DGFT Delists 15 Scrap-inspection Firms Over Lapses in Issuing Certificates
Mumbai:
Port Wings News Network:
The Directorate General of Foreign Trade (DGFT) has withdrawn recognition of 15 pre-shipment inspection agencies (PSIAs) after a review found irregularities in the issuance of pre-shipment inspection certificates (PSICs), even as metal scrap importers have flagged difficulties in clearing consignments at ports, penalties and additional inspection costs amid a tightening of the certification regime, a report in leading daily Business Standard says.
“A review of PSIA-issued certificates identified several agencies that had not followed the prescribed inspection and certification procedure. Following due process, 15 PSIAs had their recognition withdrawn after identifying that the PSIAs had issued a large number of PSICs from a single instrument across countries without due diligence,” the trade regulator said in an exclusive response to Business Standard queries.
Further, the DGFT said that additional PSIAs were recognised to ensure that adequate inspection capacity remains available and that trade is not disrupted.
The regulatory action has created a separate set of problems for importers whose consignments had already been inspected by agencies that were subsequently stripped of their recognition, according to an executive at a listed metal recycling company.
The company recently had eight cargoes released at Mundra port after paying penalties and getting the consignments inspected by local agencies, as PSICs issued by agencies whose recognition was subsequently withdrawn were not accepted for customs clearance, the executive said.
“Now, when an agency’s licence was cancelled by DGFT, the DGFT said that the certificate generated by them is not valid. The DGFT did not accept the uploaded documents by these cancelled agencies,” the executive said.
The company incurred penalties on seven other cargoes at Mundra where PSIAs had failed to upload the PSICs within the newly prescribed two-day window, the executive said.
On August 25, DGFT issued a trade notice making it mandatory for PSIAs to generate and issue PSICs on the same day of inspection.
After receiving feedback from trade and industry, DGFT subsequently eased the timeline, allowing PSIAs two days from the date of inspection to generate and issue PSICs. It also provided a one-time seven-day window for recognised PSIAs to clear the backlog of certificates relating to inspections conducted before August 25.
The recycling company executive, however, said the two-day window created problems when cargo was already in transit and PSIAs failed to generate the certificate within the stipulated period.
“Now the cargo has left the port of loading. It is in transit. And if the agency has failed to upload the certificate within the prescribed 2-day time, the window is closed. The cargo has arrived at the port, and I can’t furnish the certificate,” he said.
The company had to pay penalties on seven such cargoes despite the cargo having been inspected by the agencies, he added.
“Together with the easing of the issuance timeline to two days, this has substantially addressed the transitional concerns raised by trade,” the DGFT said, defending its position on the industry concerns.
PSIAs are DGFT-approved entities that inspect consignments at the port of loading and issue PSICs to ensure that metal scrap entering India is free from radioactive material, arms, ammunition or explosives. The importer furnishes the PSIC to Customs at the time of clearance.
For scrap originating from designated safe countries — the US, UK, Canada, New Zealand and Australia — or regions such as the European Union, a supplier/scrap-yard certificate is accepted in lieu of a PSIA inspection, subject to specified conditions.
Any misdeclaration by PSIAs attracts penal action under the Foreign Trade (Development & Regulation) Act, 1992, in addition to suspension or cancellation of recognition.
India currently imports 13 million tonnes of metal scrap annually and around 2,500 containers of scrap are handled daily by PSIAs across the globe, according to the Material Recycling Association of India (MRAI).
MRAI has sought abolition of the PSIC/PSIA mechanism, arguing that destination-side radiation scanning infrastructure at Indian ports can provide the necessary safeguards.
“Today, India has 18 major seaports, out of which 15 have the most modern infrastructure in terms of radiation scanners available to us. It is high time that we started using them instead of relying on foreign agencies to run our businesses,” said Dhawal Shah, Senior Vice President, MRAI.
Shah estimated that port-based verification could potentially save around $500,000 in foreign exchange every day.
DGFT, however, said that it is in consultation with the Department of Revenue to obtain an updated position on the availability, installation and operational status of scanning infrastructure across ports.
The trade regulator added that efforts are underway to expand the list of Safe Countries/Regions, thereby reducing reliance on PSIAs and facilitating trade from low-risk sources. “As the safe country network expands, the reliance on the PSIC framework will progressively be eased. Pending such expansion and based on the availability of adequate risk-mitigation mechanisms, pre-shipment inspection remains an essential source-side safety safeguard,” it said.
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