Customs Tariff Classification v. Origin Compliance – Does One Prevail Over The Other To Avail FTA Benefits?

Introduction:

Rules of Origin are integral to Free Trade Agreements ('FTAs') as far as trade in goods is concerned. They are crucial to ensure that the benefits of the FTA are extended only to the goods originating in the territories of the parties to the FTA. To avail these benefits, the importer must establish compliance with the Rules of Origin under the relevant FTA by submitting a valid Certificate of Origin ('CoO') issued and endorsed by the exporting country's authorized government body.

While classification of goods under the correct tariff heading is imperative for determining eligibility under specific FTA concession notifications, the Hon'ble Supreme Court recently in the case of LG Electronics India¹ has held that origin compliance in case of FTAs takes precedence and is of supreme importance. Even if classification is disputed by the customs authorities, FTA benefits cannot be denied if the goods meet the requisite origin criteria and the same is