Certificate of Inspection Explained: Types and Their Benefits

Certificates of inspection are essential documents in international trade and various industries, ensuring that products meet specific standards and regulations before they reach their destination. These certificates are issued by accredited inspection agencies after thoroughly examining the goods. The primary purpose of these certificates is to verify the quality, quantity, and compliance of the products with contractual or regulatory requirements. They play a crucial role in minimising risks and improving the trust between buyers and sellers. Understanding the different types of inspection certificates and their benefits can help businesses ensure smoother transactions and avoid potential disputes.

Let’s explore the certificate of inspection in detail: its types, benefits, who issues it, how you can obtain the inspection certificate, and more.

Understanding the Certificate of Inspection

A certificate of inspection is an important trade document issued after a thorough examination of goods being imported. It’s usually issued after the bill of lading when the shipment has been dispatched for shipping. It is issued by an independent inspection firm to assure that the goods meet all the required performance, quality, and safety criteria. 

An inspection certificate covers different aspects, including structural integrity, environmental compliance, manufacturing processes, electrical safety, and compliance with industry standards. Businesses in industries like construction, energy, manufacturing, and transportation most commonly require a certificate of inspection. It certifies whether the goods are in as good a condition as mentioned in the contract at the time of import. It helps in ensuring the reliability of products and equipment. The inspection certificate is valid for five years from the date of its issued. 

Advantages of Obtaining a Certificate of Inspection

Let’s look at the key benefits of a certificate of inspection:

• It checks whether the imported goods comply with the terms of the contract. It saves importers from receiving incorrect or low-quality products.
• It helps exporters get an estimate of production timelines. Thus, it ensures timely delivery and receipt of goods to the location of destination. 
• Exporters can regularly check the production process and take corrective measures on time before the goods are packed and dispatched. It helps avoid the goods being rejected at the time of inspection. 
• A certificate of inspection acts as an intermediary between an exporter and an importer. Despite a positive certificate of inspection, if the importer receives poor quality and sub-standard products, they can claim compensation from the inspection company. 

Different Kinds of Inspection Certificates

Here are the two main types of certificates of inspection:

• Commercial Certificate of Inspection

A commercial inspection certificate is also known as a pre-shipment inspection (PSI) certificate. It certifies that the shipped goods match the product specifications mentioned in the sales contract or the letter of credit (LC). Once a physical inspection of goods has been done by authorised personnel, an independent inspection agency issues a commercial inspection certificate. This certificate is then sent to the importer. It’s up to the importer to accept or reject the goods based on whether they meet the specifications stated in the agreement and other import regulations. 

• Official Certificate of Inspection

Customs authorities of some countries will require you to submit an official inspection certificate. It’s necessary for the clearance of goods. It helps the customs authorities to check and confirm whether the goods in the shipments meet the specifications already stated in the sales contract. The goods in the shipment are checked based on their quantity, quality, product pricing, the import eligibility criteria in the importing country, etc.

Key Information Included in a Certificate of Inspection

Here are some details mentioned in a standard certificate of inspection:

• Date of inspection 
• Place of inspection
• Purchase order number
• Contact details of the importer
• Country of origin
• Product description
• Number of units
• Gross weight
• Insurance policy number (if any)
• Number and date of pro forma invoice
• Number and date of bill of lading
• Contact details of the supplier
• Code number of custom tariff
• Place of issue
• Port of discharge
• Type of packing
• Name and signature of the authorised person

Issuer of Certification of Inspection

The certificate of inspection is issued by the Export Inspection Council (EIC) of India. The Export Inspection Council was set up by the Government of India under Section 3 of the Export (Quality Control and Inspection) Act 1963. It is responsible for ensuring compliance with the quality and safety requirements of importing countries. EIC is headquartered in Delhi with a Director of Inspection and Quality Control taking care of everyday functions of the council. 

The EIC uses two methods to ensure the quality of goods. These include an inspection based on consignments or by visiting the field of the organisation. The EIC has also set up several Export Inspection Agencies (EIA) in various locations. These include Mumbai, Kolkata, Kochi, Delhi and Chennai. They have a network of 30 sub-offices with laboratories accredited by the National Accreditation Board for Testing and Calibration Laboratories (NABL). 

The EIC is also responsible for ensuring the quality of a broad range of products, including food and non-food products. Edible products and consumables include dairy products, fish and fishery products, gelatine, honey, pre-mixtures, feed additives, etc. The EIC is the only organisation for inspections with worldwide acceptance. 

Steps to Acquiring a Certificate of Inspection

Inspections are generally conducted by independent inspection companies in the case of international trade. Here’s how you can obtain a certificate of inspection.

• Step 1: The importer must arrange for a pre-shipment inspection. The exporter will make the products available in the origin country at the given time. 
• Step 2: Usually, the exporter hires a freight forwarder to help ensure that requisite information, such as the Letter of Credit, Test Reports, Bill of Lading, and additional documents are correct and available for the inspection company.
• Step 3: The importer must bear the inspection’s cost. However, expenses that fall under the ambit of providing the goods for inspection, including unpacking, handling, and repacking, shall be borne by the exporter.

The designated inspector, who is from an authorised inspection company, issues the document after the inspection process is complete. Companies may either have the certificate issued on their letterhead after the inspection is complete or publish it online.

Countries Mandating a Certificate of Inspection for Imports

Many countries that import goods from other countries mandate the certification of inspection. Some countries requiring an inspection certificate include India, Japan, Mexico, Russia, Saudi Arabia, and the UK.

The certificate of inspection is supported by other export documents. These include the bill of lading, import and export licenses, insurance certificates, and laboratory test reports. 

Who is Responsible for Pre-shipment Inspections and Payment?

A pre-shipment inspection (PSI) is a quality control process that ensures all goods meet the set standards before shipping. It’s usually performed at the factory or production house when production is at least 80% complete. The purpose of a PSI is to:

• Ensure that the right quantity of goods is received
• Meet specific quality requirements
• Check that the packaging is correct
• Issue certificates for import and billing purposes
• Mitigate the risk of receiving non-compliant or defective products

A PSI will usually include the following steps:

• Inspection visit
• Quantity verification
• Random selection
• Cosmetic and workmanship check
• Conformity verification
• Function and safety test
• Dimensional checks
• Barcode verification
• Packaging and label checks
• Inspection report 

PSI procedures should be non-discriminatory and transparent and protect sensitive commercial and business information. They should also not cause delays and have no conflict of interest between the agency carrying out the inspection, the producers, or the client.

The importer is usually responsible for arranging a pre-shipment inspection. However, the exporter must make the goods available for inspection in the country of origin. The costs associated with the inspection are generally paid by the importer or the government of the importing country. However, the seller is responsible for the costs of presenting the goods for inspection. These costs include unpacking, handling, testing, sampling, and repackaging. 

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Conclusion

Certificates of inspection are vital tools for maintaining quality assurance and regulatory compliance in global trade. These certificates help mitigate risks, prevent disputes, and foster trust between trading partners by providing documented proof of product standards. Whether it’s ensuring the structural integrity of materials in construction, verifying the quality of consumer goods, or complying with import regulations, the benefits of having proper inspection certificates are immense. Businesses are continuously operating in an increasingly globalised market. That’s why the role of these certificates in safeguarding transactions and ensuring product quality will only become more significant. By understanding and using the appropriate types of inspection certificates, companies can achieve greater operational efficiency and maintain high compliance and quality standards.