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Union of India - Section

Section 5 in The Customs Tariff (Determination of Origin of Products under the Duty Free Tariff Preference Scheme for Least Developed Countries) Rules, 2015

5. Products not wholly obtained or produced.

(1)For the purposes of clause (b) of sub-rule (1) of rule 3, products not wholly obtained or produced shall be considered as originating in the exporting beneficiary country if they fulfill the following conditions:-
(a)the total value of the non-originating materials used in the manufacture of the export product does not exceed seventy per cent. of the FOB value or ex-works value of the product so produced or obtained (that is, the local value added content in the exporting beneficiary country is at least thirty per cent.);
(b)the product has undergone a change in tariff classification in sub-heading at the 6 digit level of the Harmonized System nomenclature from the tariff classification in which the non-originating material used in its manufacture are classified; and
(c)the final process of manufacture is performed within the territory of the exporting beneficiary country.
(2)For the purpose of calculating the "local value added content" referred to in sub-rule (1), one or other of the following formulae shall be applied: -
(a) Local value added content (X %) =| (FOB value)-(value of non-originating materials)(FOB value)| x 100% ≥ 30%;
(b) Local value added content (X %) =| (ex-works value)-(value of non-originating materials)(ex-works value)| x 100% ≥ 30%;
(3)The value of the non-originating materials used in the production of a product shall be,-
(a)for materials, the country of origin of which is other than the exporting beneficiary country or India, the CIF value; or
(b)for materials, the origin of which cannot be determined, the earliest price ascertained to have been paid in the territory of the exporting beneficiary country where the working or processing takes place, in accordance with the Agreement on Customs Valuation.
Explanation 1. - For the purpose of calculation of value of the non-originating materials, duties and taxes on the material paid in the territory of the exporting beneficiary country or both of India and the exporting beneficiary country shall not be included, and if already included in such value, such expenses shall be deducted.Explanation 2. - All costs referred to in these rules shall be recorded and maintained in accordance with the generally accepted accounting principles applicable in the territory of the exporting beneficiary country in which the product is produced.