(a) are intended for re-exportation without having undergone any change except normal depreciation including wastage due to the use made of them and be capable of identification when exported;
(b) are used solely by or under the personal supervision of a person established or resident in the other Party in the exercise of the business activity, trade, profession or sport of that person of the other Party;
(c) are not sold or leased while in its territory; except on payment of applicable duties and interests on such release;
(d) are accompanied by a security, if requested by the importing Party, in an amount no greater than the customs duty or charges that would otherwise be owed on entry or final importation, releasable on exportation of the goods;
(e) are exported on or before the departure of the person carrying out the relevant trade or profession referenced in sub-subparagraph 1(b)(ii), or within such period of time reasonably related to the purpose of the temporary admission as the Party may establish, or within the maximum timeframe set by a Party for temporary admission of a good, unless extended;
(f) are admitted in no greater quantity than is reasonable for their intended use; and
(g) are otherwise admissible into the Party’s territory under its laws.
5. If any condition that a Party imposes under paragraph 4 has not been fulfilled, the Party may apply the import duties and taxes and any other charge that would normally be owed on the good in addition to any other charges, penalties or actions provided for under its law.
Article 2.10. Customs Valuation
For the purpose of determining the customs value of goods traded between the Parties, the Parties reaffirm their commitment to Part I of the Customs Valuation Agreement.
Article 2.11. Import and Export Restrictions
Unless otherwise provided in this Agreement, no Party shall adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, except in accordance with Article XI of GATT 1994. To this end, Article XI of GATT 1994 is incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.12. Import Licensing
1. A Party shall only adopt or maintain import licensing procedures which are consistent with the Import Licensing Agreement and to that end Articles 1 through 3 of the Import Licensing Agreement are incorporated into and made part of this Agreement, mutatis mutandis.
2. A Party shall publish on an official government website any new or modified import licensing procedure, including any information that it is required to publish under Article 1.4(a) of the Import Licensing Agreement. To the extent practicable, the Party shall do so at least 21 days before the new procedure or modification takes effect.
3. A Party shall be deemed to be in compliance with paragraph 2 with respect to a new or modified import licensing procedure if it notifies that procedure including the information specified in Article 5(2) of the Import Licensing Agreement to the WTO Committee on Import Licensing provided for in Article 4 of the Import Licensing Agreement.
4. At the request of a Party, the other Party shall provide the information specified in Article 5(2) of the Import Licensing Agreement, with regard to any import licensing procedures that it adopts or maintains, or changes to existing licensing procedures.
Article 2.13. Agricultural Safeguards
Originating agricultural goods from a Party shall not be subject to any duties applied by a Party pursuant to a special safeguard taken under the Agreement on Agriculture, set out in Annex 1A to the WTO Agreement.
Article 2.14. Goods Re-entered after Repair or Alteration
1. A Party shall not apply a customs duty to a good, regardless of its origin, that re-enters the Party’s territory after that good has been temporarily exported from its territory to the territory of the other Party for repair or alteration, except that a customs duty may be applied to the value-added resulting from the repair or alteration (including cost of material used in repairs, insurance and freight charges both ways) that was performed in the territory of the other Party.
2. Paragraph 1 does not apply to:
(a) a good that has not entered into free circulation in a Party prior to being exported for repair or alteration; (1) or
(b) any materials used in the repair or alteration which were not in free circulation in the Party where the repair or alteration occurred, unless a payment equivalent to the applicable duty for that material to enter into free circulation has subsequently been made.
3. Neither Party shall, as provided for in its laws and regulations, apply customs duties to a good, regardless of its origin, admitted temporarily from the customs territory of the other Party for repair or alteration.
4. For the purposes of this Article, “repair or alteration” does not include an operation or process that:
(a) destroys a good’s essential characteristics or creates a new or commercially different good;
(b) transforms an unfinished good into a finished good; or
(c) substantially changes the technical performance or function of a good.
Article 2.15. Non-Tariff Measures
1. No Party shall adopt or maintain any non-tariff measure on the importation of any good of the other Party or on the exportation of any good destined for the territory of the other Party, except in accordance with its WTO rights and obligations or in accordance with this Agreement.
2. Each Party shall ensure the transparency of its non-tariff measures permitted in paragraph 1 of this Article.
Article 2.16. Data Sharing on Preference Utilisation
1. For the purpose of monitoring the functioning of this Agreement and calculating preference utilisation rates, the Parties shall annually exchange import statistics starting one year after the date of entry into force of this Agreement.
2. The exchange of import statistics shall cover data pertaining to the most recent year available, including value and, where applicable, volume, at the tariff line level for imports of goods of the other Party benefitting from preferential duty treatment under this Agreement and those that received non-preferential treatment.
Article 2.17. Subcommittee on Trade In Goods
1. The Parties hereby establish a Subcommittee on Trade in Goods (“Goods Subcommittee”), comprising representatives of each Party. The Goods Subcommittee shall act by mutual agreement.
2. The Goods Subcommittee shall meet at the request of either Party to consider any matter arising under this Chapter at such times and venues or by such means as agreed on by the representatives of the Parties. The Goods Subcommittee shall meet at least every two years or more frequently as the Parties agree. The meetings of the Goods Subcommittee shall be chaired jointly by the Parties.
3. The Goods Subcommittee’s functions shall include:
(a) promoting trade in goods between the Parties, including through consultation on accelerating customs duty elimination under this Agreement and other issues as appropriate;
(b) reviewing and monitoring the implementation of this Chapter and Chapter 3 (Rules of Origin). Working groups under this Chapter shall report to the Goods Subcommittee;
(c) to the extent possible, promptly seeking to address tariff and non-tariff barriers to trade in goods between the Parties;
(d) reviewing the future amendments to and updating of the Harmonized System to ensure that the obligations of the Parties are not altered;
(e) addressing issues relating to the administration and operation of tariff rate quotas;
(f) where appropriate, referring matters considered by the Goods Subcommittee to the Joint Committee; and
(g) undertaking any other work that the Joint Committee assigns to it.
Chapter 3. RULES OF ORIGIN
Article 3.1. Definitions
For the purposes of this Chapter:
“aquaculture” means the farming of aquatic organisms, including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants, from seed stock, including seed stock imported from non-Parties, such as eggs, fry, fingerlings, larvae, parr, smolts or other immature fish at a post-larval stage, by intervention in the rearing or growth processes to enhance production such as regular stocking, feeding, or protection from predators;
“carrier” means any vehicle for air, sea or land transport. However, the carriage of product can be made through multimodal transport;
“competent authority” means:
for India, in the case of exports from India, the Department of Commerce or agencies notified to issue the certificate of origin; and in the case of imports into India, the Central Board of Indirect Taxes and Customs (“CBIC”) or any of its successors; and
for the United Kingdom, its customs authority as defined in Article 1.4 (General Definitions - Initial Provisions and General Definitions);
“exporter” means a person, located in a Party, who, in accordance with the requirements laid down in the laws and regulations of that Party, exports a good;
“fungible goods” or “fungible materials” means goods or materials that are interchangeable for commercial purposes and the properties of which are essentially identical;
“generally accepted accounting principles” means those principles recognised by consensus or with substantial authoritative support in the territory of a Party with respect to the recording of revenues, expenses, costs, assets and liabilities; the disclosure of information; and the preparation of financial statements. These principles may encompass broad guidelines for general application, as well as detailed standards, practices, and procedures;
“indirect material” means a material used in the production, testing or inspection of a good but not physically incorporated into the good or a material used in the maintenance of buildings or the operation of equipment, associated with the production of a good, including:
fuel, energy, catalysts and solvents;
equipment, devices and supplies used to test or inspect the good;
gloves, glasses, footwear, clothing, safety equipment and supplies;
tools, dies and moulds;
spare parts and materials used in the maintenance of equipment buildings;
lubricants, greases, compounding materials and other materials used in production or used to operate equipment buildings; and
any other material that is not incorporated into the good but the use of which in the production of the good can reasonably be demonstrated to be a part of that production;
“issuing authority” means the authorities in India designated for issuance of certificates of origin;
“material” means any good (including ingredients, raw inputs, components or parts) used in the production of another good and physically incorporated into it;
“net weight” means the weight of the material or good excluding the weight of any packaging;
“non-originating good” or “non-originating material” means a good or material that does not qualify as originating, including those of unprovable origin, in accordance with this Chapter;
“originating good” or “originating material” means a good or material that qualifies as originating in accordance with this Chapter;
“producer” means a person who engages in the production of a good;
“production” means operations including growing, cultivating, raising, mining, harvesting, fishing, trapping, hunting, capturing, collecting, breeding, extracting, aquaculture, gathering, manufacturing, working, processing, or assembling a good other than simple assembly (1);
“tariff classification” means the classification of a good according to the Harmonized System;
“territorial sea” means waters extending up to 12 nautical miles from the baseline as defined by the Parties in line with the United Nations Convention on the Law of the Sea, 1982; and
“Working Group on Rules of Origin” means the Working Group on Rules of Origin established pursuant to paragraph 1 of the Article 3.28 (Working Group on Rules of Origin).
Article 3.2. Origin Criteria
1. Except as otherwise provided in this Chapter, each Party shall provide that a good is originating if it is:
(a) wholly obtained or produced entirely in the territory of one or both of the Parties as established in Article 3.3 (Wholly Obtained);
(b) produced entirely in the territory of one or both of the Parties, exclusively from originating materials; or
(c) produced entirely in the territory of one or both of the Parties using non- originating materials, provided the good satisfies all applicable requirements of Annex 3A (Product-Specific Rules of Origin),
in each case, provided the good satisfies all other applicable requirements of this Chapter (2).
Article 3.3. Wholly Obtained
1. Each Party shall provide that for the purposes of subparagraph 1(a) of Article 3.2 (Origin Criteria) the following goods shall be considered as wholly obtained or produced entirely in one or both of the Parties if they are:
(a) minerals, mineral goods and other non-living natural resources extracted or taken from there;
(b) plant and plant goods, including fruits, flowers, vegetables, trees, seaweed, and live plants, or fungi, or algae, grown, harvested, cultivated, picked or gathered there;
(c) live animals born and raised there;
(d) goods obtained from live animals raised (3) there;
(e) goods obtained by hunting, trapping, fishing or aquaculture conducted there, but not beyond the outer limits of a Party’s territorial sea;
(f) fish, shellfish and other marine life taken from the sea, seabed or subsoil outside the territorial sea of each Party and outside the territorial sea of non-Parties in accordance with international law, by vessels that are registered with a Party and entitled to fly the flag of that Party;
(g) a good produced from the goods referred to in subparagraph (f) on a factory ship that is registered with a Party and entitled to fly the flag of that Party;
(h) minerals, mineral goods and other non-living natural resources, taken or extracted from the seabed or subsoil, outside the territories of the Parties, and beyond areas over which non-parties exercise jurisdiction; provided that that Party or person of the Party has rights to exploit such seabed or subsoil;
(i) a good, excluding precious metals, that is:
(i) waste or scrap derived from consumption or production there; or
(ii) waste or scrap derived from used goods collected there, provided that those goods are fit only for the recovery of raw materials; or
(j) goods and their derivatives produced there exclusively from goods referred to in subparagraphs (a) through (i).
Article 3.4. Value of the Good
1. For the purposes of this Chapter, each Party shall provide that the value of the good may be ex-works price or free-on-board (FOB) value.
2. The ex-works price is either:
(a) the price paid or payable for the good to the producer at the place where the last production was carried out, and shall include the value of all materials; or
(b) the price actually paid or payable for the good when sold for export.
3. If there is no price paid or payable or if it does not include the value of all materials, the ex-works price:
(a) shall include the value of all materials and the cost of production employed in producing the good, calculated in accordance with generally accepted accounting principles; and
(b) may include amounts for general expenses and profit to the producer that can be reasonably allocated to the good.
4. For the purposes of calculating the value of the good in accordance with paragraphs 2 or 3, the ex-works price shall:
(a) not take into account any internal taxes which are, or may be, repaid when the good obtained is exported; and
(b) exclude any costs incurred subsequent to the good leaving the place where the last production was carried out, such as transportation, loading, unloading, handling or insurance.
5. The FOB value shall be the price actually paid or payable to the exporter for a good when loaded onto the carrier at the named port of exportation, including the cost of the product, and all costs necessary to bring the good onto the carrier, not taking into account any internal taxes which are, or may be, repaid when the good obtained is exported.
Article 3.5. Qualifying Value Content
1. Where Annex 3A (Product Specific Rules of Origin) specifies a qualifying value content test to determine whether a good is originating, each Party shall provide that the qualifying value content shall be calculated using one of the following methods:
(a) Build-Down Method: based on the value of non-originating materials
QVC = value of the good-value of non‐originating materials/value of the good ×100
(b) Build-Up Method: based on the value of originating materials
QVC= value of originating materials/value of the good ×100
where, QVC is the qualifying value content of a good, expressed as a percentage.
2. Each Party shall provide that the value of a material shall be:
(a) for a material imported by the producer of the good, the price actually paid or payable for the material at the time of importation, or other value determined in accordance with the Customs Valuation Agreement, including the costs incurred in transporting the material to the port or place of importation, such as transportation, loading, unloading, handling or insurance;
(b) for a material acquired in the territory where the good is produced:
(i) the price paid or payable by the producer in the Party where the producer is located;
(ii) the value as determined for an imported material in subparagraph (a); or
(iii) the earliest ascertainable price paid or payable in the territory of the Party; or
(c) for a material that is self-produced, all the costs incurred in the production of the material, which includes general expenses.
3. For an originating material, the following expenses may be added to the value of the material, if not included under paragraph 2:
(a) the costs of freight, insurance, packing, and all other costs incurred to transport the material to the location of the producer of the good;
(b) duties, taxes, and customs brokerage fees on the material, paid in the territory of a Party, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, which include credit against duty or tax paid or payable; and
(c) the cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of reusable scrap or by-product.
4. For a non-originating material or material of undetermined origin, the following expenses, where included under paragraph 2, may be deducted from the value of the material:
(a) the costs of freight, insurance, packing, and all other costs incurred in transporting the material to the location of the producer of the good;
(b) duties, taxes, and customs brokerage fees on the material paid in the territory of one or both Parties, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, which include credit against duty or tax paid or payable; and
(c) the cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of reusable scrap or by- product.
5. If the cost or expense listed in paragraphs 3 or 4 is unknown or documentary evidence of the amount of the adjustment is not available, then no adjustment is allowed for that particular cost or expense.
Article 3.6. Materials Used In Production
1. Each Party shall provide that if a non-originating material undergoes further production such that it satisfies the requirements of this Chapter, the material is treated as originating when determining the originating status of the subsequently produced good, regardless of whether that material was produced by the producer of the good.
2. Each Party shall provide that if a non-originating material is used in the production of a good, the following may be counted as originating content in determining whether the resulting good meets a qualifying value content requirement:
(a) the value of processing of the non-originating material undertaken in the territory of the exporting Party; and
(b) the value of any originating material used in the production of the non- originating material undertaken in the territory of one or both of the Parties.
Article 3.7. Non-Qualifying Operations
1. Each Party shall provide that, notwithstanding any provisions in this Chapter, a good shall not be considered to be originating merely by undergoing any of the following operations in the territory of that Party:
(a) operations to ensure the preservation of products in good condition during transport and storage (such as drying, freezing or thawing, keeping in brine, removal of damaged parts) and other similar operations;
(b) changes of packaging and breaking up and assembly of packages;
(c) washing, cleaning, removal of dust, oxide, oil, paint or other coverings;
(d) for textiles: attaching accessory articles such as straps, bands, beads, cords, rings and eyelets; ironing or pressing of textiles;
(e) simple painting and polishing;
(f) husking, partial or total bleaching, polishing, and glazing of cereals and rice;
(g) operations to colour sugar or form sugar lumps;
(h) peeling and removal of stones and shells from fruits, nuts and vegetables;
(i) sharpening, simple grinding or simple cutting;