What is an Inspection Certificate?
An inspection certificate is a vital trade document required for importing specific consumer goods. These products may include electronic goods, luxury items, softlines, hardlines, and commodities such as bulk scraps shipments and bulk oil shipments. The inspection certificate states that the shipment was in good condition at the time of inspection, usually immediately prior to shipment. The document is a crucial component in international trade transactions.
What purpose does an Inspection Certificate serve?
An inspection certificate indicates that the goods in the shipment have been inspected by a competent authority and certified that they conform to the terms stated on the sales contract. It verifies whether the goods conform to all specifications related to quality, quantity, import eligibility, tariff classification, and the price.
What are the types of Inspection Certificates?
There are two types of inspection certificates: -
1. Official Inspection Certificate
The customs authorities of some countries ask for an official inspection certificate to process the clearance of goods. It helps the authorities to check and confirm whether the goods in the shipment meet the various specifications mentioned in the sales contract. These include adhering to specifications related to quality, quantity, tariff classification, import eligibility, and price of the goods.
2. Commercial Inspection Certificate/Report
A commercial inspection certificate or report is a pre-shipment inspection that must be done before the production of a batch of goods is completed. The certificate/report is sent to the buyer to determine if the various specifications of the intended shipment match with the sales contract and other specific regulations.
If the batch fails to meet the terms of the contract, the inspection is deemed as failed. In such cases, the buyer can take any suitable action before the shipment leaves the factory. However, if the batch clears the inspection, the buyer can use the report as proof that the products are of good quality and were correctly packaged.
Who issues the Inspection Certificate?
The document is issued by a qualified inspector working for an independent inspection company after completing the inspection processes. In most instances, the certificate which is signed by the concerned authorities who inspected the procedure is provided immediately after a successful inspection. The inspection certificate is always issued on the official letterhead of the inspection company.
It is a common practice nowadays to publish the full inspection report online. This helps buyers access the document as soon as it is issued and uploaded.
In international trade, inspections are carried out by independent inspection companies with a multinational presence. Some of the leading globally recognized inspection companies are SGS, Bureau Veritas SA, Intertek, Cotecna, Baltic Control Ltd. Arhus, Alfred H Knight International Ltd, CIS Commodity Inspection Services, Control Union International, and CSA Group.
What details should the Inspection Certificate contain?
The inspection certificate should contain the following details:-
- Date of issue
- Date and place of inspection
- Contact details of the applicant
- The country of origin
- The description of the goods
- Number and date of the pro forma invoice
- The insurance policy number
- Number of packages
- The number and date of the bill of lading
- The gross weight
- Port of discharge
- Contact details of the supplier
- The code number of the custom tariff
- Type of packing
- Place of issue
- The name and signature of the authorized person
Inspection Certificate Sample
Who conducts the pre-shipment inspection and who pays for it?
Private organizations generally perform pre-shipment inspections on a contract basis. Importers can select any one of the inspection companies stated in the list above when planning inspections. Although the importer is generally responsible for arranging the pre-shipment inspection, the exporter must make the goods available for inspection in the country of origin. The exporters have to work with their freight forwarder to ensure that all the information or requirements that are mentioned in the letter of credit (LC) or other documents are accurate and provide the same to the inspection company.
Inspection costs are borne by the importer or by the government of the importing country. Although, in some cases, the inspection agency may invoice the seller in case of supplementary inspection visits. The expenses with regard to presenting the goods for inspection such as unpacking, handling, testing, sampling, repackaging are the seller’s responsibility.
Which countries require Inspection Certificate?
Usually, most countries ask for an inspection certificate only for those shipments that are above a specific value. However, there are some nations that demand the certificate regardless of the value of the shipment.
These countries are Angola, Bangladesh, Benin, Bolivia, Burkina Faso, Burundi, Cambodia, Cameroon, Central African Republic, Comoros, Republic of Congo (Brazzaville), Democratic Republic of Congo (Kinshasa), Cote d’Ivoire, Ecuador, Ethiopia, Ghana, Guinea, India, Indonesia, Iran, Kenya, Kuwait, Liberia, Madagascar, Malawi, Mali, Mauritania, Mexico, Moldova, Mauritania, Mozambique, Niger, Nigeria, Peru, Russia, Rwanda, Saudi Arabia, Senegal, Sierra Leone, Tanzania, Togo, Uzbekistan, Venezuela, Zanzibar, and Zimbabwe.
In some cases, a country may require an inspection certificate only for certain types of goods. For instance, Mexico requires an inspection certificate for goods such as shoes, textiles, steel, and bicycles only if they do not qualify for North American Free Trade Agreement (NAFTA).
What are some other/alternative Inspection Documents?
Apart from the inspection certificate, you will also need the following documents to facilitate the smooth passage of your goods through customs. These include but are not limited to:-
1. Bill of lading
Bill of lading is an important trade document that mentions the quantity, destination, and type of goods. It is also used as a shipment receipt after the goods reach their destination.
2. Insurance certificate
An insurance certificate affirms that the goods are protected against any kind of loss or damage. This certificate provides all the information regarding the insurance coverage of goods.
3. Import/export license
The import license and export license are two different documents that confirm that you have been granted permission to import/export goods into and out of a country.
4. Test report
A test report confirms that the goods have been tested and they comply with the required standards.
What are the benefits of an Inspection Certificate ?
The following are some vital benefits of inspection certificate :-
• It helps exporters reduce the chances of receiving goods that do not conform to the agreed standards. It also ensures compliance with other terms of the contract.
• Exporters can keep tabs on the production process, and take the necessary corrective steps before completing the production process and packing the goods.
• It gives exporters a clear idea of the production timelines and ensure that they are being adhered to while also getting to know the exact time the goods will be shipped.
• Inspection certificate helps in clearing the doubts about the quality of goods by a 3rd party. In case Importer receives poor quality of goods despite the positive inspection certificate , they are liable to claim compensation from the inspection company.
FAQ’s on Inspection Certificate
Are all the inspection certificates the same?
No. Not all the certificates of inspection are the same. There are various types of inspections conducted such as pre-shipment inspection, container loading supervision, during production inspection, pre-production inspection, post shipment inspection etc. Hence, the test processes and reports vary from one inspection to another.
How long is a certificate of inspection valid?
A certificate of inspection is generally valid for five years. You will have to apply for a new one at the end of its validity. If your products fail to maintain the required quality standards or there are any other compliance issues, you might be denied the certificate of inspection.
When is the inspection certificate issued?
The inspection certificate is issued immediately after the successful completion of inspection for certifying that the goods meet the requirements as stated in the agreement.
What to do if you are not satisfied with the inspection process/report?
In that case, you can find a solution to the problem by negotiating with the inspection company.
Suppose you are exporting to a member country of the World Trade Organization (WTO). In that case, you are obliged to follow the rules stated in the WTO agreement, which mentions the responsibilities of the exporter and the inspection company with respect to the pre-shipment inspection process. According to the agreement, the inspection company must appoint an appeals official and comply with the agreement guidelines. This is mandatory while carrying out pre-shipment inspection services for the signatory countries.