Manufacturing Goods for Export and their Inspection by Government Authorities
PROCURING / MANUFACTURING GOODS
Once you are ready with the infrastructure for exporting goods and have obtained necessary finance, you should proceed to procure the goods for export. Procuring the goods should be done with extreme care and caution as to the quality and cost. However, procuring the raw materials etc. and manufacturing the goods for export will need extra efforts on your part. If you are an established exporter, you can have the facility of procuring raw materials under the Duty Exemption Scheme. You can be issued Duty Free Replenishment Certificate (DFRC) for the import of inputs used in the manufacture of goods without payment of customs duty but additional customs duty equal to the excise duty shall he paid at the time of import of inputs.
COMPULSORY QUALITY CONTROL & PRESHIPMENT INSPECTION
An important aspect about the goods to be exported is compulsory quality control and preshipment inspection. About 1000 commodities under the major groups of Food and Agriculture, Fishery, Minerals, Organic and Inorganic Chemicals, Rubber Products, Refractories, Ceramic Products, Pesticides, Light Engineering Steel Products, Jute Products, Coir and Coir Products, Footwear and Footwear Products / Components are subject to compulsory preshipment inspection. At times,
foreign buyers lay down their own standards / specifications which may or may not be in consonance with the your standards. They may also insist upon inspection by their own nominated agencies. These issues should be sorted out before confirmation of order. In addition to that buyers have their own preference for third party and independent inspection agencies. Many agencies are operational in this service sector.
Specific provisions have also been made for compulsory inspection of textile goods. Products having ISI Certification mark or Agmark are not required to
be inspected by any agency. These products do not fall within the purview of the export inspection agencies network. The Customs Authorities allow export of such goods even if not accompanied by any pre-shipment inspection certificate, provided they are otherwise satisfied that the goods carry ISI Certification Mark or the Agmark. Depending upon the nature of products, goods meant for export are inspected for quality in the following manner.
Consignment to Consignment Inspection
Each individual consignment is inspected by the Export Inspection Agency, Commodity Board and certificate of inspection is issued. The application for inspection for goods has to be submitted well in advance before the expected date of shipment of the consignment. Inspection
or the consignment is generally carried out either at the premises of the exporter, provided adequate facilities exist therein for inspection or at the port of shipment. The export inspection agency has a right to exercise supervision of inspected consignment(s) at any place or time.
The application should be made in duplicate in the new prescribed form Intimation for Inspection as per standardised pre-shipment export documents to the nearest office of the respective Export Inspection Agency along with the following documents.
I. Particulars of the consignment intended to be exported
2. A crossed cheque/draft for the amount of requisite inspection fees
3. Copy of commercial invoice
4. Copy of letter of credit
5. Details of racking specifications
6. Copy of the export order /.contract, indicating inter alia the buyer's requirement that goods are strictly according to the prescribed specifications or as per samples
After satisfying itself that the consignment of exportable goods meets the requirements stipulated in the export contract / order, the inspection agency issues generally within four days of receipt of intimation for inspection the necessary certificate or inspection to the exporter in the prescribed proforma in five copies. The certificate is issued in the standardised form which is an aligned pre-shipment export document. Three copies for exporter, original copy for customs use, the second copy for the use of the foreign buyer and the third copy for the exporter's use, fourth copy for Data Bank and the fifth copy is retained with the agency for their own office record.
In-Process Quality Control (IPQC)
Certain products like chemicals or engineering goods are subject to this control. The inspection is done at various stages of production. The exporter has to get his unit registered as Export Worthy and keep record of processing and production. Inspection by the officers of Export Inspection Agency is done from time to time. The certification of inspection on the end-products is then given without in-depth study at the shipment stage.
Under this system, export is allowed on the basis of adequacy of in-process quality control and inspection measures exercised by the manufacturing units themselves. The certificates of inspection in favour of the units approved under the scheme are issued by the Export Inspection
Agencies (EIAs) in the normal course. However, these units are kept under surveillance by the EIAs and random spot checks of the consignments are carried out by them.
Units approved under this system of in-process quality control may themselves issue the certificate of inspection, but only for the products for which they have been granted IPQC facilities. However, these units have the option either to get the certificate from the Export Inspection Agencies (EIAs) or issue the same themselves. Consequently, the manufacturer-
exporters of products approved under the IPQC have been recognised as an agency for pre-shipment inspection for export of engineering products for which they have been approved by the Export Inspection Agencies.
Self Certification Scheme
Large manufacturers / exporters, export houses / trading houses are allowed the facility of Self-Certification on the theory that the exporter himself is the best judge of the quality of his products and will not allow his reputation to be spoiled in the international market by compromising on quality. The industrial units having proven reputation and adequate testing
facilities have to apply to the Director (Inspection and Quality Control) - Export Inspection Council. They are granted a certificate valid for a period of one year, allowing them self-certification facility. The facility is available to manufacturers of engineering products, chemical and allied products and marine products. During this period the exporter can issue a certificate signed signed by himself or by a person authoriscd by him. The certificate has to
indicate the number and date of EIA's reference for registration under Self-
Certification Scheme. It has to be issued in the aligned format as per new
standardised pre-shipment documents. The approval of an industrial unit
under this scheme is notified in the Gazette and the exporter has
to pay a lump sum fee to the export inspection agencies depending upon his
export turnover. Minimum Quality Norms prescribed by the Export Inspection
Council should be maintained and achieved for the grant of facility under
Self-Certi fication Scheme.
Commodities like de-oiled rice bran, crushed bones, hooves and horns are prone to insect infestation in storage and transit. They are subject to compulsory fumigation so that the product reaches destination in sound condition. This is another device to preserve quality.
The discussion on quality control and preshipment inspection will be incomplete without saying a few words about ISO 9000. The ISO-9000 Series of Standards evolved by the International
Standards Organisation has been accepted worldwide as the norm assuring high quality of goods. The ISO-9000 is also the hallmark of a good quality-oriented system for suppliers and manufacturers. It identifies the basic principles underlying quality and specifies the procedures and criteria to be followed to ensure that what leaves the manufacturer/supplier's premises
fully meets the customer's requirements.
The ISO-9000 series of standards are basically quality assurance standards and not product standards.
ISO-9000 spells out how a company can establish Document and maintain an effective and economic quality control system which will demonstrate to the customer that the company is committed to quality. The series of Standards aims at the following.
Increased customer confidence in the company
A shift from a system of inspection to one of quality management
Removing the need for multiple assessments of suppliers
Gaining management commitment
Linking quality to cost-effectiveness
Giving customers what they need
The implementation of ISO-9000 Standards involves…
Writing a quality policy
Nominating a quality representative
Identifying business processes
Writing a quality manual
Writing work instructions
It is thus clear that the ISO-9000 series of standards constitute of concept of Total Quality Management (TQM).
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