Section 5 in The Customs Tariff (Determination of Origin of Products under the Duty Free Tariff Preference Scheme for Least Developed Countries) Rules, 2008
5. Products not wholly produced or obtained.
- For the purposes of rule 4 and subject to the provisions of rule 6, products not wholly produced or obtained shall be considered as originating in the exporting beneficiary country if they fulfil the following conditions:-(i)The total value of the non-originating materials, parts, or produce used in the manufacture of the export product does not exceed 70 per cent. of the Free on Board (FOB) value of the product so produced or obtained (i.e. the local value added content in the beneficiary country is at least 30 per cent.);(ii)the product so produced or obtained is classified in a Heading, (at 4-digit level of the Harmonised System) which is different from those in which all the non-originating materials used in its manufacture are classified (Change in Tariff Heading Rule); and(iii)the final process of manufacture is performed within the territory of the exporting beneficiary country.Explanation: - (a) For the purposes of calculating the "local value added content", the following formula shall be applied:-Local Value Added Content (X %) = Free on Board (FOB) Price - Value of non-originating materials/Free on Board (FOB) Price x 100(In order for a product to qualify as originating X > 30 %)(b)The value of the non-originating materials, parts, or produce or materials of undetermined origin shall be:(i)the Cost Insurance and Freight (CIF) value, at the time of importation of the materials, parts, or produce where this can be proven; or(ii)the earliest ascertainable price paid for the materials , parts or produce of undetermined origin in the territory of the beneficiary where the working or processing takes place.(c)If in the manufacturing of the final export product, the originating material from India is used as input, the value of such input shall be included in the calculation of the local value added content as it would be deemed to be originating in the exporting beneficiary country.
