When did your Free Trade Agreement (FTA) claim actually die?

8 Reasons Your FTA Claim Gets Rejected at Customs

Every year, importers lose crores in duty savings because their FTA claim gets rejected at the last mile - not for lack of eligibility, but for paperwork gaps. Free Trade Agreement benefits under India's various trade pacts are generous, but customs officers apply the conditions strictly, and most rejections trace back to the same handful of avoidable errors.

Why Do FTA Claims Fail at the Bill of Entry Stage?

An FTA claim rejection usually isn't about whether your goods genuinely qualify as originating. It's about whether you can prove it, on paper, in the exact form customs expects. Here are the eight mistakes that show up most often.

Certificate of Origin Has Expired

A Certificate of Origin (CoO) is valid for 12 months from its date of issuance. If it lapses before you file the Bill of Entry, the claim is rejected outright - there's no condonation for this one. Track CoO dates the same way you track invoice due dates.

HS Code Mismatch Between CoO and Bill of Entry

If the HS code on your Certificate of Origin doesn't match the code declared in your Bill of Entry, customs will not extend the preferential rate. Electronic goods, with their layered classifications, see this error most often. Reconcile the HS code with your supplier before shipment, not after.

CAROTAR Form I Left Incomplete

Under CAROTAR, 2020, importers must declare specific origin-related details at the time of filing the Bill of Entry - including originating criteria and whether the goods were transported directly from the country of origin. This information has to come from your foreign supplier upfront. Chase it before the shipment lands, not when customs asks for it.

Origin and Valuation Gaps

Value Addition Never Actually Calculated

Origin criteria under most FTAs hinge on value addition, calculated using the build-up or build-down method against the FOB value of the goods. Assuming the number instead of computing it from actual supplier cost and production data leaves you with nothing to show when customs asks for proof.

Product Specific Rules Overlooked

Many products carry their own Product Specific Rules (PSRs) under an FTA's origin annexure, which can be stricter than the general origin criteria. Assuming general rules apply without checking the PSR for your specific HS code is a common and costly shortcut.

Transport and Disclosure Failures

Missing Non-Manipulation Certificate

When goods route through a third country before reaching India, and your Bill of Lading shows a different port than the actual transshipment point, customs expects a non-manipulation certificate confirming the goods stayed under customs supervision and weren't altered in transit. Without it, the direct-transport condition isn't met.

Third-Party Invoicing Not Disclosed

Third-party invoicing is permitted under India's FTA framework - the invoicing country and the origin country don't have to match. But this has to be disclosed on the Certificate of Origin. If customs discovers it later and the CoO is silent on it, even a genuinely originating consignment can get denied.

Filing Against an Outdated Tariff Notification

FTA preferential rates are staged and revised through periodic tariff notifications. The Bill of Entry must cite the correct, current notification for the item and year. Filing against last year's staged rate, even when the goods otherwise qualify, gets the benefit denied.

Getting It Right Isn't Complicated

None of these are grey areas - they're procedural steps that get missed under deadline pressure. Verify CoO validity before filing, cross-check HS codes with your supplier, get CAROTAR Form I details upfront, calculate value addition instead of assuming it, keep transshipment documentation ready, disclose third-party invoicing, confirm the applicable PSR, and check the current year's tariff notification. Building this into your standard import checklist costs far less than losing the FTA benefit after the fact.

Which of these has tripped up your FTA claims before?

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The author can be reached at [email protected] or https://unnathipartners.com