PRE-SHIPMENT INSPECTION

Foreign trade involves huge risk. Both importers and exporters face many difficulties. One of the problems is quality assurance. Importer likes to get quality assurance of the intended imported goods. Many countries of the world, it is mandatory to PSI for the goods imported because of quality assurance. So Pre shipment Inspection (PSI) clause in Letter of Credit should included for safe guard of the importer. PSI is done in the exporting country and a report will be send to the respective PSI company office located in the importer’s country.

It is found that, qualities and mechanism of customs authorities is not up to the mark in some countries. Most of them are third world countries. In these countries, government arranges some PSI company to get things done. The correct assessment of Custom duties or Taxes and CIF value is measured by the Inspection company. In fact this company works both for importers and customs authority. Because customs authority are not well equipped in third world country. Quality, quantity and price judge by the inspection company. Popular pre shipment companies are Bureau Veritas , SGS Group , Cotecna ,Omic ect.

There is a clause for PSI in LC. LC issuing bank then send a set of documents to Inspection Company including Pre Shipment Inspection Information Form, LC, Sale Contract/Pro-forma Invoice, TIN and VAT ect. After review that set of documents , they contact to exporter for necessary arrangement for inspection. But the inspection date must be within the shipment date of the LC. After inspection they issue Clean Report of Findings (CRF) if other wise in order. In CRF describes L/C issuing bank, LC no and date, Buyer’s name, Seller’s name, Pro-forma Invoice/ Indent no. and date, Container No, packing, and Detailed report of Goods Inspected including Total Quantity, Unit of Measurement, H.S Code, CIF Value, Place of inspection with date etc.

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