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Union of India - Section

Section 5 in The Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of the Republic of India and the Republic of Korea) Rules, 2009

5. Goods not wholly obtained or produced.

(1)For the purpose of clause (b) of sub-rule (1) of rule 3, goods shall be considered as originating,-
(a)when such goods satisfy the criteria under the Product Specific Rules provided in the Annexure-I to the rules;
(b)when, except for goods covered under clause (a),-
(i)the regional value content of the goods is not less than thirty five percent of the FOB value of the goods ascertained as under,-
Regional Value Content =| FOB value - Value of non-originating materials as per sub-rule (2)FOB value| x 100
and,
(ii)the goods have undergone a change in tariff classification in a sub-heading at the six digit level of the Harmonised System from the tariff classification in which all the non-originating materials used in their manufacture are classified:
Provided that the final process of manufacturing is performed within the territory of the export State party:Provided further, that any good that does not undergo a change in tariff classification pursuant to this sub-rule and the Annexure-I to the rules in the final process of production shall be considered as originating if,-
(a)for goods except for those falling within Chapter 1 to Chapter 14 and Chapter 50 to Chapter 63 of the Harmonised System, the value of all non-originating materials used in its production, which do not undergo the required change in tariff classification, does not exceed ten per cent of the FOB value of the good;
(b)for goods falling within Chapter 50 to Chapter 63 of the Harmonised System, the total weight of non-originating basic textile materials used in its production, which do not undergo the required change in tariff classification does not exceed seven per cent of the total weight of all the basic textile materials used;
(c)the good meets all other applicable criteria set forth in these rules for qualifying as an originating good; and,
(d)the value of such non-materials shall be included in the value of non-originating materials for any applicable regional Value content requirement for the good.
(2)The value of the non-originating materials used in the production of a good shall be,-
(a)for materials whose country of origin is other than the State parties to the agreement, the CIF value; or,
(b)for materials whose, origin cannot be determined, the earliest price as ascertained to have been paid for in the territory of the State party where the working or processing takes place, in accordance, with the customs valuation agreement.
Explanation 1:- For the purpose of calculation of value of the non-originating materials, the following expenses shall not be included, and if already included in such value, such expenses shall be deducted, namely:-
(a)inland transportation costs incurred to transport the material to the location of the producer; and,
(b)duties, taxes and customs brokerage fees on the material paid in the territory of one or both of the State parties, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, including credit against duties or taxes paid or payable;
Explanation 2:- For the purpose of calculation of regional value content of goods, if the material does not satisfy the requirements of sub-rule (1), the non-qualifying value of the material shall be that proportion which cannot be attributed to one or both of the State parties, provided that the requirements of rule 8 at each stage of value accumulation are satisfied;Explanation 3:- For the purposes of these rules the basis for tariff classification is the Harmonised System;Explanation 4:- In applying the customs valuation agreement for the determination of the origin of a good.
(a)the principles of the customs valuation agreement shall apply to domestic transactions, with such modifications as may be required by the circumstances, as would apply to International transactions;
(b)the provisions of these rules shall take precedence over the customs valuation agreement to the extent of any difference; and,
(c)the definitions in rule 2 shall take precedence over the definitions in the customs valuation agreement to the extent of any difference.
Explanation 5:- 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 State party in which the good is produced.Exception. - The provisions of this rule shall not apply in case of goods exempted from the principle of territoriality under rule 13.