OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA 5 Year No. 56 ADDIS ABABA - 154h June , 1999 CONTENTS Proclamation No. 173/1999 Pre - Shipment Inspection Scheme Establishment Proclamation Page 1055 PROCLAMATION NO . 173/1999 A PROCLAMATION TO ESTABLISH A PRE - SHIPMENT INSPECTION SCHEME WHEREAS , it has become necessary to establish a scheme to ascertain that the security of imported goods is equivalent to the foreign currency paid ; WHEREAS , to create efficient and conducive con customs formalities through pre - shipment inspection ; WHEREAS , it is recognized that ensuring whether the type , quality , standard and quantity of goods is in conformity usage of the goods ; WHEREAS , pre - shipment inspection would help to of under - invoicing ; NOW , THEREFORE , in accordance with Article 55 ( 1 ) of the Constitution of the Federal Democratic Republic of Ethiopia , it is hereby proclaimed as follws : 1. Short Title This Proclamation may be cited as the “ Pre - Shipment Inspection Scheme Establishment Proclamation No. 173/1999 . ” Unit Price The African Law Archive - No. 56 15 June , 1999- Page 1056 2. Definitions In this Proclamation : 1 ) “ Company ” shall mean the body which , in accor dance with an agreement to be entered into with the government , carries out pre - shipment inspection on goods to be imported into the Customs Territory of Ethiopia . 2 ) “ Customs Territory ” shall mean that which is referred to under Article 2 ( 9 ) of the Re - Establish ment and Modernization of Customs Authority Proclamation No. 60/1997 . 3 ) “ Goods ” shall mean any commodity but does not include those listed under Article 6 of this Proclamation . 4 ) “ Contract ” shall mean an agreement entered by the government and the company for the performance of pre - shipment inspction service . 5 ) “ Clean Report of Findings ” shall mean a certificate issued by the Company in confirmation of the satisfactory result of the pre - shipment inspection . 6 ) “ Non - Negotiable Report of Findings ” shall mean a document issued to the exporter by the Company whenever the pre - shipment inspection results in an unsatisfactory result . 7 ) “ Board ” shall mean the Federal Revenues Board . 8 ) “ Commercial Bank ” shall mean private or govern ment bank licensed to operate in Ethiopia . 3. Scope of Applicability Pre - shipment inspection to be carried out in accordance with this Proclamation shall apply to all goods imported into the customs territory of Ethiopia except those treated with special conditions under Article 6 of this Proclamation . 4. Requirement of Pre - shipment Inspection 1 ) All goods to be imported into Ethiopia shall be subject to pre - shipment inspection . Accordingly , any Importer or any person who exports goods to Ethiopia shall ensure that pre - shipment inspection has been conducted . 2 ) Notwithstanding the provisions of sub - Article ( 1 ) of this Article if the Country of shipment has special law_concerning pre - shipment inspection , the execution of pre - shipment inspection shall follow the existing law of that country . 5. Coverage of Pre - Shipment Inspection Pre - shipment inspection conducted on goods to be imported into Ethiopia shall cover : 1 ) price and exchange rate verification ; 2 ) quality , 3 ) quantity ; 4 ) packaging ; 5 ) Tariff classification . 6. Exceptions Pre - shipment inspection stated under Article ( 4 ) of this Proclamation shall be conducted in accordance with the following special conditions regarding goods specified herein below : The African Law Archive 1 ) Goods Pre - shipment inspection shall not be undertaken on gold , precious - stones , objects of arts , crude oil and refined petroleum , explosives and pyrotechnic products , ammunition , weapons , other military equipment , live animals , fresh , chilled or frozen fruits , vegetables , fish and meat , fresh eggs , scrap metals , current newspapers and periodicals , fer tilizers , household and personal effects including a used motor vehicle , post or commercial samples . 2 ) Value ( a ) Pre - shipment inspection shall not be conduc ted on consignments with a F.O.B. value in proforma invoice or indent or purchase order of two thousand or less United States Dollars ( USD 2,000 ) . ( b ) When goods purchased by a single purchase order are imported in smaller quantities , pre shipment inspection shall be conducted on them , even if the FOB value on each proforma invoice is 2000 USD or less . ( c ) The Board may increase or decrease the amount specified under sub - Article ( 1 ) of this Article . 3 ) Miscellaneous 1 ) Pre - shipment inspection shall not be carried out on : ( a ) goods imported by diplomatic and con sular missions as well as specialized agencies of the United Nations and the Organization of African Unity for their official use , ( b ) any goods obtained as donations . 2 ) The Board may for good cause issue special directive concerning types of goods to be treated exceptionally in accordance with this Article and concerning the manner in which pre - shipment inspection may be carried out . Opening of Letter of Credit ( L / C ) 1 ) The Importer's L / C application shall state the type , quality , quantity , unit price and total value , and freight charges if it is included in the value of the goods , as well as the country of supply of the goods . 2 ) The L / C opened by the Opening Bank shall include the following additional conditions : ( a ) that the goods concerned shall be subject to pre - shipment inspection ; ( b ) that the importer shall inform the recipient of the L / C through a letter or by telex that the goods are subject to pre - shipment inspection ; ( c ) that the recipient of the L / C shall be responsible for facilitating the inspection of the goods by the company ; ( d ) that the Bank shall make payment only upon receipt of the seller's final settlement invoice and a Clean Report of Findings confirmed by the company or its affiliates or agents . The African Law Archive 3 ) The Liaison Office of the Company in Ethiopia shall collect copies of the L / C and seller's proforma invoice from the Opening Bank . 4 ) The Liaison Office of the company shall register the L / C and issue an Import Advice Note to the importer and to the company's inspection Office in the country of sale . 5 ) The Inspection Office in the country of sale shall send an advice of inspection requirement to the shipper , consignor or seller of the goods . 6 ) The seller of the goods shall advise the Inspection Office of the date and place of inspection and send the documentation to the Inspection Office giving at least seven ( 7 ) days advance notice . 7 ) Notwithstanding the above provisions the seller may request the Inspection Office to perform an inspec tion prior to the receipt by the Inspection Office of the Import Advice Note . However , no Clean Report of Findings can be issued until the Import Advice Note has been received by the Inspection Office . 8 ) The Inspection Office shall perform the physical inspection , verify the declared tariff heading ( HS no . ) , verify that the invoice value and other elements of the total amount charged by the supplier correspond , within reasonable limits of the export market price level generally prevailing in the country of supply , or where applicable , the world market , and verify that the quality and quantity of the goods correspond to the specifications of the purchase contract . 9 ) The Inspection Office , where satisfied with the results of the inspection , shall issue a Clean Report of Findings to the Seller . 10 ) The Seller shall submit its final settlement invoice and the Clean Report of Findings to the Advising / Corresponding ( A / C ) Bank ; and the Advising Bank shall send documents and the final settlement invoice to the Opening Bank . Letter of Credit The following procedures shall apply to goods imported without a letter of credit : 1 ) The importer shall submit written details of his proposed importations together with the seller's proforma invoice to the Commerical Bank . These documents shall have the following information : ( a ) importer's name and address ; ( b ) the Bank which will receive the Clean Report of Findings ; ( c ) currency of transaction ; ( d ) value and unit price of goods to be imported ; ( e ) country of supply if different from that of seller ; ( f ) name and address of seller ; ( g ) type , quantity and quality of goods ; ( h ) freight charges . 2 ) The details specified above shall be submitted to the Commercial Bank fifteen ( 15 ) days prior to the scheduled date of shipment . 3 ) The Importer shall , in advance , notify the seller or exporter to arrange for inspection by the Company . The African Law Archive tioned under sub - Article ( 1 ) of this Article from the Commercial Bank and issue an Import Advice Note to the Inspection Office in the country of sale and to the seller or Exporter . 5 ) The Inspection Office in the country of sale shall send an advice of inspection requirement to the seller or Expor 6 ) The seller or Exporter of the goods shall advice the Inspection Office of the date and place of inspection and send the documentation to the Inspection Office giving at least seven ( 7 ) days advance notice . 7 ) The Inspection Office shall perform the physical ihspec tion ; verify the declared tariff heading ( HS no ) ; verify that the invoice value and other elements of the total amount charged by the supplier correspond , within reasonable limits , to the export market price level generally prevailing in the country of supply , or where applicable , the world market , and verify that the quality and quantity of the goods correspond to the specifications of the purchase contract . 8 ) The Inspection Office , where satisfied with the results of the inspection , shall issue a Clean Report of Findings to the Seller or Exporter . 9. Other Procedures 1 ) The procedures to be followed in the importation of goods in any other way shall be determined by the contract to be concluded between the Government and the Company . 2 ) The procedural details to be followed in the impor tation of goods with or without L / C shall be determined by the foreign exchange directive to be issued by the National Bank of Ethiopia . 10. Responsibility 1 ) Pre - shipment Inspection shall not relieve the seller of his contractual obligations to the buyer . 2 ) Pre - shipment Inspection shall not relieve the Impor ter of his duties or constitute as proof of carrying out such duties pertaining to the importation of goods imposed by other laws , rules and regulations . 11. Customs Formalities 1 ) No Customs Declarations shall be lodged in respect of goods subject to pre - shipment inspection before a Clean Report of Findings is received in accordance with this Proclamation . 2 ) Goods imported into the country without a Clean Report of Findings shall be placed under the Custody of the Customs Authority and appropriate action shall be taken in accordance with the Customs Proclamation . 3 ) The sum of the value of the goods , insurance premium and freight costs indicated in the Clean Report of Findings shall be the basis for the computations of Customs duty and taxes . 12. Contents of the Contract to be Concluded Between the Government and the Company The Contract to be concluded between the Govern ment and the company shall , without being limited to , have the following contents . The African Law Archive No. 56 15 June , 1999 Page 1060 Detail procedures in conducting Pre - shipment inspection . 2 ) Inspection fee paid by the government for services rendered by the company to be fixed by negotiation on the basis of the F.O.B value of the goods inspected . 3 ) The way through which payment for Inspection services is to be effected . 4 ) Specify the contents of the report of the company and the time of its submission . 5 ) The obligations of the company if it fails to discharge its responsibilities . 6 ) The Non - Negotiable Report of findings to be issued if the result of the inspection is not satisfac tory . 7 ) The duration of the contract . 13. Administration of the Contract The Federal Revenues Board is hereby empowered to conclude , on behalf of the Government , the Contract with the Company and to administer the same . 14. Fees 1 ) The importer of goods on which pre - shipment inspection has been effected shall , in addition to the Customs duty and taxes , pay inspection service charge at a rate to be determined by the Council of Ministers . The service charge shall be com the basis of the duty paying value . 2 ) Notwithstanding the provisions of sub - Article ( 1 ) of this Article , the Board may , for good cause , exempt the importer from payment of inspection service charges wholly or partly . 1 ) The pre - shipment inspection to be carried out in accordance with this Proclamation shall apply to all goods in respect of which a Letter of Credit is opened as of the effective date of this Proclamation . Goods in respect of which a Letter of Credit is opened before the effective date of this Proclamation shall not be subject to pre - shipment inspection . However , if the Letter of Credit is amended on or after the effective date of this Proclamation , the goods shall be subject to pre shipment inspection . 2 ) If the date indicated on the Bill of Lading or Airway Bill of goods imported without opening a Letter of Credit is after the effective date of this Pro clamation , such goods shall be subject to pre shipment inspection . The African Law Archive No. 56 15 June , 1999 - Page 1061 16. Inapplicable Laws Any law inconsistent with the provisions of this Proclamation shall not apply to matters provided for under this Proclamation . Effective Date This Proclamation shall enter into force as of the 15th day of June , 1999 . Done at Addis Ababa , this 15th day of June , 1999 . PRESIDENT OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The African Law Archive