Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 17.10.2026
Rules of Origin vs. Rules of Customs: Constitutional Authority, Treaty Enforcement and the New CBIC Clarification
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
From Article 253 of the Constitution to Section 28DA of the Customs Act: Understanding how international trade commitments become enforceable rights under Indian law.
Introduction: When International Trade Commitments Meet Domestic Customs Administration
India’s expanding network of Free Trade Agreements (FTAs) and Comprehensive Economic Partnership Agreements (CEPAs) has transformed the legal framework governing international trade. These agreements offer preferential market access, reduced Customs duties and enhanced commercial opportunities. However, their effective implementation depends upon a fundamental constitutional question: Can domestic Customs authorities impose conditions that dilute or defeat the benefits negotiated under a bilateral Trade Agreement?
This question has acquired renewed importance following CBIC Circular No. 43/2026-Customs, dated 24 September 2026. The Circular clarifies the relationship between Section 28DA of the Customs Act, 1962, the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR), and the Rules of Origin contained in India’s Trade Agreements.
Its significance extends beyond routine Customs administration. It raises questions concerning constitutional treaty-making powers, legislative competence, delegated legislation, administrative discretion and the enforceability of international obligations within India’s domestic legal system.
The Circular specifically addresses two recurring disputes: the insistence upon Form-I for preferential tariff claims under the IndiaβUK Comprehensive Economic and Trade Agreement (CETA), and the automatic denial of preferential treatment to subsequent consignments following an earlier adverse origin determination.
By reiterating that agreement-specific Rules of Origin prevail over conflicting CAROTAR provisions, CBIC has reinforced an essential legal distinction between the authority to verify preferential claims and the power to impose additional substantive conditions.
To appreciate the Circular’s wider significance, it is necessary to examine the constitutional foundation of India’s bilateral trade agreements, the mechanism through which international obligations acquire domestic legal effect, and the judicial principles governing Customs exemptions and administrative interpretation.
I. Constitutional Foundation of Bilateral Trade Agreements in India
The Constitution of India does not contain a single provision exclusively governing Free Trade Agreements. Instead, India’s treaty-making and treaty-implementation powers arise from several interconnected constitutional provisions.
Article 51(c): Respect for International Law and Treaty Obligations
Article 51(c), contained in Part IV of the Constitution, directs the State to foster respect for international law and treaty obligations in dealings between organised peoples. This provision reflects India’s constitutional commitment to international cooperation and the observance of treaty obligations.
However, Article 51(c) forms part of the Directive Principles of State Policy. By virtue of Article 37, these principles are not directly enforceable by courts, although they remain fundamental to governance. Consequently, Article 51(c) does not independently transform an international trade agreement into an enforceable domestic statute.
Its principal significance lies in guiding constitutional interpretation and encouraging consistency between domestic law and India’s international commitments.
Article 73: Executive Authority to Negotiate and Conclude Trade Agreements
Article 73 defines the extent of the Union’s executive power. Read with Articles 53 and 246 and the relevant Union List entries, it provides the constitutional foundation for the Union executive’s authority in international relations.
Accordingly, the Central Government may negotiate and conclude bilateral and multilateral trade agreements within its constitutional competence. Such agreements may cover tariff concessions, market access, Rules of Origin, investment protection, services, intellectual property, technical barriers to trade and dispute-settlement arrangements.
However, an important distinction must be maintained between concluding an international agreement and giving its provisions enforceable domestic legal effect. An international agreement may bind India at the international level without automatically creating enforceable rights or obligations against private parties under Indian municipal law.
Where implementation requires alteration of existing legislation, restriction of legal rights or imposition of domestic obligations, appropriate legislative authority becomes necessary.
Article 253: Parliament’s Power to Implement International Agreements
Article 253 is the central constitutional provision concerning domestic implementation of international treaties. It empowers Parliament to legislate for implementing treaties, agreements and conventions with foreign countries, notwithstanding the ordinary distribution of legislative powers between the Union and States.
Its importance is twofold. First, it enables Parliament to implement international obligations through domestic legislation. Second, it permits Parliament to legislate even upon matters ordinarily falling within State legislative competence when implementing an international agreement.
Therefore, Article 253 acts as a constitutional bridge between international commitments and domestic legislative authority. However, Article 253 is an enabling provision. It does not automatically make every provision of a bilateral trade agreement directly enforceable in Indian courts.
The Supreme Court’s decision in Maganbhai Ishwarbhai Patel v. Union of India, AIR 1969 SC 783, remains particularly important in understanding this distinction.
Article 246 and the Seventh Schedule: Legislative Competence Over Foreign Trade
Article 246 distributes legislative competence between Parliament and State Legislatures.
Several entries in List I of the Seventh Schedule are directly relevant to bilateral trade agreements.
| Constitutional provision | Subject matter | Relevance to international trade |
| Union List, Entry 10 | Foreign affairs and matters concerning the Union’s relations with foreign countries | International economic relations and trade negotiations |
| Union List, Entry 14 | Entering into treaties and agreements with foreign countries and implementing them | Constitutional legislative foundation for treaty implementation |
| Union List, Entry 41 | Trade and commerce with foreign countries; import and export across Customs frontiers | Import-export regulation and foreign trade administration |
| Union List, Entry 83 | Duties of Customs, including export duties | Customs tariff legislation and duty concessions |
| Article 253 | Legislation implementing international agreements | Parliamentary authority extending beyond ordinary federal legislative limitations |
These provisions collectively explain why international trade negotiations, Customs tariff legislation and foreign trade regulation principally fall within Union competence.
Articles 265 and 14: Constitutional Controls Over Customs Administration
Article 265 provides that no tax shall be levied or collected except by authority of law.
This principle is central to Customs taxation. An international agreement does not, merely through its execution, independently amend the Customs tariff or authorise Customs authorities to collect duties contrary to domestic law.
Preferential tariff treatment must be implemented through a legally valid domestic mechanism. Conversely, once a preferential concession has been lawfully implemented, its administration must remain within the governing statute and notification.
Article 14 introduces another constitutional limitation. Administrative decisions must not be arbitrary, discriminatory or unsupported by legally relevant considerations. Accordingly, Customs officers exercising powers under Section 28DA and CAROTAR remain subject to constitutional standards of legality, reasonableness and non-arbitrariness.
II. How Are Bilateral Trade Agreements Enforced Domestically in India?
India broadly follows a dualist approach to international treaties. Under this approach, international obligations and domestic legal rights operate in related but distinct legal spheres.
The execution of an international agreement does not necessarily make all its provisions directly enforceable against individuals or authorities. Domestic implementation may occur through legislation, statutory notifications, delegated legislation or executive action supported by existing law.
The Domestic Implementation Mechanism
1. Negotiation and conclusion of a Trade Agreement
Union executive authority under the Constitution
2. Identification of domestic legal requirements
Articles 246 and 253; relevant Union List entries
3. Implementation through Indian law
Customs Act, Customs Tariff Act, notifications and Rules of Origin
4. Administration of preferential tariff claims
Section 28DA, CAROTAR and the applicable Trade Agreement
5. Judicial review and statutory remedies
Customs appeals and constitutional remedies, where maintainable:-
In the Customs context, Section 5 of the Customs Tariff Act, 1975 enables the Central Government to make rules for determining the origin of goods under Trade Agreements. Preferential tariff concessions are generally implemented through notifications issued under the relevant statutory powers, including Section 25 of the Customs Act.
Section 28DA and CAROTAR then regulate the administration and verification of preferential claims. Thus, an FTA’s tariff commitments do not ordinarily operate as an independent substitute for India’s Customs legislation. Their domestic enforceability must be examined through the applicable implementing law.
III. Landmark Constitutional Precedent: Maganbhai Ishwarbhai Patel v. Union of India
Case: Maganbhai Ishwarbhai Patel v. Union of India Citation: AIR 1969 SC 783; (1969) 3 SCC 400 Court: Supreme Court of India Date: 9 January 1969
The dispute arose from the implementation of an international boundary determination involving India and Pakistan. The Supreme Court considered the constitutional powers of the Union executive to enter into international agreements and the circumstances requiring parliamentary legislation. The Court recognised that the executive could conclude international agreements within its constitutional authority.
However, it distinguished international obligations from their domestic legal consequences. Where implementation affects enforceable private rights or modifies existing domestic law, legislative support is required. The Court also explained the significance of Article 253 and Parliament’s authority to implement international agreements.
Commentary
Although the judgment concerned an international boundary dispute rather than an FTA, its constitutional reasoning remains directly relevant to trade agreements. It establishes that the Union executive’s treaty-making authority and Parliament’s treaty-implementation authority are legally distinct.
Consequently, a bilateral trade agreement cannot automatically override an inconsistent Indian statute merely because India has accepted the agreement internationally. The legally enforceable rights of importers must be identified through the applicable domestic implementing provisions, interpreted in light of the Trade Agreement where the law permits or requires such interpretation.
IV. Section 28DA of the Customs Act: The Statutory Framework for Preferential Origin
Section 28DA, introduced through the Finance Act, 2020, establishes the responsibilities of importers claiming preferential Customs duty under Trade Agreements.
The provision was intended to strengthen verification of originating status and prevent the misuse of preferential tariff concessions. Under Section 28DA(1), importers must declare that imported goods qualify as originating goods, possess sufficient supporting information, furnish prescribed particulars and exercise reasonable care regarding the accuracy of origin claims.
Section 28DA(2) makes it clear that the mere submission of a Certificate of Origin does not discharge the importer’s responsibility to exercise reasonable care. However, this provision cannot be interpreted in isolation.
Section 28DA(3) contemplates requests for further information consistent with the relevant Trade Agreement. This qualification is important because different agreements prescribe different documentary and verification procedures.
Section 28DA also establishes mechanisms for origin verification, suspension of preferential treatment, provisional clearance and denial of preferential benefits in specified circumstances. Subsection (11) addresses subsequent imports of identical goods following an earlier adverse origin determination. Importantly, the statutory framework does not confer unrestricted authority upon Customs to disregard agreement-specific origin procedures.
V. CAROTAR, 2020: Procedural Compliance and the Limits of Delegated Legislation
CAROTAR, 2020 was notified through Notification No. 81/2020-Customs (N.T.), dated 21 August 2020, and came into effect on 21 September 2020.
The Rules provide a domestic administrative mechanism for implementing Section 28DA. Rule 3 governs preferential tariff claims at the Bill of Entry stage. Rule 4 addresses the information importers must possess, including origin-related information identified in Form-I.
Rule 5 governs requests for further information. Rule 6 provides for verification through the prescribed authorities, while Rule 7 addresses identical goods and earlier adverse origin determinations.
Rule 8 deals with additional administrative matters, including consequences of non-compliance.
Rule 8(3): The Most Important Provision
Rule 8(3) expressly provides that where CAROTAR conflicts with the Rules of Origin under the relevant Trade Agreement, the latter shall prevail. This creates a specific rule of precedence within the domestic regulatory framework.
Its legal effect should be carefully understood. Rule 8(3) does not establish that every international treaty automatically overrides Indian legislation. Rather, it is a domestic legal provision expressly recognising the precedence of agreement-specific Rules of Origin over conflicting CAROTAR requirements.
The distinction is constitutionally significant. The authority of the Trade Agreement’s Rules of Origin in this context flows through the statutory framework enacted and notified under Indian law. Accordingly, Customs officers cannot disregard Rule 8(3) while administering preferential tariff claims.
VI. CBIC Circular No. 43/2026: Five Major Legal Clarifications
1. Valid Origin Declaration Under IndiaβUK CETA
Paragraph 2.1.1 recognises an Origin Declaration completed by the UK exporter or producer in the prescribed manner as proof of origin.
Therefore, a claim supported by a valid Origin Declaration must be processed without requiring Form-I. This clarification protects importers from an additional routine documentary requirement. However, the declaration must satisfy the applicable agreement’s conditions, and the goods must qualify under the relevant Rules of Origin.
2. Form-I Cannot Be a Routine Precondition
Paragraph 2.1.2 clarifies that Form-I is not required to be submitted with the Bill of Entry. Customs cannot treat its submission as a mandatory precondition for preferential tariff treatment. Nevertheless, the Circular does not abolish Form-I or eliminate lawful requests for origin-related information.
3. Requests for Form-I Information Are Restricted
Paragraph 2.1.3 identifies two cumulative conditions for seeking relevant Form-I information under the clarification concerning IndiaβUK CETA.
The Bill of Entry must have been interdicted by the National Risk Management System for origin-related checks, and the proper officer must have reason to believe that the applicable origin criteria have not been satisfied. The words used in the Circular limit routine administrative discretion. However, other verification powers lawfully available under the governing framework remain subject to their respective statutory conditions.
4. Confidential Commercial Information Is Protected
Paragraph 2.1.4 clarifies that IndiaβUK CETA importers need not obtain confidential information from exporters or producers.
Failure to furnish such information cannot, by itself, justify denial of preferential treatment. The importer must nevertheless provide information made available by the exporter or producer. Where the information remains insufficient, verification may be undertaken through the exporting Party’s Verification Authority in accordance with the Trade Agreement.
5. Subsequent Imports Require Independent Consideration
Paragraphs 2.2.1 to 2.2.3 address Section 28DA(11).
The Circular rejects the assumption that goods are identical merely because they share an HSN classification, description, exporter, producer or technical characteristics.
Before applying an earlier adverse determination, Customs must provide the importer an opportunity to furnish additional information. Where material origin-related facts differ, the current claim must be independently examined. This safeguard is particularly relevant to industrial imports involving changing suppliers, production arrangements, originating inputs and manufacturing processes.
VII. Supreme Court Judgments from 2025: Their Relevance to Customs Exemptions and Administrative Powers
The following decisions were delivered within the preceding two years. Their holdings are relevant to the broader legal principles involved, although neither directly adjudicates Circular No. 43/2026.
A. M/s L.G. Electronics India Private Limited v. Commissioner of Customs
Court: Supreme Court of India Decision: 10 September 2025 Proceedings: Civil Appeal Nos. 10349β10350 of 2024
The Supreme Court allowed LG Electronics India Pvt. Ltd.βs customs appeals concerning the import classification of G Watch smartwatches.
While it did not decide the classification dispute, the Court held that LG was eligible for the Korea-origin duty exemption based on the Certificate of Origin, set aside the CESTAT and original orders, and directed refund of the duty paid with applicable interest within two months.
Legal commentary: The Supreme Court rightly distinguished tariff classification from entitlement to a preferential-origin exemption, holding that an incorrect claimed classification cannot defeat a substantive benefit otherwise established by a valid Certificate of Origin. While leaving the smartwatch classification issue open, the ruling reinforces that customs adjudication must prioritize proven statutory conditions over technical errors made in good faith.
B. Noble Resources and Trading India Private Limited v. Union of India & Others
Citation: 2025 INSC 684 Court: Supreme Court of India Decision: 14 May 2025 Proceedings: Civil Appeal No. 2572 of 2025
The dispute concerned an exemption claimed on imported crude degummed soyabean oil under the applicable Duty Free Credit Entitlement framework.
The Department relied upon a Customs circular to extend an exclusion concerning agricultural and dairy products to certain manufactured products derived from agricultural commodities. The Supreme Court rejected the enlarged interpretation and held that the departmental circular could not expand the exclusion beyond the governing notification.
The Court allowed the importer’s appeal.
Legal commentary: This decision reinforces the principle that executive circulars cannot alter the substantive scope of statutory exemptions. Although the case did not concern Section 28DA or FTA origin verification, its reasoning is relevant where departmental instructions purport to impose restrictions beyond the governing legal instrument. The decision also demonstrates the importance of distinguishing a statutory condition from an administrative interpretation.
C. The Constitutional Connection
The decisions in Maganbhai, L.G. Electronics and Noble Resources operate at different levels. Maganbhai addresses the constitutional relationship between international agreements and domestic legislation.
L.G. Electronics concerns the examination of preferential Customs exemption entitlement. Noble Resources addresses the limits of departmental circulars in interpreting statutory exemptions.
Taken together, these authorities support the proposition that Customs administration must operate within the authority conferred by Indian law. They do not establish an unrestricted supremacy of FTAs over Parliament’s legislation. Instead, they reinforce lawful implementation, proper statutory interpretation and limitations on executive action.
VIII. Constitutional and Administrative Limitations on Customs Discretion
The Circular raises several questions concerning the lawful exercise of Customs powers. Under Article 265, Customs duty must have legal authority. Consequently, tariff concessions and their withdrawal must be examined within the applicable statutory framework.
Article 14 requires administrative action to satisfy constitutional standards against arbitrariness. Article 19(1)(g), subject to Article 19(6), protects the right of citizens to practise professions and carry on occupations, trade or business. This does not eliminate lawful import restrictions, but it may be relevant where administrative action unjustifiably interferes with protected commercial activity.
Article 226 empowers High Courts to exercise judicial review over unlawful administrative action, subject to principles governing the availability of alternative statutory remedies.
Therefore, Customs action concerning preferential tariff claims may raise constitutional issues where it exceeds statutory authority, disregards mandatory procedures or violates principles of natural justice. However, not every disagreement concerning an origin determination constitutes a constitutional violation.
Ordinary disputes involving documentary sufficiency, factual origin criteria or assessment may appropriately fall within the Customs Act’s statutory appellate framework. The constitutional remedy becomes particularly relevant where the challenge concerns jurisdictional error, procedural illegality, violation of natural justice or the validity of subordinate legislation.
IX. Inclusions, Exclusions, Limitations and Discretions: A Consolidated Legal Position
| Category | Legal position |
| Constitutional inclusion | Articles 73 and 253 provide distinct foundations for treaty-making and legislative implementation. |
| Legislative inclusion | Customs Act and Customs Tariff Act provisions provide mechanisms for domestic administration of trade commitments. |
| Preferential origin inclusion | Valid agreement-prescribed origin documents support preferential claims. |
| Procedural exclusion | Form-I cannot be imposed routinely as a prerequisite under the IndiaβUK CETA clarification. |
| Confidentiality exclusion | IndiaβUK CETA importers need not obtain confidential exporter or producer information. |
| Statutory limitation | Importers must exercise reasonable care and satisfy substantive origin requirements. |
| Treaty limitation | International agreements do not automatically override inconsistent Indian primary legislation. |
| Administrative limitation | CAROTAR cannot override conflicting Rules of Origin under the applicable Trade Agreement, as recognised by Rule 8(3). |
| Customs discretion | Origin-related information and verification may be sought within the prescribed conditions. |
| Identical-goods safeguard | Earlier adverse determinations cannot be applied mechanically without considering relevant origin facts and additional information. |
| Judicial safeguard | Unlawful administrative action may be challenged through statutory remedies or constitutional judicial review, as appropriate. |
X. A Constitutional Question for Future Litigation
One of the most significant questions emerging from this framework is whether a delegated rule, administrative instruction or Customs assessment can impose requirements inconsistent with the Rules of Origin incorporated into India’s domestic legal framework.
The answer requires identifying the precise legal source of each obligation. Where an agreement-specific rule has been implemented under the Customs Tariff Act, the officer must consider that rule alongside Section 28DA and CAROTAR. Where CAROTAR itself expressly gives precedence to the Trade Agreement’s Rules of Origin, administrative authorities must respect that prescribed hierarchy.
Where a conflict arises between an international commitment and primary parliamentary legislation, the analysis is different. The international agreement does not automatically invalidate or override the statute. The constitutional distinction is fundamental.
The enforceability of preferential trade benefits in India rests not merely upon diplomatic commitments but upon their lawful incorporation and administration under the Indian legal system.
Consequently, future litigation may increasingly examine whether origin-verification demands are supported by statutory authority, whether they comply with the applicable Trade Agreement, and whether administrative discretion has been exercised for a legitimate legal purpose.
XI. The Role of Aadrikaa Legal Services in Corporate Legal Support and Case Research
Aadrikaa Legal Services (ALS) assists large corporates, in-house legal departments, law firms and professional advisory organisations with specialised paralegal support and legal research relating to Customs, GST, Foreign Trade Policy, international trade compliance and regulatory disputes. Its support may include case-law research, statutory interpretation, preparation of legal research notes, compilation of judicial precedents, document examination, litigation chronologies, drafting assistance, regulatory compliance reviews and preparation of case briefs for counsel.
By combining legal research with domain-specific knowledge of Customs and trade regulations, ALS aims to support corporate legal teams and law firms in managing complex regulatory matters, developing litigation strategies and preparing well-researched submissions before statutory and judicial forums.
XII. Conclusion: The Constitution Sets the Boundary, Parliament Creates the Framework, and Customs Must Follow the Law
CBIC Circular No. 43/2026-Customs is more than a procedural clarification concerning Form-I and Rules of Origin. It highlights the constitutional relationship between India’s international trade commitments and their domestic implementation.
Articles 73 and 253 establish the foundations of treaty-making and legislative implementation. Articles 246 and 265 define the relevant legislative and taxation framework, while Article 14 imposes constitutional limitations upon administrative action.
Section 28DA and CAROTAR provide the domestic machinery for administering preferential tariff claims. However, Rule 8(3) expressly recognises that conflicting CAROTAR provisions must yield to the applicable Trade Agreement’s Rules of Origin.
The Supreme Court’s decisions in Maganbhai, L.G. Electronics and Noble Resources illuminate the constitutional and statutory principles that govern this relationship. The essential legal conclusion is that Customs authorities retain the power to verify originating status, prevent misuse of preferential concessions and protect public revenue.
What they cannot do is transform procedural authority into an independent power to impose substantive conditions unsupported by the governing law.
For importers, the Circular provides meaningful procedural protection. For Customs authorities, it reinforces the requirement of agreement-consistent administration. For legal practitioners, it offers a framework for examining origin disputes through statutory interpretation, delegated legislation and constitutional principles.
Ultimately, India’s international trade commitments can deliver their intended commercial benefits only when their domestic implementation remains legally coherent, transparent and consistent with the constitutional rule of law.
About the Author
Advocate Ravi Shekhar Jha is a New Delhi-based legal professional practising in matters involving Customs, indirect taxation, constitutional law, international trade and regulatory compliance, including matters before the Delhi High Court and statutory tribunals.
With approximately two decades of experience in international trade, regulatory advisory and supply-chain compliance, his professional work encompasses Customs classification and valuation, Free Trade Agreements, Rules of Origin, DGFT and Foreign Trade Policy matters, BIS and Quality Control Orders, trade remedies, and Customs litigation.
He holds an LL.M. in Constitutional Law and is associated with Aadrikaa Legal Services (ALS), which provides legal advisory, litigation, research and regulatory support to corporate clients and professional organisations.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Source: CBIC, Supreme Court
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