CBIC Eases FTA Origin Checks: Trade-Agreement Rules Prevail Over CAROTAR, and Form-I Is Not Mandatory for India–UK CETA Claims

Importers who claim preferential (lower or nil) customs duty under India's free trade agreements have long had to navigate two overlapping sets of rules: the origin provisions written into each agreement, and India's domestic verification framework — Section 28DA of the Customs Act, 1962, read with the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020, better known as CAROTAR 2020. A new CBIC circular settles how the two fit together and, in the process, removes a paperwork burden that had been slowing down legitimate preferential claims.

What Happened

The Central Board of Indirect Taxes and Customs issued Circular No. 43/2026-Customs on 24 September 2026, clarifying the interplay between Section 28DA, CAROTAR 2020 and the rules of origin contained in India's trade agreements (FTA/PTA/CECA/CEPA/CETA).

The circular makes two headline points. First, where any provision of CAROTAR 2020 is inconsistent with the rules of origin of a trade agreement, the trade-agreement provision prevails — a position the Board grounds in rule 8(3) of CAROTAR itself. Second, for claims under the India–UK Comprehensive Economic and Trade Agreement (CETA), a valid origin declaration completed by the UK exporter or producer is sufficient proof of origin, so the Form-I statement is not a precondition for granting preferential treatment and need not be filed with every Bill of Entry.

Why / Background

CAROTAR 2020 was introduced to curb misuse of FTA preferences — routing third-country goods through an FTA partner to dodge duty. But in practice some field formations began treating CAROTAR's Form-I (a detailed origin-information statement) and requests for exporter cost data as routine documentation for every preferential claim. That raised compliance costs and created friction, particularly for importers who cannot compel a foreign supplier to share commercially confidential information.

With new-generation agreements such as the India–UK CETA coming into force, CBIC has moved to align domestic practice with the self-certification model those agreements use, where an origin declaration by the exporter or producer is the primary proof of origin.

Who's Affected

Any importer claiming a preferential rate of duty under an Indian trade agreement benefits from the clarification — especially those sourcing from the UK under CETA, and more generally from CEPA/CECA partners such as the UAE, Australia, Japan, Singapore and the ASEAN bloc. Customs brokers (CHAs) who file Bills of Entry with preferential claims, and the exporters/producers abroad who issue origin declarations, are also directly affected.

How the Verification Framework Now Works

The circular sets out a graduated approach rather than blanket documentation:

• Origin declaration is primary. A valid declaration by the exporter or producer supports the preferential claim at the time of import.
• Form-I is conditional, not routine. It may be sought only where the Bill of Entry is interdicted by the National Risk Management System for origin verification and the proper officer has specific reason to believe the origin criteria are not met. Even then, only the information specified in Form-I may be asked for.
• No duty to supply confidential data. Importers need only furnish information the exporter or producer has actually made available to them. A failure to produce confidential exporter cost data cannot, by itself, be grounds to deny preference.
• Verification runs government-to-government. Where information is insufficient, customs may verify origin through the exporting country's designated verification authority.
• "Identical goods" is read narrowly (Section 28DA). An earlier denial of preference can be applied to later imports only of genuinely identical goods from the same producer/exporter, and only where the importer has not demonstrated the origin criteria. Shared description, tariff heading, exporter or technical characteristics do not by themselves make goods "identical," and the importer must get an opportunity to submit fresh information for each consignment.

What Importers and CHAs Should Do Now

• Keep the exporter's/producer's origin declaration on file for every preferential claim; make it the backbone of your FTA documentation.
• Stop treating Form-I as a default attachment — file it only when a consignment is actually flagged for origin verification and the officer invokes it.
• Do not promise foreign suppliers' confidential cost data you cannot obtain; document what the supplier has shared and rely on the circular if preference is questioned on that basis alone.
• For India–UK CETA imports, confirm the UK supplier can issue a compliant origin declaration under CETA's self-certification rules.
• Train filing teams and brokers on the "identical goods" limitation so a single past query is not mechanically applied to later, materially different shipments.
• Retain origin records for the period prescribed, in case of post-clearance verification.

The Bigger Picture

The circular is part of a broader shift toward self-certification of origin in India's newer trade deals and a trade-facilitation posture that reserves intensive checks for risk-flagged consignments. For importers, it lowers the routine cost of claiming FTA benefits; for the system, it keeps CAROTAR's anti-circumvention teeth for the cases that genuinely warrant scrutiny. Expect similar alignment as more CEPA/CETA partners move to declaration-based origin proof.

Frequently Asked Questions

Does this mean CAROTAR 2020 no longer applies? No. CAROTAR continues to apply. The circular only clarifies that where its provisions conflict with a trade agreement's rules of origin, the agreement prevails, and that Form-I is not a routine requirement.

Do I still need a certificate/declaration of origin to claim preference? Yes. A valid proof of origin — for CETA, the exporter's/producer's origin declaration — remains essential. What changes is the additional domestic paperwork, not the core origin proof.

When can customs still ask me for Form-I? Only when your Bill of Entry is interdicted for origin verification and the proper officer has specific reason to believe the origin criteria are not satisfied.

Is my preferential claim safe if my supplier won't share cost data? Non-furnishing of confidential exporter data cannot, on its own, justify denial. You must supply whatever the exporter/producer has made available to you.

This summary is for general guidance. Importers and CHAs should read CBIC Circular No. 43/2026-Customs in full and verify current rules of origin on the CBIC/ICEGATE portal before filing preferential claims.