The Central Government has notified the rules governing how goods will qualify for preferential customs duty treatment under the Free Trade Agreement between India and New Zealand. The rules will come into force on October 20, 2026.
The Customs Tariff (Determination of Origin of Goods under the Free Trade Agreement between India and New Zealand) Rules, 2026 prescribes origin criteria, documentation requirements, verification procedures and safeguards against incorrect claims for tariff concessions. The notification identifies the agreement as having been signed on April 27, 2026.
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Eligibility Depends On Origin, Not Merely The Country Of Shipment
Under the notified framework, goods will qualify as originating if they are wholly obtained or produced in the territory of one or both countries, or satisfy the applicable product-specific rules contained in Annexure A, along with the other requirements of the rules.
Wholly obtained goods include specified agricultural produce, animals born and raised in either country, products obtained from such animals, minerals and qualifying marine products. Other goods must meet the applicable product-specific requirements, which may involve changes in tariff classification, qualifying value content or specified production processes.
The notification establishes eligibility requirements for preferential treatment. The applicable preferential customs duty rate remains linked to the respective tariff commitments under the agreement.
Bilateral Cumulation And Value Content Calculation
The rules permit bilateral cumulation. An originating material from one country, when incorporated into the production of goods in the other country, may be treated as originating in that other country.
Where a qualifying value content requirement applies, the rules provide two calculation methods. The build-down method measures the FOB value of the finished goods after deducting the value of non-originating materials, while the build-up method measures the value of originating materials as a proportion of the FOB value.
The rules also prescribe how material values and eligible cost adjustments are to be determined and supported by records.
Simple Packaging, Labelling And Assembly Will Not Confer Origin
The notification expressly excludes specified minimal operations from conferring originating status on goods produced from non-originating materials.
These include simple packaging, sorting, affixing labels or logos, simple dilution, simple assembly, polishing and simple mixing. All operations undertaken on the goods in a country must be considered together when assessing whether the processing is sufficient.
The rules also introduce limited tolerances for certain non-originating materials. For goods outside Harmonised System Chapters 50 to 63, materials that fail the applicable change in tariff classification requirement may generally be tolerated up to 10% of the goods’ FOB value, provided the remaining conditions are satisfied.
Separate provisions apply to textiles under Chapters 50 to 63 and to goods classified as wholly obtained. These tolerances remain subject to the conditions specified in Rule 9.
Certificates Of Origin And Self-Certification Framework
A claim for preferential tariff treatment must ordinarily be supported by a certificate of origin issued by a designated authority or an eligible origin declaration.
The rules provide for origin declarations by Indian status holders and New Zealand approved exporters, who must accept responsibility for their declarations. However, the introduction of origin declarations is subject to establishing an electronic system for exchanging information to authenticate those declarations.
Proof of origin must be in English, carry a unique identification or certification number and contain the prescribed particulars. It remains valid for 12 months from issuance or completion.
In exceptional circumstances, proof of origin may be issued retrospectively, no later than 12 months after importation, with the required endorsement and explanation. The framework also envisages a review after five years to consider declarations by exporters or producers more broadly.
Refund Claims Permitted After Importation
The rules allow an importer who did not claim preferential treatment at the time of importation to subsequently seek the benefit and a refund of excess duties, provided the goods qualified when imported.
As a condition, the importing country may require the claim, proof of origin and supporting documents within 12 months of importation, or within a longer period permitted under its domestic laws.
Where an importer discovers that a claim rests on incorrect information affecting the proof of origin, the importer must correct the import documentation and, where applicable, pay the customs duty and penalties owed.
Third-Country Invoices And Transit Allowed Subject To Conditions
Preferential treatment cannot be denied solely because an invoice was issued in a third country or by someone other than the exporter, producer, approved exporter or status holder, provided the goods otherwise meet the rules.
Goods transported through third countries may retain their originating status if they remain under customs control and undergo only permitted operations, such as unloading, reloading, storage or operations necessary for preservation and transportation. Customs authorities may seek supporting transport or customs documents.
Verification Powers And Protection Against Minor Errors
Customs authorities may verify origin at importation or after release of the goods. Verification may include information requests, assistance from the exporting country’s authorities and visits to production premises.
During verification, goods must be allowed to be released subject to payment of duties or provision of security in accordance with domestic law. Authorities must communicate their origin determination in writing, with reasons.
Preferential treatment may be denied where goods fail the origin requirements, sufficient information is not supplied within the prescribed timelines, or consent for a verification visit is not provided.
At the same time, minor spelling, typing, formatting or documentary discrepancies cannot, by themselves, justify rejection of proof of origin where they do not create doubt about the goods’ originating status.
Importers must retain the relevant records for at least five years from importation. Exporters, producers and other specified entities must retain origin-related records for at least five years from issuance or completion of proof of origin, subject to any longer domestic retention requirement.
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