Women empowerment in India is a

teenagers dream of a perfect life.

PROJECT WORK ON
LAW OF ARREST
SUBMITTED TO:
Fr. Peter Ladis F.
(Faculty of Criminal Law-II)
Submitted
By:
Gaurav
Prakash
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ROLL NO.
1020
4th SEMESTER
ACKNOWLEDGEMENT
Writing a project is one of the most significant academic challenges
I have ever faced. Though this project has been presented by me
but there are many people who remained in veil, who gave their all
support and helped me to complete this project.
First of all I am very grateful to my subject teacher Fr. Peter Ladis F.
without the kind support of whom and help the completion of the
project was a herculean task for me. He donated his valuable time
from his busy time to help me to complete this project and
suggested me from where and how to collect data.
I am very thankful to the librarian who provided me several books
on this topic which proved beneficial in completing this project.
I acknowledge my friends who gave their valuable and meticulous
advice which was very useful and could not be ignored in writing the
project.

Gaurav Prakash
Roll No. 1020
4th semester

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TABLE OF CONTENTS
Chapter-(1).................................................................................................................4
Introduction............................................................................................................... 4
Object of Study......................................................................................................6
Hypothesis..............................................................................................................7
Methodology..........................................................................................................8
Sources of Data......................................................................................................9
Chapter-(2)...............................................................................................................10
Meaning and Purpose of Arrest...............................................................................10
Chapter-(3)...............................................................................................................14
Powers of Judicial Magistrate in respect to Investigation.......................................14
Chapter-(4)...............................................................................................................15
Misuse of Power of Arrest and Constitutional Provision........................................ 15
Chapter-(5)...............................................................................................................17
Guidelines given by Supreme Court........................................................................17
Chapter-(6)...............................................................................................................24
Conclusion, Criticism & Suggestions......................................................................24
References............................................................................................................... 25
Websites:..............................................................................................................25
Books:..................................................................................................................25

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CHAPTER-(1)
INTRODUCTION
Corruption and bureaucratic inefficiency are widely cited as important barriers to
economic development1. Within a developing countrys government, the customs
agencythe organization responsible for taxation of imported goodsis often
singled out as having particularly severe problems along these lines. An ineffective
customs bureaucracy may be unable to prevent fraud by dishonest importers
seeking to pay less than the legal tariffs due on their shipments. Even more, corrupt
customs officers may be complicit in the revenue fraud, turning a blind eye to
falsified import documentation in return for bribes. A corrupt customs agency may
also delay incoming shipments (often under the pretext of problems in import
documentation) to extract bribes from importers, potentially discouraging import
trade2. Pre-shipment inspection, (also spelled preshipment inspection) or PSI, is a
part of supply chain management and an important quality control method for
checking the quality of goods clients buy from suppliers.
Pre-shipment inspection is usually undertaken by customs administrations and
standards bureaus to address security, smuggling, tax evasion and counterfeit
goods challenges of imports. It is implemented to fight corruption. With the
establishment of World Trade Organisation in 1995, tariff reduction was paramount
concern, so in order to cut the widespread corruption guideline for pre-shipment

1 Journal of Law and Economics, vol. 51 (February 2008)

2 Low (1995) and Jenkins (1992) cite survey evidence that preshipment inspection (PSI) was
accompanied by dramatic reductions in customs clearance times in Indonesia
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inspection was issued. In particular, the effectiveness of pre-shipment services in

areas as3:a) Disbursement verification
b) Revenue collection
c) Trade facilitation
Under Pre-shipment inspection, inspecting agencies are employed to carry out
checks on behalf of importing country prior to exportation. It was originally
introduced in implementation of custom procedures at importation. Once the
inspection has been completed, a document in the form of Clean report of
Findings is issued and is accompanied the consignment to its destination.
Continued

efforts

were

made

towards

entering

into

Memorandum

of

Understandings/Mutual agreement/Equivalence agreement with the trading partner

so that they recognize the certificate of Pre-Shipment Inspection.

3 The Journal of Law & Economics, Vol. 51, No. 1 (February 2008), pp. 25-57
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OBJECT OF STUDY
In this research, researcher wants the critical analysis of the Laws related to Preshipment inspection. Researchers main aim is to study the different international
customs and practices in relation with rules made by World Trade Organisation and
effectiveness of pre-shipment inspection in import and export.

HYPOTHESIS
The World Bank views Pre-shipment Inspection as the best policy for countries
with administrative weakness. One of the message is that more careful empirical
work is needed for an authoritative assessment of the value of any given preshipment consignment.
METHODOLOGY
The methodology of the present project with includes Doctrinal techniques.
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In doctrinal method we solve any problem with the help of law. Only with the help
of legal resource, we see legal provision. We can solve any kind of problem from
legal provision. It is only based on the legal proposition. In which researcher
analyze any problem with the help of law and it is based on the only the written
material.
Doctrinal research involves analyze of case law, arranging, ordering and
systematizing legal proposition and study of legal institution through legal
reasoning or rational deduction.
In this research field work is not needed and library reference is through enough. It
is only based on library. The source of data is act judgment, legislation, and
judiciary. It is not concerned with people.
SOURCES OF DATA
Primary Sources: Statutes and Articles of World Trade Organisation and
International Conventions
Secondary Sources: includes opinions of jurists, journals, books, newspapers,
magazines etc.

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CHAPTER-(2)
MEANING AND PURPOSE OF ARREST

PSI has been a part of international trade for many years. It was originally
introduced to assist developing countries with their implementation of customs
procedures at importation - to ensure that imported goods were of the stated
merchantable quality and quantity, were fairly priced - both commercially and for
customs the valuation for purposes, and that they met the importing countrys
required safety and quality standards. Under PSI, inspection agencies are employed
to carry out checks on behalf of the importing country prior to exportation. Once
the inspection has been completed a document, in the form of a Clean Report of
Findings, is issued and accompanies the consignment to its destination. Over the
years PSI has become more widespread as global trading and industry has
developed. Whereas inspections used to involve brief physical and documentary
checks, these checks have been extended both in terms of the countries which have
been encouraged to introduce them and the requirements which have been built
into the checking procedures themselves4. In light of the increased use of PSI, a
4 Low (1995) and Jenkins (1992) cite survey evidence that preshipment inspection (PSI) was
accompanied by dramatic reductions in customs clearance times in Indonesia.
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number of other world organisations have produced statements, recommendations

and initiatives aimed at highlighting the potential burdens and costs of PSI to
international trade. These international organisations include the General
Agreement on Trade and Tariffs (GATT) and its replacement body the World Trade
Organisation (WTO). The Agreement on Pre-Shipment Inspection was
introduced into the GATT agreement in 1994 and placed a number of obligations
on users of PSI. In particular it emphasised that PSI should be applied:

in a non-discriminatory manner;
that the procedures shall be transparent;
that confidential business information shall be protected;
that delays in carrying out the procedures shall be avoided;
that the price verification shall be base on the price of identical or similar
goods in the country of exportation, shall not be based on the price of goods
offered to different countries of importation and the exporter shall be given

the opportunity to explain the price charged, and;

that the inspection agencies establish appeals procedures and that the
findings of those procedures be made available to other exporters.
Whilst the document did not directly discourage the use of PSI it highlighted the
potential costs to the importing country of the procedures, but recognised that there
was a potential valid use for PSI as a short term measure.

CHAPTER-(3)
PRE-SHIPMENT INSPECTION IN INTERNATIONAL TRADE LAW
The practice of employing private companies to check shipment details such as
price, quantity and quality of goods ordered overseas. The Agreement on PSI
recognizes that principles of the GATT Agreement apply to such activities. The
purpose is to safeguard national financial interests (prevention of capital flight and
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commercial fraud as well as customs duty evasion, for instance) and to compensate
for inadequacies in administrative infrastructures. The agreement recognizes that
GATT principles and obligations apply to the activities of preshipment inspection
agencies mandated by governments. The obligations placed on PSI-user
governments include non-discrimination, transparency, protection of confidential
business information, avoidance of unreasonable delay, the use of specific
guidelines for conducting price verification and the avoidance of conflicts of
interest by the PSI agencies.
The obligations of exporting contracting parties towards PSI users include nondiscrimination in the application of domestic laws and regulations, prompt
publication of such laws and regulations and the provision of technical assistance
where requested.
The agreement establishes an independent review procedure administered
jointly by an organization representing PSI agencies and an organization
representing exporters to resolve disputes between an exporter and a PSI
agency. "Preshipment inspection (PSI) activities" are all activities relating to the
verification of the quality, the quantity, the price, including currency exchange rate
and financial terms and/or the Customs valuation and classification of goods to be
exported to the territory of the User Government. PSI regulations change often,
and contracts for pre-shipment inspections are reviewed periodically. Exporters can
contact the Commerce Departments Trade Information Center at 1-800-USATRAD(E), inspection companies, or freight forwarders for more information on
current regulations. Whilst it is recognised that such inspection procedures may
have a role in the short-term, it is suggested that they should only be relied upon
for a maximum of five years, during which time the opportunity should be taken to
train staff in the appropriate administrations and introduce appropriate modern
control systems and techniques. In working towards this objective, countries using
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PSI should seek assistance from relevant international organisations, such as the
World Customs Organisation (WCO), and from countries that are experienced in
advanced import and export control techniques. Indeed, there is in fact no
substitute for properly applied controls in the country of importation.

CHAPTER-(4)
SCOPE AND PROCEDURES OF PSI
Where such procedures are considered necessary by the country of importation,
their scope should be restricted to the minimum required to fulfil its purpose.
PSI should not interfere with commercial practice or agreed and binding
contractual obligations. Instead, where it is perceived to be necessary, it should be
restricted to valuation and classification of the goods for customs purposes and
quality and health verification for safety reasons.
Equally, concerning the scope of the procedures, where possible they should be
applied on a risk based approach by commodity sector generally and companies
specifically. For example, if there are commodities sectors which are low risk then
PSI should not be applied to these areas and they should be excluded from the

CHANAKYA NATIONAL LAW UNIVERSITYPage 11

procedures. This will keep costs to a minimum and ensure that the measures cannot
be regarded as a general non-tariff barrier.
Application of PSI Controls
If PSI is adopted certain policies and standards should be applied to the controls to
limit the burdens to trade. Firstly, the recommendations in the WTO Agreement on
PSI are endorsed, should be incorporated in any PSI contract and applied by the
inspection agencies. Further, traders should be informed of their rights under this
agreement.
At a macro level the controls must be carried out fairly and without discrimination
on grounds of national origin or place of supply. Moreover, the application of
controls should not be applied on the basis that similar goods are available from
within the countrys own industry - this would be equivalent to using the PSI
system as a non-tariff barrier to trade.
At a more detailed level, any application of control should be performed on a risk
basis. The perceived risk of a consignment should be assessed, based on the
compliance record of the trader supplying and receiving the goods. Where the
reputation and compliance of both is high, then PSI controls should either not
apply, or should be restricted to a small percentage of consignments.
Further, countries using PSI could authorise certain traders to be exempt entirely
from the PSI procedures. Following an initial audit by the inspection agency,
companies could be authorised to export without having to undergo transaction
based inspections. This type of approach would substantially reduce the burdens
and cost of PSI to exporters.
Composition of an Inspection
The composition of the PSI inspection should be kept to a minimum.

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Whilst this area of obligation is often at the discretion of the PSI agency, countries
adopting PSI should emphasise that the obligations and burdens on the exporter
should be kept to the minimum required to satisfy the PSI agency of the integrity
of the information and the goods. In particular, inspection agencies should not be
required to provide photographic evidence of any stage of the inspection and where
possible, they should only inspect a percentage of the overall consignments with
the minimum quantity of samples being taken.
Confidentiality of Information
The Secretariat considers that countries who use PSI should apply the WTO
Agreement on PSI (Article 2 (9 - 13)) standards. These require that:
all information is treated as confidential
no confidential information shall be divulged to any other party, save the
governments which are employing them, and that these governments shall
also treat the information as confidential
information on the following matters must not be requested by the
inspection agencies:
a) manufacturing information related to patented, licensed or undisclosed
processes;
b) unpublished technical information;
c) internal pricing, including manufacturing costs;
d) profit levels;
e) the terms of contracts between exporters and their suppliers. Any areas of
the exporters processing or establishment which are identified as being
especially confidential and to which access has been denied, should be
treated with respect by the inspection agencies. Information regarding such
restrictions and locations should also be treated as confidential.

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CHAPTER-(5)
BENEFITS, BURDEN AND COST OF PRE-SHIPMENT INSPECTION

The Pre-Shipment Inspection increases burdens and costs in international trade and
can be counter-productive for the country of importation and its traders. This is
particularly the case if it is adopted as a long term strategy.
Any additional costs incurred by the exporter during the export process, whether
directly, in the form of charge levied by the inspection company, or indirectly, in
the form of additional obligations to arrange for the inspection, make goods
available and the subsequent delays which often occur are ultimately passed onto
the buyer. This has two implications:
the cost of products in the country applying PSI is increased, both for its
home consumers and its industry. These costs must be subsequently passed
on and may even have a detrimental effect on the importing countrys
exports;
PSI can be perceived as a non-tariff barrier to trade and this may result in
other countries adopting similar counter measures.
In light of the burdens, it is strongly recommended that where PSI and similar
procedures are implemented they should only remain in place as a short term
measure. In order to progress, a review needs to be undertaken every twelve to
eighteen months, with the objective of withdrawing or limited the procedure and
freeing the movement of goods. Any implementation of PSI beyond a six year
period should, in the Secretariats opinion, undergo close and radical scrutiny and
other methods considered for its replacement.

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Overall the increased burden and cost of PSI runs contrary to trade facilitation and
the objective of reducing costs and it is in the interests of exporters, imports and
sponsoring countries to limit its application if burdens and costs are to be
minimised.
Advantages of PSI
Ensures that the price charged by the exporters of the good is true to its
value.
Helps in ascertaining the quality, quantity and price of the goods.
prevent substandard goods from importation.
mitigate attempts to avoid the payment of customs duties.
Increasing effectiveness of administrative authorities by countering
smuggling
Disadvantages of PSI

Unreasonable Delay in Inspection

Increasing cost of inspection
Unnecessary transportation of goods for site location.
Wastes of value or goods itself due to delay in providing the PSI certificate.

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CHAPTER-(6)
CONCLUSION, CRITICISM & SUGGESTIONS
The Worldbank recommends pre-shipment inspections as a means to fight
corruption especially in developing countries. Particularly in developing countries
it is widespread problem and goods entering through custom are no exception.
Custom officials are corrupt which is necessary that some standard measures to be
given to importation of goods. So some countries require PSI for the goods
entering in the country to fight corruption. With the increase globalisation of trade,
progressive reductions in duty rates, more effective and legitimate policing and
new methods of control, the Secretariat considers that PSI is becoming
increasingly appropriate in international trade. With a consertive effort being made
to reduce controls and therefore delays during the movement of goods and to
replace such controls with audit based methods and post-verification checks on
goods, the application of PSI is clearly counterproductive. As a consequence of
these conclusions, whilst understanding the apparent attractiveness of PSI to
developing countries as a method to protect their government revenues and to
overcome the lack of integrity in both commercial and official circles, discourages
the unnecessary growth of PSI and similar procedures. The principles of nondiscrimination and transparency are integral part of pre shipment inspection. It is
carried out for governments combines confirmation of the buyer's specifications,
and quantity and value controls of imports/exports. It is done in compliance with
WTO (World Trade Organization) requirements. In carrying out preshipment
inspection of goods on behalf of Customs authorities, Bureau Veritas helps
international trade operators to comply fully with current legislation. This
improves their business efficiency and eliminates risk wherever possible. The
service also provides government clients with the guarantee they require.

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REFERENCES
Europa World Yearbook. 19802000. London: Europa Publications.
Fisman, Raymond, and Shang-Jin Wei. 2004. Tax Rates and Tax
Evasion: Evidence from Missing Imports in China. Journal of
Political Economy 112:47196.
Fjeldstad, Odd-Helge, and Bertil Tungodden. 2003.
Fiscal Corruption: Vice or Virtue? World Development 31:145967.
Hines, James R., Jr., and Eric Rice. 1994. Fiscal Paradise: Foreign Tax
Havens and American Business. Quarterly Journal of Economics
109:14982.
International Yearbook and Statesmens Whos Who. 19802000.
London: Burkes Peerage.
International Monetary Fund. 2004. Direction of Trade Statistics.
Washington, D.C.: International Monetary Fund.
Jenkins, Glenn. 1992. Economic Reform and Institutional Innovation.
Bulletin of the International Bureau of Fiscal Documentation 46:588
96.
Jones, Benjamin, and Benjamin Olken. 2005. Do Leaders Matter?
National Leadership and Growth since World War I. Quarterly Journal
of Economics 120:83564.
Klepper, Steven, and Daniel Nagin. 1989. The Anatomy of Tax
Evasion. Journal of Law, Economics, and Organization 5:124. Low,
Patrick. 1995.
Preshipment Inspection Services. Discussion Paper No. 278.
World Bank, Washington, D.C. Mookherjee, Dilip, and I. P. L. Png.
1992. Monitoring vis-a`-vis Investigation in Enforcement of Law.

American Economic Review 82:55665.

http://www.jstor.org/stable/pdf/10.1086/520007.pdf
http://www.unece.org/trade/untdid/download/itp97007.pdf
https://www.wto.org/english/docs_e/legal_e/21-psi_e.htm
http://www.export.gov/logistics/eg_main_018120.asp

CHANAKYA NATIONAL LAW UNIVERSITYPage 17

 http://www.ifia-federation.org/content/wpcontent/uploads/PSI_Code_of_Practice.pdf
http://commerce.nic.in/publications/pdf/CHAPTER_6.pdf

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