Pre-Shipment Inspection Certificate (PSIC): Compliance, Procedure, and Legal Significance in International Trade

Pre-Shipment Inspection Certificate (PSIC): Compliance, Procedure, and Legal Significance in International Trade.

1. Introduction

In international trade, quality assurance, safety, and conformity assessment of goods before shipment are critical to preventing fraud, substandard exports, and hazardous imports. The Pre-Shipment Inspection Certificate (PSIC) is an essential compliance document that certifies that the goods being exported or imported have been physically inspected, verified, and found to meet the required specifications, quality standards, and regulatory norms before dispatch.

The PSIC system is particularly important in India’s foreign trade and customs framework, especially for specific categories such as import of metallic scrap, waste, used machinery, and certain restricted items. It ensures that imported consignments are free from radioactive contamination, explosives, and other hazardous materials, and comply with the Foreign Trade Policy (FTP), Customs Act, and environmental laws.

2. Definition of Pre-Shipment Inspection Certificate (PSIC)

A Pre-Shipment Inspection Certificate is a document issued by an authorized inspection agency, confirming that the goods have been examined before shipment and comply with the specifications and conditions prescribed by the importing country or regulatory authority.

• Purpose: To ensure that the shipment is safe, compliant, and as per contractual or regulatory requirements.
• Authority: Issued by DGFT-approved pre-shipment inspection agencies (PSIAs) or other internationally accredited agencies.
• Applicability: Commonly required for imports of metal scrap, waste, second-hand machinery, hazardous goods, and certain consumer products.

3. Legal Framework in India

The requirement and process for PSIC are governed by:

1. Foreign Trade (Development and Regulation) Act, 1992
2. Foreign Trade Policy (FTP), Chapter 2 and Chapter 4
3. DGFT Public Notices and Notifications
   • Public Notice No. 12/2015-20 dated 17 July 2015 – lays down procedures for import of metallic scrap.
   • Public Notice No. 3/2015-20 dated 1 April 2016 – specifies the list of approved PSIAs.
4. Customs Act, 1962 – empowers customs officers to verify and detain non-compliant consignments.
5. Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 under the Environment (Protection) Act, 1986.

4. Categories of Goods Requiring PSIC

PSIC is mandatory for:

1. Metal Scrap and Waste (Ferrous and Non-Ferrous) – to ensure that consignments are free from arms, ammunition, explosives, or radioactive substances.
2. Second-Hand Machinery or Used Capital Goods – to verify the condition, residual life, and safety compliance.
3. Certain Agricultural or Food Products – to certify quality, absence of pests, and conformity to standards.
4. Hazardous Chemicals, Electrical and Electronic Waste (E-Waste) – to ensure compliance with international environmental norms (e.g., Basel Convention).

5. Issuance Process of PSIC

Step 1: Appointment of Inspection Agency

• Exporter (or importer) engages a DGFT-empanelled Pre-Shipment Inspection Agency (PSIA) located in the exporting country.
• The list of approved PSIAs is available on the DGFT website.

Step 2: Inspection

• The agency physically inspects the goods at the exporter’s premises, warehouse, or port of loading.
• For metal scrap, checks include:
  • Radiation test
  • Visual inspection for arms, ammunition, or hazardous materials
  • Chemical composition test

Step 3: Certification

• Upon satisfactory inspection, the PSIA issues a Pre-Shipment Inspection Certificate (PSIC) stating:
  • Description of goods
  • Quantity, weight, and packing details
  • Inspection date and place
  • Declaration of freedom from prohibited/hazardous substances

Step 4: Submission to Customs

• The PSIC accompanies the import documents (Bill of Lading, Invoice, Packing List, etc.) and must be produced to Customs authorities in India at the time of clearance.

Step 5: Cross-Verification (if required)

• Customs or DGFT may direct re-inspection at the port of import by an authorised Indian laboratory if discrepancies are found.

6. Importance of PSIC

7. Consequences of Non-Compliance

Failure to produce a valid PSIC where required may result in:

• Customs detention or confiscation of goods under Section 111 of the Customs Act, 1962.
• Refusal of clearance by Customs or DGFT authorities.
• Blacklisting or DEL inclusion of the importer’s IEC.
• Imposition of penalty under Section 11(2) of the FT (D&R) Act, 1992.
• Environmental or safety action under the Hazardous Waste Management Rules.

8. Compliance Best Practices

To ensure full compliance with PSIC requirements, importers/exporters should:

1. Engage Only DGFT-Approved PSIAs – verify the validity and scope of approval.
2. Schedule Inspection in Advance – before shipment to avoid delays at destination ports.
3. Retain Documentary Proof – PSIC, inspection photographs, radiation test reports.
4. Ensure Authenticity – verify PSIC details online where available.
5. Follow Environmental and Safety Norms – particularly for scrap and second-hand goods.
6. Maintain Consistency – the details on PSIC should match the shipping documents.

9. Integration with Digital Trade Compliance

India’s trade ecosystem is increasingly digitalized through DGFT’s e-Platform, ICEGATE, and SWIFT system, which allows:

• Online verification of PSICs,
• Data sharing between DGFT, Customs, and the Atomic Energy Regulatory Board (AERB),
• Reduced manual intervention and faster clearance of compliant consignments.

This integration helps detect forged PSICs and ensures transparency in high-risk imports.

10. Way Forward and Conclusion

The Pre-Shipment Inspection Certificate serves as a frontline compliance tool for ensuring that India’s imports meet safety, environmental, and quality standards. With growing trade volumes and increased global scrutiny, PSIC mechanisms act as a safeguard against the import of hazardous or substandard goods.

Way Forward:

• Strengthen coordination between DGFT, Customs, and BIS for harmonised inspection standards.
• Introduce blockchain-based traceability for PSIC verification.
• Expand the network of accredited PSIAs in major exporting countries.
• Build importer awareness on inspection procedures and compliance responsibilities.

Conclusion:
A robust PSIC system enhances India’s trade credibility, protects public safety, and supports sustainable trade practices. Continuous modernization of inspection and digital verification mechanisms will ensure that the PSIC remains a reliable compliance instrument in the evolving global trade environment.

References

1. Foreign Trade (Development & Regulation) Act, 1992
2. Foreign Trade Policy (2015–20 & 2023–28)
3. DGFT Public Notice No. 12/2015–20 dated 17 July 2015
4. DGFT Public Notice No. 3/2015–20 dated 1 April 2016
5. Customs Act, 1962
6. Hazardous and Other Wastes (Management & Transboundary Movement) Rules, 2016
7. DGFT Handbook of Procedures, Para 2.54 – “Import of Metallic Waste and Scrap”
8. World Trade Organization (WTO) – Agreement on Pre-shipment Inspection

A sample PSIC format/template (as per DGFT standards) or a flowchart showing the PSIC issuance and clearance process.

1. A sample Pre-Shipment Inspection Certificate (PSIC) template — aligned with DGFT and Customs documentation standards; and
2. A flowchart illustrating the PSIC issuance and clearance process step-by-step.

You can use this for academic purposes, trade training, or compliance manuals.

?? Sample Format: Pre-Shipment Inspection Certificate (PSIC)

(For Import of Metal Scrap / Used Machinery / Other Restricted Goods)

Pre-Shipment Inspection Certificate (PSIC)
Issued under the provisions of the Foreign Trade Policy, DGFT, Government of India

We hereby certify that the consignment has been inspected at the above location and found to be free from arms, ammunition, explosives, radioactive or any hazardous materials as defined under the Hazardous Waste (Management and Transboundary Movement) Rules, 2016.

The goods conform to the declared description and specifications and are fit for export to India in accordance with DGFT Public Notice No. 12/2015–20 dated 17 July 2015 and allied notifications.
| 13. Remarks (if any) | [Any observations or test results] |
| 14. Certification Number / Date | [Unique PSIC No. / Date of Issue] |
| 15. Authorized Signatory |
Name: _________
Designation: _________
Signature & Seal of PSIA: _________
Date: _________

?? Declaration

This certificate is issued based on physical inspection and testing carried out as per DGFT guidelines. Any alteration, misuse, or falsification will render this certificate invalid and subject to penal action under the Foreign Trade (Development & Regulation) Act, 1992.

(Note: Attach radiation test report, photographs of inspected goods, and packing details where applicable.)

?? Flowchart: Pre-Shipment Inspection and Clearance Process

Below is a step-by-step visualization of the PSIC process:

        +------------------------------+

        ¦ 1. Importer identifies goods ¦

        ¦    (e.g., metal scrap, used   ¦

        ¦     machinery)                ¦

        +------------------------------+

                       ¦

                       ?

        +------------------------------+

        ¦ 2. Importer contacts DGFT-   ¦

        ¦    approved Pre-Shipment     ¦

        ¦    Inspection Agency (PSIA)  ¦

        +------------------------------+

                       ¦

                       ?

        +------------------------------+

        ¦ 3. PSIA conducts inspection  ¦

        ¦    at exporters premises or ¦

        ¦    port of loading           ¦

        ¦  ? Visual, radiation &       ¦

        ¦     chemical checks          ¦

        +------------------------------+

                       ¦

                       ?

        +------------------------------+

        ¦ 4. PSIA issues PSIC          ¦

        ¦    certifying goods are free ¦

        ¦    from prohibited materials ¦

        +------------------------------+

                       ¦

                       ?

        +------------------------------+

        ¦ 5. Exporter sends PSIC along ¦

        ¦    with shipping documents   ¦

        ¦    (Invoice, BL, Packing List)¦

        +------------------------------+

                       ¦

                       ?

        +------------------------------+

        ¦ 6. Importer files Bill of    ¦

        ¦    Entry with Customs in     ¦

        ¦    India + PSIC attached     ¦

        +------------------------------+

                       ¦

                       ?

        +------------------------------+

        ¦ 7. Customs verifies PSIC via ¦

        ¦    DGFT/ICEGATE systems      ¦

        ¦    (Radiation test may be    ¦

        ¦     repeated if needed)      ¦

        +------------------------------+

                       ¦

                       ?

        +------------------------------+

        ¦ 8. Clearance granted if all  ¦

        ¦    documents valid and no    ¦

        ¦    contraband detected       ¦

        +------------------------------+

? Key Takeaways for Compliance Officers

• Always verify PSIA authorization on DGFT’s official site.
• Maintain document trail (inspection photos, test reports, PSIC copy).
• Use digital verification via ICEGATE / SWIFT before Customs filing.
• Ensure details in PSIC match those in Bill of Entry, Invoice, and Packing List.
• Conduct post-clearance audits for traceability and record-keeping.

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