Rules of origin explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The India-Japan CEPA rules of origin decide which goods qualify for preferential tariff treatment when traded between India and Japan. They were made by Notification No. 55/2011-Customs (N.T.) dated 1 August 2011 and came into force on 1 August 2011. This article explains the rule structure: the origin criteria, qualifying value content, accumulation, the de minimis allowance, consignment, and the operational certification procedures in Annexure-2 that cover the certificate of origin and verification.
This article reads the rules as amended up to Notification No. 44/2022-Customs (N.T.) dated 20 May 2022, which followed Notification No. 14/2018-Customs (N.T.) dated 19 February 2018 (CBIC text; no later amendment found in CBIC's 2023-2026 lists). Later notifications should be checked before you rely on the current text.
Goods are originating if they are wholly obtained or produced (rule 4) or, if not, they have a qualifying value content of not less than 35 per cent and every non-originating material has undergone a change at the six-digit sub-heading level (rule 5), or they meet the product specific rules in Annexure-1. A de minimis of 7 or 10 per cent by value, or 7 per cent by weight, applies depending on the chapters (rule 8). The certificate of origin is valid for twelve months and covers a single importation (Annexure-2, paragraph 4).
What the rules are and when they apply
The rules are made under section 5(1) of the Customs Tariff Act, 1975. Rule 1 gives the title and brings them into force on 1 August 2011. Rule 2 defines the terms used, including "vessels of the Party" and "factory ships of the Party" (registered in the Party, flying its flag, with ownership and crew conditions), "non-originating material" (imported non-originating material and material of undetermined origin) and "indirect materials". The rules print no tariff concession or duty rate.
The India-Japan agreement also has a bilateral safeguard framework, described in our articles on Rules 1 to 4 of the India-Japan CEPA Bilateral Safeguard Measures Rules, 2017 and later rules, which refer to these origin rules for the meaning of an "originating good". On the Indian import side, claims follow the customs procedure explained in our articles on Rules 1 to 4 of the CAROTAR and Rules 5 to 8 of the CAROTAR. If you are new to exporting, our IEC registration service can help you obtain the code you need first.
The origin criteria (rules 3 to 6)
Rule 3: originating goods
Goods imported by a Party that are consigned directly under rule 10 are deemed originating and eligible for preferential tariff treatment if they are wholly obtained or produced entirely in the Party (rule 4), or not wholly obtained but satisfy rule 5 or 6.
Rule 4: wholly obtained or produced goods
These include live animals born and raised in the Party; animals obtained by hunting, trapping, fishing, gathering or capturing; goods from live animals; plants and plant products harvested there; minerals and naturally occurring substances extracted there; sea-fishing goods taken by vessels of the Party outside the territorial seas of the Parties; goods produced on board factory ships of the Party from that catch; seabed goods where the Party has exploitation rights under the United Nations Convention on the Law of the Sea; collected articles, scrap and waste fit only for disposal or recovery of raw materials; recovered parts or raw materials; and goods produced exclusively from these.
Rule 5: goods produced using non-originating materials
Goods qualify as originating under rule 5(1) if:
- (a) the goods have a qualifying value content (QVC), calculated using the formula in rule 6, of not less than thirty-five per cent; and
- (b) all non-originating materials used in the production have undergone in the Party a change in tariff classification at the six-digit level, that is a change in tariff sub-heading.
Under rule 5(2), goods subject to product specific rules qualify if they satisfy the applicable rules in Annexure-1. Rule 5(3) adds that a tariff-change or process requirement applies only to non-originating materials. This article does not list Annexure-1; read the entry for your own product.
Rule 6: calculation of QVC
One of two formulas is applied: QVC equal to FOB value less the value of non-originating materials, divided by FOB value, multiplied by 100; or QVC equal to the value of originating materials plus direct labour cost, direct overhead cost and profit, divided by FOB value, multiplied by 100. Generally accepted accounting principles of the exporting Party apply. FOB is the value payable by the buyer to the seller regardless of the mode of shipment, excluding internal excise taxes reduced, exempted or repaid on export, with fallbacks where no FOB value exists. The value of a material is its customs value (CIF) in accordance with the customs valuation agreement, or the first ascertainable price paid in the Party.
Accumulation, de minimis and non-qualifying operations (rules 7 to 9)
Rule 7, accumulation: an originating good of the other Party used as a material in production in the first Party may be treated as an originating material, if it has undergone its last production process in the first Party beyond the rule 9 operations.
Rule 8, de minimis: non-originating materials that do not satisfy an applicable rule are disregarded if their total does not exceed the following, subject to the chapter exceptions the rule itself lists:
| Goods | Printed limit |
|---|---|
| Chapters 15 to 24 (with listed exceptions and listed additions) | Seven per cent in value of the good |
| Chapters 28 to 49 and 64 to 97 (with listed exceptions) | Ten per cent in value of the good |
| Chapters 50 to 63 (with listed exceptions) | Seven per cent in weight of the good |
"Value of the good" means the FOB value in rule 6 or the value in Explanation 2(a). Rule 8(2) says the de minimis is not applied in calculating the QVC.
Rule 9, non-qualifying operations: preservation, change of packaging, disassembly, simple bottling and packing, collection of parts classified as a good, simple removal of dust, sifting, sorting, matching and washing, simple cutting and repacking, labelling, simple mixing, simple assembly, slaughter and mere dilution, alone or in combination, do not confer origin. "Simple" means no special skills or specially produced or installed machines are needed.
Consignment and other rules (rules 10 to 15)
- Rule 10, consignment: an originating good meets the criterion if transported directly, or through non-Parties for transit or temporary warehouse storage with only unloading, reloading or preserving operations. Otherwise it is not considered originating.
- Rule 11, unassembled or disassembled goods: treated as originating if they meet rules 3 to 9 and are classified as assembled under the Harmonized System general rule.
- Rule 12, fungible goods and materials: origin may be determined by an inventory management method under generally accepted accounting principles in the Party.
- Rule 13, indirect materials: considered originating wherever produced.
- Rule 14, accessories, spare parts, tools and instructional materials: disregarded for tariff-change tests if not invoiced separately and customary in quantity and value; counted in the QVC where one applies.
- Rule 15, packing: shipment packing is ignored; retail packaging classified with the good is ignored for origin tests but counted in the QVC.
Certificate of origin and procedures (rule 16 and Annexure-2)
Rule 16 says the procedure for the certificate and operational certification is set out in Annexure-2. Our guide on how to get a certificate of origin in India covers the Indian issuing side.
Annexure-2 provides, among other things:
- the importer submits the certificate of origin with the import documents; the importing Party may waive the requirement under its laws, and may ask for a through bill of lading or transit evidence where goods pass through non-Parties (paragraph 2);
- the certificate is issued by the competent governmental authority of the exporting Party (the Department of Commerce for India and the Ministry of Economy, Trade and Industry for Japan) or its designees, in English, in the Appendix-B format, on a written request by the exporter or its authorised agent, and only after the exporter or producer proves that the good qualifies (paragraph 3);
- the certificate applies to a single importation and is valid for twelve months from issue; one submitted after expiry because of force majeure shall be accepted (paragraph 4);
- the competent authorities keep records of certificates, and exporters and producers keep origin records, for five years (paragraph 5);
- the Implementing Procedures in Appendix-A say a certificate should be issued not later than three days from the date of shipment, and in exceptional cases may be issued retroactively within twelve months from shipment, marked "ISSUED RETROACTIVELY".
Verification (Annexure-2, paragraphs 6 to 10)
The importing customs authority may request information on origin from the exporting competent authority on the basis of the certificate, and the exporting authority provides it within three months of the request; if additional information is requested, within two months. While the check and any visit proceed, the importing authority may suspend preferential treatment but may release the goods.
If dissatisfied, the importing authority may request the exporting Party to arrange a verification visit to the exporter's or producer's premises. The request is made in writing at least sixty days before the proposed date and the exporting authority seeks the exporter's or producer's written consent. The exporting Party responds within thirty days whether it accepts or refuses the visit, and gives the information obtained within forty-five days (or another agreed period) from the last day of the visit. The importing authority may deny preference where the good does not qualify, where the exporting authority fails to provide information within the periods, refuses the visit or does not respond, or where the information is not sufficient. It must send a written determination with findings of fact and the legal basis, and each Party maintains penalties against fraud (paragraph 10).
A practical example
Fuji Components Pvt Ltd exports a machine part to Japan. The FOB value is 100 units; imported non-originating materials from outside the Parties total 55 units, so the QVC under the first formula is 45 per cent, above the 35 per cent floor, and each non-originating material has shifted at the six-digit level. The exporter applies for a certificate, which is valid for twelve months and for one importation only. If Japanese customs ask for information, the Department of Commerce must respond within three months.
Need help with Japan exports or imports?
Reading Annexure-1 for your product, calculating the QVC and preparing for a verification visit are separate steps. Our IEC registration team can help you set up before claiming a Japan preference. For related agreements, see the India-Korea CEPA rules of origin and the ASEAN-India rules of origin.
Key takeaways
- Two routes: wholly obtained (rule 4) or QVC of at least 35 per cent plus a six-digit tariff change, or Annexure-1 (rule 5).
- De minimis: seven or ten per cent by value, or seven per cent by weight, depending on chapter (rule 8).
- The de minimis is not used in the QVC calculation (rule 8(2)).
- The certificate is valid for twelve months and for a single importation.
- Records are kept for five years.
- Requests for information are answered within three months; visit requests need sixty days' notice.
Read next
- Rules of origin under the India-Korea CEPA
- Rules of origin under the ASEAN-India trade in goods agreement
- Rules 1-4 of the India-Japan CEPA Bilateral Safeguard Measures Rules, 2017
- Rules 5-8 of the CAROTAR, 2020: verification and denial of preference
Disclaimer: Based on the Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic Partnership Agreement between the Republic of India and Japan) Rules, 2011 as published on the CBIC Tax Information Portal, as consulted on 3 October 2026. Later notifications, duty notifications and the Customs Tariff Act, 1975 should be checked. This article is general information, not legal advice; check the official text before acting.