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:

CRF number (10 digit)
coloured pattern background
micro-printed side border
warning band
artificial water marks
dry embossed seal
hologram
Local Office of the Agency will send attested copy of CRF to LC Issuing Bank.