consignment means products which are either sent simultaneously from one exporter to the consignee or covered by a single transport document covering their shipment from the exporter to the consignee or, in absence of such a document, by a single invoice. 3. RULES OF ORIGIN 3.1 The objective of these rules is to determine the origin of goods under the free trade agreement. Products, which have achieved the status originating in India, will be eligible for preferential tariff treatment upon imports into Sri Lanka. 3.2 Following products shall be considered as originating in India. a) Products that are wholly obtained in India, as defined at 3.3 below. b) Products obtained in India in the manufacture of which, in addition to the materials referred to at 3.3 below, materials originating in Sri Lanka alone are also used, provided i) that value addition in India not less than 25% of the f.o.b. value of the product under export, and ii) that aggregate value addition, that is, total value addition in India and Sri- Lanka, is not less than 35% of the f.o.b. value of the product under export. c) Products obtained in India in the manufacture of which, in addition to the materials referred to at 3.3 below, materials imported from more than one country (whether or not including Sri Lanka) or of undetermined origin are also used, provided i) the materials of imported or undetermined origin, used in the manufacture of the product, are subjected to sufficient working or processing in India, as defined at 3.4 below, going beyond those described as insufficient working or processing at 3.5 below, and ii) the value of such materials of imported or undetermined origin does not exceed 65% of the f.o.b. value of the product.
3 3.3 Within the meaning of 3.2 (a) below, the following is to be considered as wholly obtained in India. a) raw or mineral products extracted from its soil, its water or its seabed; b) vegetable products harvested there; c) animals born and raised there; d) products obtained from animals referred to in clause (c) below; e) products obtained by hunting or fishing conducted there; f) products of sea fishing and other marine products taken from the high seas by its vessels; g) products processed and/or made on board its factory ships exclusively from products referred to in clause (f) below; h) used articles collected there, fit only for the recovery of raw materials; i) waste and scrap resulting from manufacturing operations conducted there; j) products extracted from the seabed or below seabed which is situated outside its territorial waters, provided that it has exclusive exploitation rights; k) goods produced there exclusively from the products referred to in clauses (a) to (j) above. 3.4 Within the meaning of 3.2 (c) (i) above, materials of imported / undetermined origin will be considered to be sufficiently worked or processed when the product obtained is classified in a heading (at the 4 digit level) of Harmonized Commodity Description & Coding System (HS), which is different from those in which such materials of imported / undetermined origin are classified. 3.5 The following will, in any event, be considered as insufficient working or processing, that would not confer the status of origination products regardless of whether or not the requirements of 3.2 (c) (ii) or 3.4 above are satisfied. a) Operations to ensure the preservation of products in good condition during transport and storage (ventilation, spreading out, drying, 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 up;
4 c) (i) Changes of packing and breaking up and assembly of consignments, (ii) Simple operations consisting of removal of dust, sifting or screening, sorting, classifying, matching (including the making-up of sets of articles), washing, painting, cutting up. d) affixing of marks, labels or other like distinguishing signs on products or their packaging; e) simple mixing of products, whether or not of different kinds, where one or more components of the mixture do not meet the conditions laid down in these Rules to enable them to be considered as originating products; f) simple assembly of parts of products to constitute a complete product; g) a combination of two or more operations specified in(a) to (f); h) slaughter of animals. 3.6 The following shall be considered to be directly consigned from the India to Sri Lanka. a) If the products are transported without passing through the territory of any country other than India and Sri Lanka. b) The products whose transport involves transit through one or more intermediate countries with or without transshipment or temporary storage in such countries; provided that i) the transit entry is justified for geographical reason or be considerations releated exclusively to transport requirements; ii) the products have not entered into trade or consumption there; and iii) The products have not undergone any operation there other than unloading and reloading or any operation required to keep them in good condition. 3.7 When determined the origin of the products, packing shall form a whole with the product it contains.
5 4. CERTIFICATE OF ORIGIN 4.1 Products origination in India benefit from preferential tariff treatment on submission of and ISFTA certificate of origin, a specimen of which is annexed. The certificate of origin is to be issued only when a product is meeting the rules of origin described earlier. 4.2 One set of Certificate of Origin form (combined declaration and certificate) consists of four sheets- an original (top copy) and three copies. Explanatory Notes for filling up the form are provided on the back of top and first copy while Application for Certificate of Origin under ISFTA is printed on the back of second and third copies of the set. 4.3 A certificate of origin is to be issued only upon written application by the exporter. For this purpose, an application form has been printed on the back of second and third copies of the certificate set. The exporter can make use of this form or type out the contents of this form on his letterhead for obtaining the certificate of origin from the EIAs. 4.4 In the event of theft, loss or destruction of a certificate, EIAs may issue DUPLICATE of certificate of origin, subject to the following: a. The exporter furnishes an affidavit, on a paper that can be executed / enforced in the court of law, explaining the circumstances in which the certificate was lost or destroyed and undertaking not to use the earlier certificate and return the same to EIA if it is located / recovered at a later date. b. The contents of the duplicate to be issued are identical to the certificate it is replacing. c. Endorsement DUPLICATE Issued in lieu of certificate no.... dated... is made in box no. 4 of the new certificate. d. Fee at the prescribed rate is charged for issued of new certificate. 4.5 In the event an exporter of bulk commodities (such as HR Coils and Plates, Wire Rods, Bullets, Structural and the like) is unable to actually ship the planned quantity / weight, EIAs may amend box 9 of the certificate, as per details give below: a. Such exporters shall continue to obtain ISFTA certificate of origin prior to shipment by filling, in box no. 9, the quantity / weight they plan to export. In case they are not able to actually ship the planned quantity / weight, they should come back to the certifying authority the day after shipment with i. One application, on their letter head, for amendment of quantity in box number 9 of the certificate, ii. 2 copies of revised invoice / packing list, bearing same (original) number and date but indicating the quantity/ weight actually shipped and
6 iii. One certified copy of the B/L showing the quantity / weight actually shipped. b. The certifying authority, after charging the certification fee, will amend the quantity / weight mentioned in box number 9 in the original + 3 copies of the certificate and authenticate the same. At the same time, the old invoice / packing list will also be replaced by the revised invoice, bearing same (original) number and date. 4.6 If goods meet the rules of origin, they are certified by the EIAs. While the original and the first copy duly certified are returned to the exporter, second and third copies are retained by the Agency. 4.7 The first consignment of a particular product of a particular exporter is to be certified only after a Physical Verification that origin criterion / value addition norm prescribed at 3.2 above is actually being met. Continued compliance to prescribed origin criterion / value addition norm is to be assessed on a periodic basis at a frequency of 1 in 10 consignments, for each product. Depending upon the performance observed in the last 6 s, the Incharge of the Agency shall have the discretion to change this frequency for a product of an exporter subject to the condition that physical verification is carried out at least once in six s for each products. Reasons for the same shall, however, be recorded. Physical verification has been prescribed primarily for ensuring that origin criteria / value addition norms are actually being met before a certificate is issued for a particular product. Looking at the objective. Examination of the consignment is advised primarily on two counts. One gets an idea of the product and the type of materials / components used in its manufacture. This helps in deciding the checks that one would like to carry out for determining origin. The second advantage is that at time, one is able to observe actual use of a non-origination material in the consignment. Physical verification is to be carried out where the goods are physically available but preferably at the premises of the manufacturer. In case goods are available at a premises under the jurisdiction of another Agency / Sub Office, physical verification shall be got done through the concerned office within 3 days. In case visit to manufacturing premises is considered necessary in addition to physical verification, it may be organized through the Agency / Sub Office in whose jurisdiction the same is located within 3 days. The officer deputed for physical verification shall submit a report immediately thereafter, covering at least the following points. - Details of the consignment including the form & invoice, - Address (es) of the premises where physical verification was carried out/ visited for ascertaining compliance to prescribed origin criterion / value addition norm, - Date / time of arrival & completion of physical verification / visit, and
7 - Grounds, in detail, on which the goods are adjudged to be complying (or not complying) to the origin criterion / value addition norm prescribed at 3.2 above, and the supporting documentation, if any. Records of issue of certificates of origin / physical verification carried out shall be maintained exporter wise and for each exporter product wise, if applicable, to facilitate physical verification at the desired frequency. 4.8 In the case of application of 3.2 (b), the certifying authorities will rely upon certificates of origin issued by the Director General of Commerce, Sri Lanka as evidence of material originating in Sri Lanka. 4.9 One certificate of origin will cover only one consignment. Further, certificates of origin are to be issued only at the time of exportation and not after the goods are shipped. Retrospective issue of the certificate of origin is not allowed at all Instructions on how to fill the certificate to origin form and the application form are also enclosed. 5. FEE STRUCTURE & MODE PAYMENT 5.1 Sale price of blank form : Rs. 25/- per set/ form. 5.2 Certification Fee : Rs. 150/- per set/ form (without physical verification). 5.3 Fee for physical verification : Rs. 500/- per man-day plus actual cost of transportation. 5.4 Payment of price of blank forms, certification fee and physical verification can be made either through a Deposit Account opened with the Agency Office or through a Bankers Cheque / Demand Draft drawn in favour of the Agency and valid for at least 3 s on the date. 5.5 A Deposit Account can be opened by an exporter with the Agency / Sub Office concerned by paying initials sum of Rs. 1,000/- and remitting further amounts periodically, in multiples of Rs. 500/-, depending up on the quantum of certificated being sought. The payment of initial sum of opening of deposit account as well as remittance of further amounts is to be done through local cheques / bank drafts drawn in favour of Export Inspection Agency concerned, and valid for at least three s on the date. For operation the deposit account, a passbook will be issued by the concerned agency / suboffice. 6. RECORD KEEPING & FEED BACK 6.1 Details of certificates of origin being processed shall be maintained in the format enclosed.
8 6.1 EIAs shall submit a statement to EIC, by 7 th of the, about the working of the scheme in the previous, in the format enclosed. Notes: 1. Includes mineral fuels, lubricants and related materials as well as mineral or metal ores. 2. Includes agricultural and forestry products. 3. Vessels shall refer to fishing vessels engaged in commercial fishing, registered in India and operated by Indian citizen(s) or partnership, corporation or association, duly registered in India, at least 60 per cent of equity of which is owned by a citizen or citizens and / or Government of India. However, the products taken from vessels, engaged in commercial fishing under Bilateral Agreements, which provide for chartering/leasing of such vessels and/or sharing of catch between India and Sri Lanka will also be eligible for preferential treatment. 4. In respect of vessels or factory ships operated by Government agencies, the requirements of flying the flag of the Contracting Party does not apply. 5. For the purpose of ISFTA, the term factory ship means any vessel, as defined, used for processing and / or making on board products exclusively from those products referred to in clause 3.3 (f).
10 ISFTA RECORD FORMAT Unique No. (1) Exporter Form No. Item / Product HS Tariff Number (6 digit level) Invoice Receipt No./ Ledger Folio Number Certification Status/ Certifying Officer Number Date FOB Value (in Rs.) (2) (3) (4) (5) (6) (7) (8) (9) (10)
11 EXPORT INSPECTION AGENCY- MONTHLY REPORT FOR ISFTA FOR THE FINANCIAL YEAR Statement for the of 1. ISFTA SL. NO. 1 Office No. of blank forms sold During the Up to the No. of Certificates issued During the Up to the Post verification request receive During the Up to the Post verification requests disposed off Up to the Up to the Stock of blank forms as on the last day of the 2. Status of post verification requests received by the Agency but pending beyond three s. Sl. no. Reference ISFTA Exporter Product including HS tariff heading From No. & Date O/O Issue No. & Date 1 Issues for verification Status including reasons for delay in verification
12 3. Product certified and their value. Sl. no. HS Tariff (6 digit level) Value ( in Rs.) 1 2 3