The Certificate of Origin (CoO) is significant in International trade as it is a definitive document substantiating the origin of goods exported from India. Granted by the Directorate General of Foreign Trade (DGFT), this certificate validates the country where the products were produced, manufactured, or obtained. The DGFT CoO plays a crucial role in facilitating cross-border trade by enabling exporters to verify the origin of their goods and determine their eligibility for tariff preferences. This post explores the significance of the DGFT Certificate of Origin and the Procedure to procure it.
Role of Certificate of Origin in Tariff Policy and Trade Agreements
The Certificate of Origin (CoO) is an independent commercial policy instrument to encourage and sustain mutual trade and promote economic cooperation among nations. It is closely related to the basic concept of tariffs, a conventional commercial policy instrument. At its crux, the Certificate of Origin detects and validates the origin of goods being exchanged. It provides data on the country in which the products are produced, manufactured, or sourced. This is important in determining the prevailing tariff rates or preferential treatment that could be accorded under trade agreements.
Tariffs, in general, are taxes on imported goods and have been a pillar of trade policy for centuries. Tariffs can be employed to shield domestic industries, regulate imports, generate revenue, or support strategic economic objectives.
The Certificate of Origin lines up with the tariff system by allowing customs officials to apply the proper tariff rates based on the origin of the goods. It prevents misclassification or false statements about the origin of goods, provided that the right tariff rates are used in the importing process.
Additionally, the CoO plays a crucial role in preferential trade agreements and other trade agreements. These include lowering or eliminating tariffs on traded goods between member countries. The Certificate of Origin becomes important in certifying that the goods serve the criteria set forth in the agreement and are qualified for preferential treatment.
Importance of Certificate of Origin (COO)
1. Unilateral and Bilateral Agreements
Certificate of Origin plays a crucial role in international trade between nations. According to the government policies of every country, as well as the unilateral and bilateral business agreements between countries, import duties may be exempted for specific goods from certain countries. Or, according to the availability and consumption of goods, particular commodities are levied import duty to regulate the import of such goods. Moreover, duties are charged against the goods imported from specific countries due to political policies.
2. Customs Clearance
If the goods, imported/exported, do not arrive with a Certificate of Origin, the concerned Customs officer charged with inspection of goods will not permit the goods to leave the customs custody. Customs officers use the Certificate of Origin to determine the duties and other customs liabilities that must be paid.
3. Export Incentives
The government of India offers various export incentives for goods produced in India and exported to foreign countries. A certificate of origin is essential to prove that the goods being exported are manufactured in India.
4. Identification of Illegal Exports/Imports
The Certificate of Origin also aids the Customs Department of India in examining whether the goods being exported from India or imported into India are illegal.
Types of Certificates of Origin
There are two types of Certificate of Origin (CoO) for export:
- Non-Preferential Certificate of Origin (NP CoO)
- Preferential Certificate of Origin
1. Preferential Certificate of Origin
The Preferential Certificate of Origin is granted for exports that are eligible for tariff preferences under exclusive trade agreements. It is compulsory to export goods to countries with which India has trade agreements that offer tariff preferences. This certificate is granted for goods that qualify for preferential tariff treatment concerning duty payment. It may comprise a decrease of the general tariff or an entire exemption from tariffs. Preferential certificates are issued when two or more countries build a trade agreement that includes exemptions for goods exported or imported between them.
2. Non-Preferential Certificate of Origin (NP CoO)
On the contrary, the Non-Preferential Certificate of Origin endorses the origin of the exported goods but does not offer preferential tariff treatment. It is usable for exports that are not eligible for tariff preferences. CoO NP signals that the exported goods do not get any preferential tariff treatment. It entails paying existing duties on the products at the time of exportation or importation. These clear forms of certificates cover distinct export situations and guarantee adherence to trade agreement terms.
Documents Needed for DGFT CoO
To obtain a Certificate of Origin, the following documents are typically required:
- Airway bill/Bill of Lading: This is used as evidence of shipment and consists of details such as the carrier’s name, the consignee, the consignor, and the destination.
- Shipping bills: These bear information about the shipment, including the description of the goods, value, quantity, and other suitable information.
- Packing List: This is a document describing the contents of every package within the shipment, including the packaging type, weights, and sizes
- Invoice Copy: An invoice copy provides a full breakdown of the exported goods, their worth, description, and other relevant business details.
- Also, you need a Digital Signature Certificate to submit applications online.
Procedure to Apply for Certificate of Origin
Previous registration on the CoO website is required before proceeding with the certification application. The specified steps lay out the registration process:
- Visit the Common Platform Portal inaugurated by DGFT
- Select “Online Exporter Registration” within the online services section.
- Add the Class 2 or Class 3 Digital Signature Certificate (DSC) before launching the registration process. Ensure that the DSC includes the embedded Importer-Exporter Code (IEC) of the company.
- Enter the email address, IEC code, and mobile number according to the updated IEC details.
- Utilize the IEC Profile Management service on the DGFT portal to update the opted email address for communication purposes.
- Choose “Save & Next” to continue with the registration.
- Examine the terms and conditions, choose “I Agree,” and file the registration request.
- A password will be dispatched to the registered email address upon effective registration.
- Visit the login screen and enter the registered IEC (10-digit numeric/alphanumeric code) as the username.
- Use the password obtained through email to log in to the website.
Once the registration process is complete, you are able to access the CoO portal with the provided username and password so you can proceed with the application for Certificate of Origin issuance. To obtain a Certificate of Origin (CoO) online, observe the procedure specified below:
- Login to the Common Platform: Enter the Common Platform utilizing legitimate credentials, like the Importer-Exporter Code (IEC) number and password obtained after registering on the portal.
- Enter Application Details: Finish the application form by filling in all the details regarding the Certificate of Origin. Ensure that all essential fields are filled correctly.
- Attach Digitally Signed Documents: Attach the digitally signed documents needed for the application. These documents may comprise shipping bills, packing lists, invoices, and other appropriate supporting documents.
- Attach Digital Signature Certificate (DSC): Insert a valid Digital Signature Certificate for application submission and document uploading. The DSC verifies the submitted documents and ensures their genuineness.
- Preview the Certificate: Inspect the application by selecting the preview certificate option. This enables you to view a draft of the application before final submission.
- Make Payment and Deposit: Continue to make the required payment for the Certificate of Origin issuance. After payment is complete, please proceed with the processing.
- Confirmation and Notification: After applying, a confirmation alert will be sent to the registered email address and mobile number provided during the application process.
Bottom Line
The Certificate of Origin from the Directorate General of Foreign Trade (DGFT) has a big impact on boosting global trade for exporters from India. Checking where goods come from helps make sure they follow the rules about product origins in different trade deals, enabling exporters to benefit from reduced trade barriers and preferential tariffs. The digitalization of the issuance procedure through the DGFT portal has considerably boosted efficiency, transparency, and accessibility. As global trade gets increasingly challenging and rule-oriented, the value of a valid and correctly issued Certificate of Origin cannot be overstated.
Continued enhancements to the DGFT’s systems and increased awareness among exporters will further strengthen India’s position in global trade.
