(Published in Part – III Section 4 of the Gazette of India, Extraordinary)
New Delhi, the 15 March 2002
New Delhi, the 15 March 2002
Authority for Major Ports
In exercise of the powers conferred by Section 48 of the Major Port
Trusts Act, 1963 (38 of 1963), the Tariff
Authority for Major Ports hereby disposes of the representation made by M/s.
Seahorse Ship Agencies Pvt. Limited for
waiver of ground rent levied by the Kolkata Port Trust for the period of
detention of its containers by the Customs as in the Order appended hereto.
( S. Sathyam )
Seahorse Ship Agencies Pvt.
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The Kolkata Port Trust (KoPT)
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O R D E R
on this 11th day of March 2002)
This case relates to a representation made by M/s. Seahorse Ship
Agencies Pvt. Ltd. (SSAPL) for waiver of ground rent levied by the
Kolkata Port Trust (KOPT) for the period of detention of their containers by the
The SSAPL has made the following points in its representation:
A container belonging to one of its principals landed at the Kolkata
Docks on 10 July 2001 and was destuffed on 9 August 2001.
During the course of destuffing 12 packages were found to be unmanifested.
The customs authorities seized the container and the unmanifested cargo.
Subsequently, on a detailed scrutiny of all the documents and
submissions made by the SSAPL, it was found that the 12 cartons were
actually manifested goods and part of a consignment imported by some other
company in the same vessel. The
detention notice was, therefore, withdrawn by the Customs on 30
The KOPT was requested to waive the container ground rent charges for the
period from 9 August 2001 to 4 September 2001 in view of the Customs’
official detention; but, the KOPT has refused to consider its
request in the absence of any provision in the Scale of Rates (SOR).
The previous SOR of the KOPT contained a clause that no detention/rent
shall be charged for the period the container/cargo are officially detained by
In this backdrop, the SSAPL has requested this Authority to direct
the KOPT not to charge the container ground rent for the period from 9 August
2001 to 4 September 2001.
In accordance with the procedure prescribed, a copy of the
proposal was sent to concerned representative bodies of port users and the KOPT
for comments. The comments
received are summarised below:
The Association of Shipping Interest in Calcutta (ASIC)
The container was detained by the Customs for no fault of the SSAPL.
As per the long established practice followed by the KOPT, rent on
cargo/container is not charged if the cargo/container is detained by the Customs
for a specified period. Therefore, no ground rent on the container
shall be realised from the SSAPL for the period of Custom detention.
This being a matter of ‘refund’ and not of ‘waiver’
of ground rent, the KOPT could have granted refund under section 55 of
the MPT Act 1963. The
absence of relevant provisions in the SOR is not a valid reason.
The SOR is subordinate to the MPT Act; and, cannot
over-rule the Act.
Shipping Corporation of India Limited (SCI)
Although no reference about the clause relating to waiver of rent if the
cargo/container is officially detained was found in the earlier port tariff,
there is a definite merit in the representation made.
(ii). The detention of the container was made on the specific instructions of the Customs authorities; and, ultimately no case was found against the SSAPL. The agents shall not therefore, be made to pay the detention charges for no fault of theirs.
The Kolkata Port Trust (KOPT)
As per Section 48 of the MPT Act 1963, the TAMP is empowered to
frame a Scale of Rates and Statement of Conditions under which any of the
service specified in that section shall be performed by the port or any other
person authorised under Section 42.
The Port Trust’s Board is empowered to waive the demurrage
charges under Section 53 of the MPT Act 1963.
Since the KOPT is not responsible for the detention, there is no
merit in the appeal of the SSAPL.
Eastern India Shippers Association (EISA)
No ground rent shall be levied for the period of detention as the
shipping agents are in no way responsible for detention of the containers by
demurrage on the cargo shall also be waived.
Bengal Chamber of Commerce and Industry (BCCI)
The TAMP may notify waiver of ground rent by the KOPT for the period of
detention of container by the Customs, which is another department of the
Government for investigation.
The SSAPL did not cause any illegal import; and, the goods
were properly accounted for and accepted by the Custom authorities.
Hence, in the absence of a relevant notified provision in the SOR
of the KOPT, waiver may be considered by the TAMP.
A copy each of the above comments was sent to the SSAPL and the KOPT as
A joint hearing in this case was held on 7 January 2002 in Kolkata. At the joint
hearing, the following
submissions were made:
Seahorse Ship Agencies Private Limited (SSAPL)
The Port Trust has refused to waive; therefore, we have come to the TAMP.
If the Port Trust had a CFS we could have off-loaded the cargo and
released the container.
The Customs had detained; why should we pay?
The container was kept in the custody of the KOPT. There was some pilferage in an adjacent container.
Some cargo of that was put into our container.
All this was not our doing.
An enquiry was made by the Customs, and they had
They found pilferage; breaking open of our container; and, dumping of unmanifested excess cargo into our container.
The Port could have destuffed the cargo on day one and released the cargo; a lot of money would have been saved
We started destuffing; the excess was
detected; we informed the
KOPT, they notified customs; and, the customs intervened. We want the
period from then to be covered by waiver/exemption.
We knew about the enquiry conducted by the Customs. We even
participated; but, no official letter was given about
the detention, so we could not
convince our principals.
The Association of Shipping Interests in Kolkata (ASIC)
The port should have brought to the notice of the ship agent, the problem on day one, when it was noticed.
The surveyor only reports on condition of lock and seal.
The carrier must have carefully looked into it before clearing the box
Port Trust (KOPT)
This was an FCL and not an LCL container.
It was at a non-CPY berth. The SSAPL wrongly
refers to CPY berth. The destuffing at
the non-CPY berth is done by the agents, and not by the port.
The Supreme court judgment in the Airports Authority of India case has
also upheld the levy of demurrage on cargo by the port trust even during the
period of detention by the Customs.
Lines should have moved the container to the Custom bonded area.
There was no request from the agent for destuffing.
They waited for the FCL party.
That was the delay.
The yard superintendent was informed about destuffing. The carrier
was also informed.
At the joint hearing, the KOPT filed a
written submission containing its comments on the representation of the SSAPL.
In addition to detailing the history of the case, the following points have been made
by the KOPT against refund of the ground rent:-
The container agent is responsible for making arrangements for destuffing;
at no point of time the KOPT has refused/denied the agent to destuff the
The container physically occupied the storage space inside the port
the storage charges are recoverable.
If the container was wrongfully detained, the agents can recover the same from the erring
The KOPT cannot be denied of the legitimate charges for its services.
The TAMP has issued a clarification in this regard vide letter No.
dated 30 October 2001 on its Order prescribing the time limit of two months for
levy of storage charges on FCL container:
the Port has no control over such container and cannot make arrangement for
destuffing as the cargo along with the container is seized / confiscated by the
Customs authorities. In such cases,
the storage charges will cease to apply from the date the Customs Authorities
ordered release of the cargo.
seized / confiscated container can be required (by the Port Trust) to be removed
(by the line/Consignee) from its premises to the Customs Bonded Area so that its
space is not unnecessarily occupied.”
The following note in the revised SOR has been approved for insertion
with effect from 4 April 2001:
the container is seized/confiscated by the Customs Authorities and the same
cannot be destuffed within the prescribed time limit of 75 days,
the Storage Charges will cease to apply from the date the Customs order release
of the cargo subject to the Lines observing the necessary formalities and
bearing the cost of transportation and destuffing.
Otherwise, seized/confiscated container should be removed by the Line
/ Consignee from the port premises to the Customs Bonded Area and in that case
the Storage Charges shall cease to apply from the date of such removal.”
Supreme Court has passed the following orders in the case of the International
Airport Authority Vs. M/s. Grand Slam International [1995 (I), Scale 859: 1995 AIR SCE 1802; p-1928]:
Authority created under a statute even if it is the custodian of the imported
goods because of the provision of Customs Act 1961,
would be entitled to charge demurrages for the imported goods in its custody and
make the importer or consignee liable for the same even for period during which
he/it was unable to clear the goods from the Customs Area due to fault on the
part of the Customs Authorities or of other authorities who might have issued
Detention Certificate owning such fault.”
lawful and reasonable for a port trust to charge demurrage on any goods,
which has arisen due to the fault of Customs or other authorities who might have
issued the detention certificate.
reference to the totality of information collected during the processing of this
and bearing in mind the arguments advanced at the joint hearing,
following position emerges:-
Before proceeding with the issue agitated by the SSAPL, it becomes necessary to deal with
the statement made by the KOPT about the statutory power available to this
Authority and the power vested with the Port Trust Board under Section 53 of the
Implied in the statement made by the KOPT is a suggestion that this
Authority cannot intervene in cases like the one in reference and such matters
should be left to be decided by the Board of Trustees of the KOPT under the
powers conferred on it by Section 53 of the MPT Act.
It has to be recognised that setting tariffs at the major ports,
which falls under the competence of this Authority, can take the following three routes:
(a). A proposal from the
major ports trusts / private terminal operators for modification of the Scale of
(b). A representation from
users / representative bodies of port users; and
(c). Suo motu action
by this Authority.
The Government has already advised that this Authority can prescribe
Scale of Rates of the major ports trusts / private terminals with retrospective
if such an approval becomes essential. That being so,
this Authority can alter the Scale of Rates of the KOPT with retrospective
if some exceptional circumstances to do so emerge. It may
also be relevant here to mention that grievances relating to port tariff which
may relate to application of the existing tariffs as well as hardship caused due
to absence of a specific conditionality in the Scale of Rates,
cannot be left to be decided by the port trusts at their will when a neutral,
third party and statutory regulator is in position.
The ASIC has argued that the instant case needs to be dealt with under
the provisions of Section 55 of the MPT Act. Section 55 of
the MPT Act deals with refund of over-charges levied by a port trust.
As pointed out by the KOPT,
the charges realised in the instant case were based on the provisions available
in its Scale of Rates.
Levy of charges based on rates and conditionalities prescribed in the
Scale of Rates for the corresponding services rendered cannot be termed as an
One of the guidelines adopted at the Chennai Workshop (February 1998) is
about users not being made responsible for delays caused by the ports.
This principle has been followed in prescribing / amending many of the
conditionalities in the Scale of Rates of different ports.
In this case, admittedly,
the delay was caused by the Customs. Since a relief
has been sought from the KOPT, it becomes necessary to examine whether the delay was due
to any fault of the KOPT. It may perhaps
not serve any useful purpose to harp only on the pleadings that the user is not
responsible for the delay caused.
In this regard,
the following points deserve consideration:
(a). The container was
detained by the Customs and not by the port.
(b). Since the SSAPL has
alleged tampering with the contents of the container,
it may be relevant to see if the KOPT was the custodian of the container at the
There is no proof available on record to say that the tampering happened when the container was in the custody of the KOPT.
All that has been mentioned is that the tampering was noticed
at the time of destuffing.
(c). The container in
question was an FCL container. As pointed out
by the KOPT,
this container could have been moved to the Customs bonded area.
There is nothing to show that the Port had compelled the container to
remain within its premises.
(d). The SSAPL has argued that the port should have destuffed the container immediately on landing. The KOPT has responded that it had never denied permission for destuffing of the container. It is unreasonable to expect a port trust to presume the various services required by a user. It is for the user to requisition different services required by him from the port trusts. In the instant case, this requisition assumes more significance for destuffing since the container in reference was an FCL container which might not necessarily be destuffed in the port premises; and, it had landed at a non-CPY berth which meant that destuffing, in any case, was to be done by an agent and not by the port.
From the above,
it cannot be reasonably concluded that the delay was caused by the port not only
in respect of the detention of the container, but also on the associated services involved with
The BCCI has argued for waiver of ground rent levied by the KOPT for the
period of detention of the container by the Customs on the ground that another
department of the Government caused the delay. Even if the
KOPT and the Customs are seen to be instrumentalities of the same Government,
there is no justification for ignoring the fact that they are separate legal and
It is noteworthy that a port trust is a self-financing organisation and
it cannot stand responsible for acts of commission / omission of other arms of
As has been argued by the KOPT,
the container in reference continued to occupy revenue earning space inside the
port premises during the period of its detention.
That being so, the KOPT is justified in demanding storage charges for that
The KOPT has cited an order passed by the Supreme Court in a case
relating to the International Airports Authority of India to justify its action
to levy storage charges even during the period of detention of container / cargo
by other statutory agencies.
Irrespective of the Supreme Court decision,
as has already been pointed out,
the principle followed by this Authority is that users are not to be responsible
for delays caused
by the port. In this case,
it has only been argued that the delay was caused not due to the fault of the
it is not established that it was due to the fault of the port.
That being so, there is no merit in the request
of the SSAPL for refund of storage charges levied by the KOPT for the period of
detention of its container by the customs.
In view of the position clearly emerging in this case, it is not necessary to modify the Scale of Rates of
the KOPT to include a conditionality about allowing relief in payment of storage
charges for the period during which containers are detained by other agencies.
In the result,
and for the reasons given above, and based on a collective application of mind,
this Authority rejects the representation of M/s. Seahorse Ship Agencies Pvt.
for refund of the ground rent levied by the KOPT for the period of detention of
their containers by the Customs.
( S. Sathyam )