DGFT Backtracks on New System of Pre-shipment Inspection of Metal Scrap, Old System to Continue “Till Further Orders”

-Arun Goyal-

The DGFT while unveiling the FTP 2015-2020 emphatically said at Vigyan Bhavan on 1st April, 2015-2020 that there won’t be any changes to the new FTP released and there will be only a mid-term review after two-and-half-years. Within a week of this announcement, the DGFT amended the new FTP Hand Book of Procedures relating to Metal Scrap import pre-shipment inspection certificate (PSIC) to keep in abeyance the provisions of para 2.55 and 2.56 of Handbook of Procedures, 2015-20 (which came into effect from 1.4.2015) till further orders. Accordingly, the procedure for issue of Pre-Shipment Inspection Certificate (PSIC), as laid down in para 2.32.2A and 2.32.2B of Handbook of Procedure Vol. I 2009-14, would remain in effect, till “further orders”.

We understand that the DGFT suspended the new system which requires videos of all containers with the date stamped detail of the inspectors in the backdrop of the material. The Indian importer was advised to be a part of the videography in the new system.

The requirement for videography followed complaints from Customs that the Inspection Certificates were being issued in bulk by agents in India with fabricated physical inspection reports based on mere photographs. There were also allegations that forged certificates were being submitted to customs by unscrupulous importers.

The new system did raise transaction costs and administrative burden on DGFT whose servers could not handle the massive data generated by the video clips of each and every container. ABS News Service understands that snapshots and stills will substitute to videos in revised system under preparation.

There are also complaints that unnecessary detail like passports of each inspectors were being asked for in the application form for Agency approval in the new system. It was felt that the approved agency is responsible for the antecedents of the inspectors, micromanagement from DGFT will serve little purpose.

DGFT is moving towards a modern system of inspection with provision for roaming inspectors picking up scrap at competitive prices for the Indian market with portable inspection devices. This will take time and there will be teething problems during the transition period.

DGFT Notification Text given below

Subject: Keeping in abeyance the provisions of para 2.55 and 2.56 of Handbook of Procedures, 2015-20.

05-PN(RE)     In exercise of powers conferred under
10.04.2015   paragraph 2.04 of the Foreign Trade Policy
(DGFT)          2015-2020, in order to facilitate transitional
                    arrangements, the Director General of Foreign

Trade hereby keeps in abeyance the provisions of para 2.55 and 2.56 of Handbook of Procedures, 2015-20 (which came into effect from 1.4.2015) till further orders. Accordingly, the procedure for issue of Pre-Shipment Inspection Certificate (PSIC), as laid down in para 2.32.2A and 2.32.2B of Handbook of Procedure Vol. I 2009-14, would remain in effect, till further orders.

Effect of Public Notice

In order to facilitate transitional arrangements, the provisions of para 2.55 and 2.56 of Handbook of Procedures, 2015-20 are kept in abeyance till further orders and the procedure for issue of PSIC will be regulated as per procedure laid down in para 2.32.2A and 2.32.2B of Handbook of Procedure Vol.I, 2009-14, till further orders.