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Certificate of Origin

Why nations demand Certificates of origin? The origin of goods is checked by many importing countries in order to decide on the following issues as part of their national policy.

  1. To check whether the law of the land legally allows to import the goods into the country.
  2. To check whether goods are being imported from a nation where embargo exists.
  3. To check whether the goods fall under a quota system.
  4. To check whether the goods fall under any preferential treatment.
  5. To check what specific rate of duty is applicable to the goods.

In case of import of goods, some countries demand a signed statement to attest the origin of the goods being exported. Such certificates can usually be obtained from local trade body such as local chamber of commerce & industry. The certificates of origin can also be issued by an international commodity organization. Sometimes the certificate of origin has to be endorsed by the local embassy or consulate office of the country requiring the certificate of origin. If there is no consulate office stationed in the country of export, then it is necessary to send the document to the trade authorities of the importing country to have necessary endorsement. This formalities cause some delays in the credit transaction. Custom officials of the importing country need to know the origin of the imported goods to assess accurately the custom duties and taxes. It is therefore an obligation on the part of seller to send an accurate certificate of origin that complies with the rules and regulations of the importing country.

What precautionary measures an exporter has to undertake to provide an accurate certificate of origin

  • The exporter should check with the buyer in order to know thoroughly about the total requirements of the certificate of origin, i.e. whether special form is needed,   endorsement of importing country is required, the tariff reference and any other special formalities to be observed. Most of the countries accept general format of certificate of origin which is globally used. But some countries may require specific certificates of origin in separate format.
  • In some cases, an international organization for commodities (e.g. the international coffee organization, ICO) issues a specific certificate of origin form for an overseas shipment. The form provides details of goods related to its identity, size, origin, destination and time of shipment. These certificates are used to regulate the movement of the commodities worldwide and also to enforce quota limits that individual exporting countries may have agreed on. Therefore, exporters should comply with all the regulations of the specific forms. The name of the consignee and the consignor, their addresses, shipping details and other general information shown in the certificate of origin, should be identical to the commercial invoice. Otherwise the document will be rejected by the customs authorities.
  • If the country of origin is stated incorrectly in the certificate, the custom authority of the importing country may impose heavy penalties.
  • The quantity of goods being shipped should clearly mention the exact number of pieces/packages, the net and gross weight of each package and tariff reference of the importing country. Otherwise there may be delays in customs clearance and extra charges for import duty.
  • Certain countries accord tax or duty exemptions on certain commodities from certain countries. For example, the European Union allows duty exemptions on shipments of coffee from ACP (African, Caribbean and Pacific) countries and Finland exempts duty on coffee imports from LDCs. Buyers may refuse shipping documents if such exemption certificate is not produced by the seller.