| I) |
PRICE
VERIFICATION CONTRACTS |
| |
|
|
| |
The
mandate for CE/ PSI agency in a Price Verification contract
is to detect the over-invoicing of goods which may be as a
result of a plethora of reasons including:
|
| |
|
|
| |
a.
|
Capital
flight when the importer and exporter are in collusion with
each other that allows the importer to circumvent exchange
control regulations (for example, the seller agrees to pay
the difference between the export market price and the invoice
price, to the importer's bank abroad);
|
| |
|
|
| |
b. |
The
exporter includes unofficial commissions in the price at the
request of the importer (for example: the exporter agrees
to fix an export price at the request of the importer which
includes a commission that is transferred by the exporter
to the importer's foreign bank account). This is frequent
for public purchases; the exporter pays non-repatriable commissions
to a third party outside the country of importation;
|
| |
|
|
| |
c. |
The
seller deliberately overcharges the importer by taking advantage
of the importer's lack of knowledge of the export market price;
As a consequence, over-invoicing could result in potential
losses of foreign exchange and corporate taxes.
|
| |
|
|
| |
d. |
Foreign
Partners may misrepresent their foreign investments in joint
venture companies by overstating their participation in the
JV company by inflating the value of the goods supplied.
|
| |
|
|
| II) |
CUSTOMS
ASSISTANCE CONTRACTS |
| |
|
|
The
mandate for CE/ PSI agency in Custom Assistance contract is
to
|
|
a. |
Establish
the appropriate classification of the imported goods so as
to be in conformity with India's national tariff codes.
|
|
. |
|
|
b. |
TO
assist the authorities to detect whether the appropriate customs
duties and taxes are paid on the imported goods.
|
|
. |
|
|
c. |
In case of Import of Second Hand Capital Goods, the CE Certification
has to state that the residual life of the Imported goods
is more than 10 years.
|
|
. |
|
|
d. |
A
multinational company could transfer profits from one country
with high corporate taxes to a country with low corporate
taxes in order to reduce the company's global tax liability.
This may be achieved by adjusting invoiced prices in case
of Related Parties Transactions/ inter-company sales
|
| |
|
|
|
|
|
| III) |
SPECIFIC
REQUIREMENTS |
| |
|
|
Besides
the regular Price Verification and Customs Assistance Contracts
there are certain specific provisions/ requirements of the
Government of the Importing Country that make the PSI certification
a mandatory requirement for the Importers.
Example:
PSI
for Import of Metallic Scrap into INDIA
|
|
Clause
2.32 of the EXIM policy notified on 31st March 2002and the
subsequent public notices, requires all importers of Metallic
Scrap to get a PSI certification of the Scrap at the port
of loading issued from any of the Inspection and Certification
Agencies listed in Appendix 28 of the Handbook of Procedures
Vol-I.
The mandate for the PSI agency in this case is inspection
of Scrap at the Port to Loading to certify that
|
|
|
|
|
i.
|
The consignment does not contain any type of arms, ammunition,
mines, shells, cartridges, radio active contaminated OR any
other explosive material in any form either used OR otherwise.
|
|
|
|
|
ii.
|
The
imported item is actually a metallic scrap / seconds / defective
as per the internationally accepted parameters for such a
classification.
|
