DGFT Tightens Certificate of Origin Rules, Requires Matching Invoice Numbers
The DGFT has mandated that the invoice number on the Certificate of Origin (CoO) must match the export invoice number, tightening the rules for claiming preferential tariff benefits under trade agreements.
The DGFT certificate of origin invoice matching rule aims to curb misuse of preferential tariff benefits. The Directorate General of Foreign Trade (DGFT) has implemented a stricter verification process for Certificates of Origin (CoO). This requires the invoice number on the CoO to precisely match the export invoice number. This move is designed to prevent fraudulent claims of tariff benefits under various Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs). Discrepancies in invoice numbers have been a loophole exploited to avail undue benefits, leading to revenue loss and market distortion. The new rule will impact exporters across various sectors who rely on CoOs to reduce import duties for their buyers in partner countries. This change signals a more stringent approach by the DGFT to ensure compliance and prevent revenue leakage.
This directive likely falls under the Foreign Trade (Development and Regulation) Act, 1992, which empowers the DGFT to regulate import and export procedures. Non-compliance could lead to penalties under the Customs Act, 1962, including seizure of goods or denial of preferential tariff treatment. This reinforces the importance of accurate documentation as per Customs regulations.
This move reflects a broader trend towards stricter enforcement of trade regulations and a focus on preventing revenue leakage. Companies should proactively review their export procedures and documentation processes to ensure compliance and avoid potential disruptions to their supply chains. This also highlights the need for better coordination between export and finance departments.
Certificates of Origin are crucial documents that certify the country of origin of goods, enabling importers to claim reduced tariff rates as per trade agreements. Previously, variations in invoice numbers were sometimes overlooked, creating opportunities for misuse.
This change will likely lead to increased scrutiny of export documentation and a greater need for accuracy in invoice and CoO preparation. CAs and CFOs should ensure their clients and companies are fully aware of the new requirements to avoid penalties and disruptions to trade.
Further clarifications from DGFT on handling exceptional cases, such as invoice revisions or amendments, will be important to monitor.