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:
  • 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.