diff --git a/apps/pce/app/src/test/java/org/onosproject/pce/pceservice/BasicPceccHandlerTest.java b/apps/pce/app/src/test/java/org/onosproject/pce/pceservice/BasicPceccHandlerTest.java
new file mode 100644
index 0000000..a5ea175
--- /dev/null
+++ b/apps/pce/app/src/test/java/org/onosproject/pce/pceservice/BasicPceccHandlerTest.java
@@ -0,0 +1,280 @@
+/*
+ * Copyright 2016-present Open Networking Laboratory
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *     http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+package org.onosproject.pce.pceservice;
+
+import static org.hamcrest.MatcherAssert.assertThat;
+import static org.hamcrest.Matchers.is;
+import static org.hamcrest.Matchers.notNullValue;
+import static org.hamcrest.Matchers.nullValue;
+
+import static org.onosproject.net.Link.Type.DIRECT;
+
+import java.util.Iterator;
+import java.util.List;
+import java.util.LinkedList;
+
+import org.junit.After;
+import org.junit.Before;
+import org.junit.Test;
+
+import org.onlab.packet.IpAddress;
+import org.onosproject.core.DefaultGroupId;
+import org.onosproject.incubator.net.tunnel.Tunnel;
+import org.onosproject.incubator.net.tunnel.TunnelEndPoint;
+import org.onosproject.incubator.net.tunnel.IpTunnelEndPoint;
+import org.onosproject.incubator.net.tunnel.TunnelName;
+import org.onosproject.incubator.net.tunnel.TunnelId;
+import org.onosproject.incubator.net.tunnel.DefaultTunnel;
+import org.onosproject.incubator.net.resource.label.LabelResourceId;
+import org.onosproject.incubator.net.resource.label.LabelResourceService;
+import org.onosproject.net.ConnectPoint;
+import org.onosproject.net.DefaultAnnotations;
+import org.onosproject.net.DefaultPath;
+import org.onosproject.net.DeviceId;
+import org.onosproject.net.PortNumber;
+import org.onosproject.net.Path;
+import org.onosproject.pce.pcestore.api.LspLocalLabelInfo;
+import org.onosproject.pce.pcestore.api.PceStore;
+import org.onosproject.pce.pcestore.PceccTunnelInfo;
+import org.onosproject.pce.pcestore.DefaultLspLocalLabelInfo;
+import org.onosproject.net.provider.ProviderId;
+import org.onosproject.pce.util.LabelResourceAdapter;
+import org.onosproject.pce.util.PceStoreAdapter;
+import org.onosproject.net.DefaultLink;
+import org.onosproject.net.Link;
+
+/**
+ * Unit tests for BasicPceccHandler class.
+ */
+public class BasicPceccHandlerTest {
+
+    public static final long LOCAL_LABEL_SPACE_MIN = 5122;
+    public static final long LOCAL_LABEL_SPACE_MAX = 9217;
+
+    private BasicPceccHandler pceccHandler;
+    protected LabelResourceService labelRsrcService;
+    protected PceStore pceStore;
+    private TunnelEndPoint src = IpTunnelEndPoint.ipTunnelPoint(IpAddress.valueOf(23423));
+    private TunnelEndPoint dst = IpTunnelEndPoint.ipTunnelPoint(IpAddress.valueOf(32421));
+    private DefaultGroupId groupId = new DefaultGroupId(92034);
+    private TunnelName tunnelName = TunnelName.tunnelName("TunnelName");
+    private TunnelId tunnelId = TunnelId.valueOf("41654654");
+    private ProviderId producerName = new ProviderId("producer1", "13");
+    private Path path;
+    private Tunnel tunnel;
+    private PceccTunnelInfo pceccTunnelInfo;
+    private DeviceId deviceId1;
+    private DeviceId deviceId2;
+    private DeviceId deviceId3;
+    private DeviceId deviceId4;
+    private DeviceId deviceId5;
+    private PortNumber port1;
+    private PortNumber port2;
+    private PortNumber port3;
+    private PortNumber port4;
+    private PortNumber port5;
+
+    @Before
+    public void setUp() throws Exception {
+       pceccHandler = BasicPceccHandler.getInstance();
+       labelRsrcService = new LabelResourceAdapter();
+       pceStore = new PceStoreAdapter();
+       pceccHandler.initialize(labelRsrcService, pceStore);
+
+       // Cretae tunnel test
+       // Link
+       ProviderId providerId = new ProviderId("of", "foo");
+       deviceId1 = DeviceId.deviceId("of:A");
+       deviceId2 = DeviceId.deviceId("of:B");
+       deviceId3 = DeviceId.deviceId("of:C");
+       deviceId4 = DeviceId.deviceId("of:D");
+       deviceId5 = DeviceId.deviceId("of:E");
+       port1 = PortNumber.portNumber(1);
+       port2 = PortNumber.portNumber(2);
+       port3 = PortNumber.portNumber(3);
+       port4 = PortNumber.portNumber(4);
+       port5 = PortNumber.portNumber(5);
+       List<Link> linkList = new LinkedList<>();
+
+       Link l1 = DefaultLink.builder()
+                            .providerId(providerId)
+                            .annotations(DefaultAnnotations.builder().set("key1", "yahoo").build())
+                            .src(new ConnectPoint(deviceId1, port1))
+                            .dst(new ConnectPoint(deviceId2, port2))
+                            .type(DIRECT)
+                            .state(Link.State.ACTIVE)
+                            .build();
+       linkList.add(l1);
+       Link l2 = DefaultLink.builder()
+                            .providerId(providerId)
+                            .annotations(DefaultAnnotations.builder().set("key2", "yahoo").build())
+                            .src(new ConnectPoint(deviceId2, port2))
+                            .dst(new ConnectPoint(deviceId3, port3))
+                            .type(DIRECT)
+                            .state(Link.State.ACTIVE)
+                            .build();
+       linkList.add(l2);
+       Link l3 = DefaultLink.builder()
+                            .providerId(providerId)
+                            .annotations(DefaultAnnotations.builder().set("key3", "yahoo").build())
+                            .src(new ConnectPoint(deviceId3, port3))
+                            .dst(new ConnectPoint(deviceId4, port4))
+                            .type(DIRECT)
+                            .state(Link.State.ACTIVE)
+                            .build();
+       linkList.add(l3);
+       Link l4 = DefaultLink.builder()
+                            .providerId(providerId)
+                            .annotations(DefaultAnnotations.builder().set("key4", "yahoo").build())
+                            .src(new ConnectPoint(deviceId4, port4))
+                            .dst(new ConnectPoint(deviceId5, port5))
+                            .type(DIRECT)
+                            .state(Link.State.ACTIVE)
+                            .build();
+       linkList.add(l4);
+
+       // Path
+       path = new DefaultPath(providerId, linkList, 10);
+
+       // Tunnel
+       tunnel = new DefaultTunnel(producerName, src, dst, Tunnel.Type.VXLAN,
+                                  Tunnel.State.ACTIVE, groupId, tunnelId,
+                                  tunnelName, path);
+    }
+
+    @After
+    public void tearDown() throws Exception {
+    }
+
+    /**
+     * Checks the operation of getInstance() method.
+     */
+    @Test
+    public void testGetInstance() {
+        assertThat(pceccHandler, is(notNullValue()));
+    }
+
+    /**
+     * Checks the operation of allocateLabel() method.
+     */
+    @Test
+    public void testAllocateLabel() {
+       List<LspLocalLabelInfo> lspLocalLabelInfoList;
+       Iterator<LspLocalLabelInfo> iterator;
+       LspLocalLabelInfo lspLocalLabelInfo;
+       DeviceId deviceId;
+       LabelResourceId inLabelId;
+       LabelResourceId outLabelId;
+       PortNumber inPort;
+       PortNumber outPort;
+
+       // check allocation result
+       assertThat(pceccHandler.allocateLabel(tunnel), is(true));
+
+       // Check list of devices with IN and OUT labels whether stored properly in store
+       pceccTunnelInfo = pceStore.getTunnelInfo(tunnel.tunnelId());
+       lspLocalLabelInfoList = pceccTunnelInfo.lspLocalLabelInfoList();
+       iterator = lspLocalLabelInfoList.iterator();
+
+       // Retrieve values and check device5
+       lspLocalLabelInfo = (DefaultLspLocalLabelInfo) iterator.next();
+       deviceId = lspLocalLabelInfo.deviceId();
+       inLabelId = lspLocalLabelInfo.inLabelId();
+       outLabelId = lspLocalLabelInfo.outLabelId();
+       inPort = lspLocalLabelInfo.inPort();
+       outPort = lspLocalLabelInfo.outPort();
+
+       assertThat(deviceId, is(deviceId5));
+       assertThat(inLabelId, is(notNullValue()));
+       assertThat(outLabelId, is(nullValue()));
+       assertThat(inPort, is(port5));
+       assertThat(outPort, is(nullValue()));
+
+       // Next element check
+       // Retrieve values and check device4
+       lspLocalLabelInfo = (DefaultLspLocalLabelInfo) iterator.next();
+       deviceId = lspLocalLabelInfo.deviceId();
+       inLabelId = lspLocalLabelInfo.inLabelId();
+       outLabelId = lspLocalLabelInfo.outLabelId();
+       inPort = lspLocalLabelInfo.inPort();
+       outPort = lspLocalLabelInfo.outPort();
+
+       assertThat(deviceId, is(deviceId4));
+       assertThat(inLabelId, is(notNullValue()));
+       assertThat(outLabelId, is(notNullValue()));
+       assertThat(inPort, is(port4));
+       assertThat(outPort, is(port5));
+
+       // Next element check
+       // Retrieve values and check device3
+       lspLocalLabelInfo = (DefaultLspLocalLabelInfo) iterator.next();
+       deviceId = lspLocalLabelInfo.deviceId();
+       inLabelId = lspLocalLabelInfo.inLabelId();
+       outLabelId = lspLocalLabelInfo.outLabelId();
+       inPort = lspLocalLabelInfo.inPort();
+       outPort = lspLocalLabelInfo.outPort();
+
+       assertThat(deviceId, is(deviceId3));
+       assertThat(inLabelId, is(notNullValue()));
+       assertThat(outLabelId, is(notNullValue()));
+       assertThat(inPort, is(port3));
+       assertThat(outPort, is(port4));
+
+       // Next element check
+       // Retrieve values and check device2
+       lspLocalLabelInfo = (DefaultLspLocalLabelInfo) iterator.next();
+       deviceId = lspLocalLabelInfo.deviceId();
+       inLabelId = lspLocalLabelInfo.inLabelId();
+       outLabelId = lspLocalLabelInfo.outLabelId();
+       inPort = lspLocalLabelInfo.inPort();
+       outPort = lspLocalLabelInfo.outPort();
+
+       assertThat(deviceId, is(deviceId2));
+       assertThat(inLabelId, is(notNullValue()));
+       assertThat(outLabelId, is(notNullValue()));
+       assertThat(inPort, is(port2));
+       assertThat(outPort, is(port3));
+
+       // Next element check
+       // Retrieve values and check device1
+       lspLocalLabelInfo = (DefaultLspLocalLabelInfo) iterator.next();
+       deviceId = lspLocalLabelInfo.deviceId();
+       inLabelId = lspLocalLabelInfo.inLabelId();
+       outLabelId = lspLocalLabelInfo.outLabelId();
+       inPort = lspLocalLabelInfo.inPort();
+       outPort = lspLocalLabelInfo.outPort();
+
+       assertThat(deviceId, is(deviceId1));
+       assertThat(inLabelId, is(nullValue()));
+       assertThat(outLabelId, is(notNullValue()));
+       assertThat(inPort, is(nullValue()));
+       assertThat(outPort, is(port2));
+    }
+
+    /**
+     * Checks the operation of releaseLabel() method.
+     */
+    @Test
+    public void testReleaseLabel() {
+       // Release tunnels
+       assertThat(pceccHandler.allocateLabel(tunnel), is(true));
+       pceccHandler.releaseLabel(tunnel);
+
+       // Retrieve from store. Store should not contain this tunnel info.
+       pceccTunnelInfo = pceStore.getTunnelInfo(tunnel.tunnelId());
+       assertThat(pceccTunnelInfo, is(nullValue()));
+    }
+}