APTA benefits denied where goods lack origin status and third-party invoicing not allowed under substantive Rules of Origin

The authority held that preferential duty under APTA is available only where goods qualify as originating in terms of the substantive Rules of Origin under the relevant notification and are supported by a valid Certificate of Origin. As the APTA framework and notified Rules contain no provision permitting third-party invoicing or third-country trade, mere reference to "third-party trade" in procedural notes for completing the Certificate of Origin cannot create a substantive right. Instruction No. 23/2024 likewise cannot expand treaty benefits beyond the text. Consequently, third-party invoicing is not permissible for claiming APTA benefits, and the applicant is not entitled to preferential duty.

---

---

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether third-party invoicing / third-party trade is permissible under the legal framework of the Asia-Pacific Trade Agreement and its Rules of Origin.

1.2 Whether CBIC Instruction No. 23/2024-Customs, Circular No. 53/2020-Customs, WCO Guidelines and other external materials can be relied upon to read into APTA a permission for third-party invoicing not expressly provided in its Rules of Origin.

1.3 Whether the reference to "third party trade" and use of the expression "To Order" in Box 2 in the Notes for completing the Certificate of Origin under APTA creates a substantive right to claim preferential duty in third-party invoicing situations.

1.4 Whether, and subject to what conditions, preferential duty benefit under the customs exemption notification implementing APTA can be extended where third-party invoicing is involved.

1.5 Consequentially, whether questions relating to the manner of filling Boxes 1 and 2 of the Certificate of Origin (including non-mention of the third-party supplier, mention of Chinese exporter, and determination of compliance with Box 1 requirements) arise for consideration.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Permissibility of third-party invoicing under APTA

Legal framework

2.1 The Tribunal examined the Rules of Determination of Origin of Goods under APTA notified by Notification No. 94/2006-Customs (N.T.), in particular Rules 2-6 and 8, which: (a) define "originating products"; (b) prescribe value-addition thresholds and "wholly produced/obtained" criteria; (c) provide for cumulative rules of origin; (d) impose a "direct consignment" requirement under Rule 6; and (e) require support of a Certificate of Origin under Rule 8. These Rules do not contain any express provision regarding third-country invoicing or third-country trade.

2.2 The Notes for completing the Certificate of Origin attached to Notification No. 94/2006-Customs (N.T.) state, under Box 2 ("Goods Consigned to"), that the name of the importer must match the invoice, and "for third party trade, the words 'To Order' may be typed".

Interpretation and reasoning

2.3 The Tribunal held that eligibility to preferential treatment under APTA is governed by the substantive origin rules: the product must (a) fall within the concessions of the importing State; (b) independently meet the APTA origin conditions under Rules 2-5; (c) satisfy the direct consignment requirement under Rule 6; and (d) be supported by a valid Certificate of Origin under Rule 8.

2.4 The mere mention of "third party trade" in the Notes for completion of the Certificate of Origin was treated as a procedural instruction concerning how Box 2 may be filled. The Tribunal held that such notes do not create or expand substantive rights and cannot be construed as conferring, by implication, a legal entitlement to third-party invoicing where the Rules of Origin are otherwise silent.

2.5 Relying on principles of strict construction of taxing and exemption provisions (including the law that (i) exemption conditions must be strictly complied with; and (ii) nothing can be read into a taxing/exemption statute that is not expressly provided), the Tribunal held that in the absence of an express enabling provision in the APTA Rules of Origin, third-party invoicing cannot be treated as permitted merely on the strength of drafting in the notes to the Certificate of Origin.

Conclusions

2.6 The Tribunal concluded that APTA, as implemented through the notified Rules of Origin, does not expressly or substantively permit third-party invoicing. The concept of third-party invoicing is therefore not recognized as a matter of right under APTA.

Issue 2 - Effect of CBIC Instruction 23/2024, Circular 53/2020, WCO Guidelines and other external materials on APTA

Legal framework

2.7 The applicant relied on: (a) CBIC Instruction No. 23/2024-Customs, dealing with difficulties in clearance of imports involving third-party invoicing under FTAs where such invoicing is "allowed under the provisions of a trade agreement", with specific reference to AIFTA which expressly permits third-party invoicing; (b) Circular No. 53/2020-Customs concerning third-party invoicing for "wholly obtained goods" under the Duty Free Tariff Preference (DFTP) Scheme for LDCs, where the rules of origin are value-neutral; and (c) WCO "Guidelines on Certificates of Origin" and related WCO materials recognising intermediary trade and third-country invoicing.

Interpretation and reasoning

2.8 On CBIC Instruction 23/2024-Customs, the Tribunal held that the Instruction is explicitly limited to FTAs where third-party invoicing is already allowed by the text of the agreement (e.g. AIFTA Article 22). It merely clarifies procedural handling and cannot be invoked to read into other FTAs a substantive permission that is not present in their Rules of Origin. Since APTA contains no such enabling provision, the Instruction has no effect in creating or implying a right to third-party invoicing under APTA.

2.9 On Circular No. 53/2020-Customs, the Tribunal held that: (a) it is scheme-specific, confined to the DFTP Scheme for LDCs; (b) it addresses only "wholly obtained" goods where value has no impact on origin; and (c) it permits acceptance of third-party commercial invoices in those limited circumstances. In contrast, under APTA the origin of "not wholly produced" goods is value-based. Therefore, the rationale and relaxation in Circular 53/2020 cannot be extended to APTA, and the circular cannot be used to construct a general permissive rule for third-party invoicing under APTA.

2.10 As to WCO Guidelines and Origin Compendium, the Tribunal held that these are non-binding advisory instruments and do not have legal force unless expressly incorporated in a treaty or adopted in domestic law. They may serve as interpretative aids but cannot override or supplement the APTA Rules of Origin or notifications issued thereunder, nor can they create rights (such as third-party invoicing) absent from the treaty text.

2.11 Judgments and rulings cited by the applicant (including those on AIFTA, other FTAs, and on the "sacrosanctity" of Certificates of Origin) were held not to control the interpretation of APTA, particularly because (a) AIFTA and other FTAs considered in those decisions expressly permit third-country invoicing; and (b) none of the precedents dealt with third-party invoicing under APTA. General statements on the evidentiary value of Certificates of Origin were not treated as authority to dilute explicit statutory or treaty-based conditions.

Conclusions

2.12 CBIC Instruction 23/2024-Customs, Circular 53/2020-Customs, WCO guidelines, and case law on other FTAs do not and cannot be used to introduce, under APTA, a facility of third-party invoicing that is not expressly provided in its Rules of Origin. The APTA framework must be applied on its own terms.

Issue 3 - Legal effect of reference to "third party trade" and "To Order" in Box 2 of the Certificate of Origin under APTA

Legal framework

2.13 The Notes for completing the Certificate of Origin under Notification No. 94/2006-Customs (N.T.) provide, for Box 2 ("Goods consigned to"), that the importer's name must match the name in the invoice, and that "for third party trade, the words 'To Order' may be typed".

Interpretation and reasoning

2.14 The Tribunal treated these Notes as procedural instructions governing how the form of the Certificate of Origin is to be filled. They do not appear in the body of the Rules of Origin and do not modify or expand the origin criteria, direct consignment requirement, or any substantive condition for preferential treatment.

2.15 Applying settled principles that (a) exemption/benefit provisions must be construed strictly; and (b) courts/authorities cannot add words to a statute or read into it what is not stated, the Tribunal held that the Notes' acknowledgment of "third party trade" cannot be elevated to a substantive permission for third-party invoicing under APTA when the Rules themselves are silent.

Conclusions

2.16 The expression "To Order" in Box 2 of the Certificate of Origin and the related reference to "third party trade" are purely procedural. They neither create substantive rights to preferential treatment in third-party invoicing scenarios nor constitute a legal basis for eligibility under APTA. They cannot be relied upon to establish permissibility of third-party invoicing under APTA.

Issue 4 - Conditions for preferential duty under the exemption notification in a third-party invoicing scenario

Legal framework

2.17 The Tribunal considered that preferential duty benefits under APTA are implemented through Notification No. 50/2018-Customs, which grants concession of tariffs on imports from notified APTA countries, subject to the importer proving to the satisfaction of the proper officer that: (a) the goods are "originating" under the APTA Rules of Origin; and (b) the conditions of the Rules of Origin (including consignment and certificate of origin requirements) are fulfilled.

Interpretation and reasoning

2.18 While holding that APTA contains no express provision authorising third-party invoicing, the Tribunal nevertheless articulated the minimum substantive conditions that must be satisfied in any case where a claim is sought to be made in a third-party invoicing situation. The Tribunal underscored that origin and consignment requirements cannot be diluted by contractual or invoicing arrangements involving intermediaries.

2.19 The Tribunal specified that, for preferential duty benefit to be considered, the importer must, to the satisfaction of the Deputy / Assistant Commissioner of Customs, demonstrate cumulatively that:

(i) the imported goods satisfy the originating criteria under Rules 2-5 of the APTA Rules of Origin (wholly produced/obtained, or value-addition thresholds with final manufacture in the exporting participating State, and without relying on prohibited "simple operations");

(ii) the goods satisfy the direct consignment requirement under Rule 6 (including any permitted transit through non-participating States without entry into trade or processing); and

(iii) there is complete and traceable documentary linkage among (a) the Certificate of Origin issued by the competent authority in the exporting APTA State, (b) the transport documents, and (c) the third-country commercial invoice relied upon for customs valuation.

2.20 The Tribunal further reiterated that any assessment of preferential benefit in such a structure remains subject to strict compliance with the substantive provisions of APTA and the exemption notification, and cannot be claimed as of right merely on the basis of the existence of third-party invoicing, WCO practice, or non-binding clarifications.

Conclusions

2.21 Preferential duty benefit under the exemption notification implementing APTA may be granted where third-party invoicing is involved only if the importer strictly establishes: (a) satisfaction of the origin criteria under Rules 2-5; (b) compliance with the direct consignment requirement under Rule 6; and (c) full documentary linkage between the Certificate of Origin, transport documents and the third-country invoice. These are threshold conditions, to be evaluated by the proper officer; third-party invoicing by itself confers no automatic entitlement.

Issue 5 - Consequence for questions on completion of Boxes 1 and 2 of the Certificate of Origin

Interpretation and reasoning

2.22 In light of the primary finding that APTA does not expressly or substantively permit third-party invoicing, and that the "To Order" endorsement in Box 2 is merely procedural and not a basis of eligibility, the Tribunal considered that detailed questions framed by the applicant regarding: (a) insertion of "To Order" in Box 2; (b) non-mention of the third-party supplier in Box 1; (c) mention of the Chinese exporter in Box 1; and (d) the method of determining compliance with Box 1 requirements in third-party trade, did not require separate adjudication.

Conclusions

2.23 The questions concerning the completion of Boxes 1 and 2 of the Certificate of Origin in the context of third-party trade were held to be not applicable for ruling in the present advance ruling, given the refusal to recognize a substantive right to third-party invoicing under APTA.

---