Pre-Shipment Inspection(PSI)

 Pre-Shipment Inspection(PSI)

 

Legal Framework:

• Pre-shipment Inspection Rules – 2002 (SRO No. – 255-AIN/2002/1973/Shulka, Dated 19-09-2002 which replaces Pre-Shipment Inspection Order – 1999, Dated 19-10-1999)
• Amendment of Pre-shipment Inspection Rules–2002 (SRO No. 38-AIN/2008/2188/Shulka, Dated 05-06-2008)
• Circular regarding exemption from mandatory pre-shipment inspection (SRO No. 193-AIN/2010/2311/Shulka, Dated 10.06.2010)
• Customs Act-1969
• Import Policy Order

Objectives:

• Monitoring imports into developing countries.
• Protection of foreign exchange resources by verifying quantity, quality and price of the goods being imported.
• Improvement in revenue collection through accurate classification of tariff codes.

PSI at a glance:

• Mandatory PSI was launched from February 15, 2000 following the Pre-shipment Inspection Order-1999 (SRO-316/99, Dated: 19.10.1999)
• PSI Order-1999 was replaced by PSI Rules-2002
• For performing the purpose all countries of the world are divided into 5 Blocks.
• At present 4 (four) Inspection Agencies are enlisted by NBR to perform inspection:
• SGS (Societe Generale De Surveillance), Switzerland.

-Block A & C

• BIVAC (Bureau Varitas International), France.

-Block B

• OMIC (Overseas Merchandise Inspection Co.), Japan.

-Block D

• Intertek International Ltd, UK.

-Block E

Major points of PSI Rules-2002:

• Appointment procedure of PSI Agencies
• Expiry of appointment

- maximum 3 years

• Segregation of the countries of the world into Blocks

- 5 Blocks

• Duties & Responsibilities of the Agencies

-          examination of goods

-          verification of description, quantity and quality of goods

-          classification of tax of goods

-          determination of value of goods

• Procedure of inspection by the Agency
• Procedure of issuing Report (CRF)
• Procedure of sending Report

§  Responsibility of the Importer

§  Responsibility of the Bank

• Procedure of Physical Examination of goods
• Investigation & Punishment (if objections raised against the Agency)
• Establishment of Central and Local Monitoring Committee
• Inspection Fees and payment procedure

Goods exempted from Pre-Shipment Inspection:

(Details in SRO No. 193 – AIN/2010/2311/Shulka, Dated 10.06.2010)

• Goods under H.S. Codes those have no customs duty as per First Schedule.
• Goods under H.S. Codes those have 5% customs duty as per First Schedule.
• Perishable goods including fresh fruit, live animal, living plants, fish and meat.
• Goods imported for export-oriented industries, imported under bonded warehouse facilities.
• Capital machineries imported for hundred percent export oriented industry by submitting indemnity bond.
• Goods imported as relief under the authority of government.
• Goods imported by a diplomat or under the coverage of diplomatic facility as per Vienna convention, 1961.
• Machinery and equipment imported for the rehabilitation of deaf, dumb, blind and physically and mentally handicapped persons.
• Post parcel and commercial samples, etc.

Bank’s Duties/Responsibilities:

• Incorporation of PSI clause in the LC
• Sending PSI information with Bank’s forwarding on the day of opening LC to the local office of the PSI Agency along with the following documents attested by the Bank:

-copy of LC

-copy of Proforma Invoice/Indent

-copy of Insurance Cover Note

-copy of TIN certificate  (once for new importer)

-copy of VAT Registration (once for new importer)

• Sending copy of amendment, If LC is amended.
• Receiving attested copy of CRF (Clean Report of Findings)
• Giving endorsement on attested copy of CRF
• Endorsement on Final/Commercial Invoice and Packing List certified by the PSI Agency.
• If LC is cancelled, it should be informed to the Agency.
• If LC is cancelled after completion of PSI, Bank will recover fees/charges of the Agency from the margin of LC.

CRF (Clean Report of Findings):

• To be issued in prescribed format on the Agency’s letterhead pad
• Following arrangements to be maintained in CRF:

Ø  CRF number (10 digit)

Ø  coloured pattern background

Ø  micro-printed side border

Ø  warning band

Ø  artificial water marks

Ø  dry embossed seal

Ø  hologram

• Local Office of the Agency will send attested copy of CRF to LC Issuing Bank.

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