The Customs Authority for Advance Ruling (CAAR), Mumbai, held that no substantive provision authorizes third-party invoicing under the Asia-Pacific Trade Agreement (hereinafter, ‘APTA’). The CAAR clarified that the preferential duty under Notification No. 50/2018 may be granted in a third-party invoicing where the importer satisfies the condition of the Deputy/Assistant Commissioner of Customs.
The case arose from an application seeking an advance ruling on whether the import of toys from China, invoiced by the Swiss Supplier, can avail the benefit of preferential customs duty under the APTA. The Applicant contended that “third-party trade” is recognized under the Rules of Origin issued under APTA, and further relied on CBIC Instruction No. 23/2024 and Customs Circular No. 53/2020, where third-party invoicing is considered as an established business practice and can be accepted while claiming preferential tariff treatment.
While dealing with Issue No.1, whether the concept of third-party invoicing is allowed under the, APTA, the CAAR observed that the APTA Rules of origin notified under the Notification No. 94/2006 – Customs, contain a sample certificate of origin along with notes for completing the Certificate of Origin, but do not provide a provision regarding third-country invoicing or third-country trade, although the Certificate of Origin mentioned the third-party trade but it’s merely a procedural accommodation and cannot be as substantive authorization. The Authority also held that the CBIC Instruction no. 23/2024 considers third-party invoicing only in respect of FTAs, but the APTA contains no such provision, and the instruction cannot be claimed as a right.
The Second issue the authority considered was whether the Applicant can claim exemption under the Customs Notification No. 50/2018. The authority held that the preferential duty benefit under APTA may be granted in cases of third-party invoicing only if the applicant satisfies the Deputy / Assistant Commissioner with three conditions:
i. the goods satisfy the originating criteria under Rules 2-5 of the APTA Rules of Origin;
ii. the goods satisfy the direct consignment requirement under Rule 6;
iii. the applicant establishes complete documentary linkage between the COO issued by the exporting APTA State, the transport documents, and the third country commercial invoice.
Accordingly, the CAAR held that third-party invoicing is not allowed under APTA, and while preferential duty may be granted, subject to fulfillment of three conditions and satisfaction of the Deputy / Assistant Commissioner of Customs.
Appearances:
For the Applicant – Advocate Nishant Shah and Supriya Singh
