The Objectives of the Certification

The CE/ PSI certification was first introduced with a Primary objective to combat capital flight. With a shortage of foreign exchange and strict exchange controls and regulations under FERA operators in international trade sought to over- invoicing of imported second hand capital goods that allowed them to take foreign exchange out of India. The role of CE/ PSI Certification agencies was to detect this over-invoicing of goods which was considered to be a major cause of capital flight.
However with the opening up of the Indian economy and the liberalization of trade and foreign exchange policies the interest in over-invoicing as a means of capital flight has dwindled considerably. The stringent Foreign Exchange Regulation Act (FERA) was replaced by a more moderate and liberal Foreign Exchange Management Act (FEMA). More items were included in the OGL category and the Government is striving slowly towards increased Capital Account Convertibility.

Subsequently the Indian Customs Authorities and Government's focus and interest shifted to tax revenue-related issues. Albeit India rationalized its Customs duty tariff to a great extent over the last decade, we still rely heavily on customs duty and other taxes as means to collect fiscal income.

The Authorities suspect that imported goods are deliberately sold at a price below their Customs Value in order to evade the import duties and other tax liabilities related to the import of goods. There is also a feeling that the importers might be tempted to mis-classify the goods i.e. not in conformity with Indian Customs tariff code classification in order to attract a lower tax rate.

The Chartered Engineer's Certification OR the PSI Certificates that are issued after physical inspection of the goods at the port of origin serves a two fold objective of the Government of the Importing Country.