(Published in Part – III Section 4 of the Gazette of India, Extraordinary)

Tariff Authority for Major Ports

NOTIFICATION

                        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 ) 

Chairman

M/s. Seahorse Ship Agencies Pvt. Limited                 - - -                          Applicant 

                                    Vs 

The Kolkata Port Trust (KoPT)                                      - - -                                 Respondent 

O R D E R

(Passed 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 Customs.   

2.1.                   The SSAPL has made the following points in its representation: 

(i).        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. 

(ii).        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  The detention notice was, therefore, withdrawn by the Customs on 30 August 2001. 

(iii).       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). 

(iv).       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 the Customs. 

2.2.                   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. 

3.1.                   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)      

(i).        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. 

(ii).        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.   

The Shipping Corporation of India Limited (SCI)      

(i).        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)               

(i).        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. 

(ii).        Since the KOPT is not responsible for the detention, there is no merit in the appeal of the SSAPL. 

The Eastern India Shippers Association (EISA)                             

(i).        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 Customs.  Similarly, demurrage on the cargo shall also be waived. 

The Bengal Chamber of Commerce and Industry (BCCI)            

(i).        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. 

(ii).        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. 

3.2.                   A copy each of the above comments was sent to the SSAPL and the KOPT as feedback information. 

4.1.                   A joint hearing in this case was held on 7 January 2002 in Kolkata.  At the joint hearing, the following submissions were made: 

M/s. Seahorse Ship Agencies Private Limited (SSAPL)            

(i).        The Port Trust has refused to waive; therefore, we have come to the TAMP. 

(ii).        If the Port Trust had a CFS we could have off-loaded the cargo and released the container. 

(iii).       The Customs had detained; why should we pay? 

(iv).       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.

(v).        An enquiry was made by the Customs, and they had cleared us.  They found pilferage; breaking open of our container; and, dumping of unmanifested excess cargo into our container. 

(vi).       The Port could have destuffed the cargo on day one and released the cargo; a lot of money would have been saved for us. 

(vii).      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. 

(viii).      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)

 (i).        The port should have brought to the notice of the ship agent, the problem on day one, when it was noticed. 

(ii).        The surveyor only reports on condition of lock and seal.  The carrier must have carefully looked into it before clearing the box for landing. 

            Kolkata Port Trust (KOPT) 

            (i).            This was an FCL and not an LCL container. 

(ii).        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. 

(iii).       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. 

(v).        Lines should have moved the container to the Custom bonded area. 

(vi).       There was no request from the agent for destuffing. 

(vii).      They waited for the FCL party.  That was the delay. 

(viii).      The yard superintendent was informed about destuffing.  The carrier was also informed.  

4.2.                   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:- 

(i).        The container agent is responsible for making arrangements for destuffing; and, at no point of time the KOPT has refused/denied the agent to destuff the container. 

(ii).        The container physically occupied the storage space inside the port premises; and hence, the storage charges are recoverable. 

(iii).       If the container was wrongfully detained, the agents can recover the same from the erring government agency.  The KOPT cannot be denied of the legitimate charges for its services. 

(iv).       The TAMP has issued a clarification in this regard vide letter No. TAMP/86/99-Misc. dated 30 October 2001 on its Order prescribing the time limit of two months for levy of storage charges on FCL container: 

“Since 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, however, the storage charges will cease to apply from the date the Customs Authorities ordered release of the cargo.  So, 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.” 

(v).        The following note in the revised SOR has been approved for insertion with effect from 4 April 2001:

 “Where 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.” 

(vi).       The Hon’ble 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]: 

“An 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.”  

It is, therefore, 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.  

5.                     With reference to the totality of information collected during the processing of this case, and bearing in mind the arguments advanced at the joint hearing, the following position emerges:- 

(i).        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 MPT Act.  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 Rates 

(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 effect, if such an approval becomes essential.  That being so, this Authority can alter the Scale of Rates of the KOPT with retrospective effect, 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. 

(ii).        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 over-charge. 

(iii).       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 critical time.  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 destuffing it. 

(iv).       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 financial entities.  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 the Government.  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 period. 

(v).        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 user; but, 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. 

(vi).       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.

6.                     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. Ltd. for refund of the ground rent levied by the KOPT for the period of detention of their containers by the Customs. 

( S. Sathyam ) 

 Chairman