(Published
in Part III Section 4 of the Gazette of India,
Extraordinary)
| No. 280 |
NEW DELHI, the 11
October, 2001 |
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 of M/s. Krishna Clearing Agency
relating to imposition of demurrage on storage of wheat flour at Transit shed at
the Kandla Port Trust as in the Order appended hereto.
( S.
Sathyam
)
Chairman
Tariff
Authority for Major Ports
Case
No.TAMP/86/2000-KPT
M/s.
Krishna
Clearing Agency
-------
Applicant
V/s.
The
Kandla Port Trust
-------
Respondent
O
R D E R
(Passed
on this 20th day of September 2001)
This case relates to a representation made by M/s. Krishna
Clearing Agency (KCA) against imposition of demurrage charges on their storage
of wheat flour at Transit Shed at the Kandla Port Trust (KPT).
2.
The KCA has made the following points in its representation:
(i).
The entire cargo of wheat flour was brought inside (April 96) the Port
with the sole intention of shipment by nominating a ship which was withdrawn,
as its principals, M/s. Eclectic Exports Limited could not offer
the required quantity due to suspension of wheat supply to the flour mills by
the Food Corporation of India (FCI) following a change in the Government policy.
(ii).
The cargo, thus left over in the Port as unshipped, was
kept inside the port with an expectation of a suitable feeder vessel to carry
even the smaller available parcel ready in the port by incurring further
expenditure on the shed-demurrage. Due to storage of cargo for a longer
period, the cargo was damaged during the monsoon and cyclonic weather.
A part of the cargo was removed out of the port area for
re-processing with ports permission to make it export worthy.
(iii).
By the time the cargo was made again ready for shipment together with the
part cargo, which was expected from the FCI godowns in view of the
modified policy of the Government, the relevant letter of credit (L/C)
had become inactive.
(iv).
Despite suffering heavy financial losses, M/s. Eclectic
Exports Ltd., finally managed to export the entire cargo on 20 September
96 thereby fulfilling their export obligation.
(v).
Inspite of repeated requests, the KPT did not grant waiver of
demurrage as per the provisions of its Scale of Rates inspite of the party
making all-out efforts to fulfil its export obligation.
3.1.
In accordance with the procedure prescribed, a copy of the representation
of the KCA was forwarded to the Kandla Port Trust and all the concerned
user-organisations for comments. The comments received are summarised below:
Kandla
Port Trust (KPT)
(i).
The KCA had, on account of M/s. Eclectic Exports Ltd.,
stored a quantity of 30030 bags and 18980 bags of wheat flour each weighing 50
Kg. inside the Transit Shed for a period from 22 April 1996 to 7 June
1996 and 12 June 1996 to 4 July 1996 respectively for shipment against the
vessel M.V. JAIPUR, later on amended to M.V. HUA-CHUAN.
The shipment was withdrawn due
to change in the Government policy.
(ii).
Due to acute shortage of storage space in the Port area the cargo was not
allowed to be reprocessed either at the Transit Area or at the rented godown,
and was removed by the M/s. Eclectic Exports Ltd., from the Port
area by making payment of the demurrage charge on survey rejected / shut-out
cargo (i.e., calculated on the basis of 15 days free period and
50% rebate as applicable to export cargo).
(iii).
The reprocessed cargo was transferred to M/s. Raja Rani Exports
Ltd., and M/s. United Lumbers and loaded on vessel M.V. VICKO
after filing fresh shipping bill. The shipping bill dated 2 May 96 in the name of M.V.
HUA-CHUAN was cancelled on 6 September 96.
(iv).
The representation received from the party was examined in depth and a
regret reply was sent for the following reasons:
(a).
The cargo which was brought to be loaded on vessel M.V. JAIPUR
was taken out of the Port area, and the shipping bill was also later on
cancelled; therefore, all the transactions in respect of the
cargo were treated as closed.
(b).
The fresh shipping bill and the arrival of the cargo from out of the
Port area to load on the vessel M.V. VICKO was treated as a
fresh consignment.
(c).
The cargo after shifting from the Port areas was transferred to M/s.
Raja Rani Exports Ltd., and M/s. United Lumbers in part. Also,
M/s. Eclectic Exports Ltd., had closed their business during
1997 and established a new company called M/s. Commodities Exchange
Corporation Ltd., New Delhi. That
being so, the argument of M/s. Eclectic Exports Ltd., to
extend the free period of 30 days or grant of any waiver of demurrage could
not be entertained.
Gandhidham
Chamber of Commerce & Industry (GCCI)
(i).
This is an old case of demurrage charges in respect of wheat flour. The
cargo was brought inside the Port for shipment per
M.V. HUA-CHUAN which was ultimately withdrawn
due to change of Government policy as the FCI could not supply the remaining
quantity.
(ii).
The matter has already been taken up with the Chairman (KPT) requesting
him to re-consider the matter and grant 30 days free period excluding
Sunday/holidays and condone the delay caused for the cargo detained in the Port
due to the circumstances beyond their control and to waive the demurrage charges
amounting to Rs.46,24,690/-.
Kandla
Custom House Agents Association (KCHAA)
(i).
The KPT must go into the merit of the case and the genuineness of the
problems which the exporter faced in the instant case.
(ii).
The KPT has since September 1996 did not even think it fit to communicate
any of its decisions on the subject matter to the parties concerned which is
inexcusable.
(iii).
The KPT shall interpret the Scale of Rates in a practical manner so as to
ensure that no exporter and / or its agent is put through unnecessary hardship
and financial losses as is happening in the instant case.
3.2.
The Kandla Port Steamship Agents Association has not sent any
comments.
4.
A copy each of the comments received from the KPT and the representative
bodies of port users was sent to the KCA as feed back information.
5.1.
A joint hearing in this case was held on 12 April 2001 at the KPT
premises. At the joint hearing the
following submissions were made:
M/s.
Krishna Clearing Agency (KCA)
(i).
We had continuously been appealing to the KPT. They have not heard our plea at all.
(ii).
We have given a written submission. All documents are there to
show that the cargo was the same.
(iii).
The KPT has given waiver in other similar cases. Why discriminate against us?
(iv).
If it is treated as the same cargo, our claim for remission will
be enhanced.
(v).
We will give a list of cases where, under similar circumstances,
the Board of Trustees of the KPT had given remissions.
The
Kandla Port Trust (KPT)
(i).
They were to export 7000 MT of wheat flour. They could not assemble the entire cargo. The
vessel, therefore, left without the cargo.
(ii).
May be, the FCI had changed its system; but, the KPT
is not concerned with that.
(iii).
They took back the cargo for cleaning and reaggregation. For this period they were given all available benefits and,
were charged only the demurrage leviable.
(iv).
The final export was a different transaction involving different parties.
Even if it is treated as the
same transaction, there is no particular benefit to accrue. The demurrage of Rs.46 lakhs would not go down.
(v).
The fact that the Port could not allot them space does not make any
difference. This case has
been treated as export of the same cargo from inside the port and all the
benefits admissible have been given.
The
Kandla Custom House Agents Association (KCHAA)
(i).
We have given our response vide our letter dated 4 January 2001. Please
take that into account.
(ii).
The bona fides of the exporter are clear. They
had to take the cargo out because the KPT could not allot them space.
5.2.
The KCA filed a written submission giving the chronology of the events
relating to the export of the wheat flour along with the copies of all the
relevant documents in this regard.
5.3.
At the joint hearing it was decided that the KCA would furnish the
information about the cases in which, under similar circumstances,
the Board of Trustees of the KPT had given remissions. The KPT had been required to give a note on how the similar
cases were dealt with earlier; and, if, as alleged by the
KCA, there were a comparative cases, then the KPT might explain
the reasons for giving differential treatment to the KCA.
6.
The KPT has informed that the KCAs reference was relating to
the two cases of M/s. Liladhar Pasoo Forwarders, considered for
remission of demurrage charges by the Board of the KPT, which are not
similar to the case of the KCA in reference. The gist of these cases is
as follows:
(i).
M/s. Liladhar Pasoo Forwarders had on behalf of M/s. Satnam
Overseas Limited had stored a quantity of 3000 tonnes of Basmati rice in the
transit shed for the period between 18 April 1997 to 2 May 1997 for shipment to
Jeddah in May 1997, which could take place only in September 1997. The
consignment was delayed an account of non-opening of L/C by the foreign buyer
despite its verbal and written confirmation; and, hence,
the demurrages to the extent of Rs.87 lakhs was accrued to the party,
which would have been to the extent of Rs.1.36 lakhs only had the
party removed the cargo from transit-account to rental- account. This case was considered by the Board of Trustees of the KPT
and it was decided to waive 80% of the demurrage charges accrued on the advice
of the Government to examine the case under Section 53 of the MPT Act,
1963 for extending some concession to the export cargo.
(ii).
In the other case, M/s. Liladhar Pasoo Forwarders made a
shipment of the rice on 23 May 1996 and 30 May 1996 per vessel MV Harmony B and
M.V. Kapitan K, out of which some cargo was shutout which
was kept partly at the godown on rental terms and the balance in the transit
shed on transit terms. The
cargo kept at the godown was cleared on 14 June 1996. With
respect to the balance cargo, the shipper had submitted all the related
documents including Customs permission; however, grant of
permission at the Traffic Managers office was delayed by more than a month
resulting in accrual of a huge amount of demurrage. The
Board of Trustees remitted 80% of the demurrage charges on the basis of the
guidelines prescribed by the Government vide its letter No.PR-14013/23/89-PG
dated 24 January 1992, which stipulates consideration of waiver of
demurrage charges in case the port is not able to deliver the goods in time.
7.
With
reference to the totality of information collected during the processing of this
case, and based on the arguments advanced at the joint hearing,
the following position emerges :-
(i).
(a). The case arises from a
petition filed by M/s. Krishna Clearing Agency (KCA), a Clearing,
Forwarding, and Shipping Agents company in Kandla,
acting on behalf of M/s. Eclectic Exports Limited.
(b). The case pertains to
the year 1996. The
Petitioner was handling an export cargo (viz., wheat flour) of M/s. Eclectic
Exports Limited. Because
of some problems, the export could not be effected resulting in levy of
demurrage on the unexported cargo. The
case is about the levy of this demurrage as also about concessions available
to export cargo.
(ii).
The grounds of the petition are as follows:
(a).
The Petitioner was not to blame for the lapse. Problems came in the way of the export because of third party
actions/inactions.
(b).
The special considerations shown (e.g., grant of extra
free time and a 50% rebate in demurrage) to encourage exports were unjustly
denied in this case.
(c).
The significance of the fact that the (same) cargo was in fact
subsequently exported has been ignored.
(d).
Relief through remission granted on earlier occasions to affected
parties in similar circumstances has been discriminately denied in this case.
(iii).
The Petitioner was to export about 7,000 MT of wheat flour. They
had aggregated about 2,500 MT. The
balance could not be aggregated because of a change in the Government policy
halting supply of wheat by the FCI to flour mills. As
a result, the shipment could not move. It
is the Petitioners contention that the entire blame is thus on the
Government and on the FCI; and, it will be unfair to penalise
them in the circumstance.
It is not reasonable for an exporter to cite such extraneous factors in
support of a claim against a Port Trust. Even if it is a fact that there was indeed a change in the
Government policy interrupting supply of wheat to the exporter, it has
to be viewed as a legitimate business risk faced by the exporter; it
cannot be used as an argument to require the Port Trust to absorb the
consequential hardships. As
it happens, the Petitioner does not seem to have covered well his
flanks to protect himself against such business risks and other eventualities.
The recounting below of some
of the more relevant facts governing this case will throw more light on the
gaps in the Petitioners performance.
(iv).
The following sequence of facts governing this case can be seen to be
more meaningful:
(a).
There was no fixity about the sailing schedule. The shipment was originally against vessel M.V. JAIPUR;
it was later changed to M.V. HUA-CHUAN.
(b).
Even during the three month period (April 96 July 96) the
Petitioner could aggregate only about 2,500 MT of cargo as against the
required 7,000 MT.
(c).
Instead of making strident efforts to come up with alternative
arrangements, the cargo was allowed to lie in the port area and get
damaged in the monsoon season.
(d).
The damaged cargo had to be taken out of the port area for
re-processing to make it export-worthy.
(e).
In the meanwhile, the Letter of Credit relating to the
transaction became inactive.
(f).
Even as the cargo was being re-processed, it was transferred by
the Petitioner to M/s. Raja Rani Exports Limited and M/s. United
Lumbers.
(g).
In the circumstance, the Shipping Bill in the name of M.V.
HUA-CHUAN (dated 2 May 96) was cancelled on 6 September 96.
(h).
When the re-processed cargo was brought into the port again for export,
it was treated by the KPT as a fresh consignment covered by a new Shipping
Bill.
(i).
Ultimately, the exporters M/s. Eclectic Exports Limited
closed their business and established another Company M/s. Commodities
Exchange Corporation.
(v).
The Petitioner has once again sought to shift the blame for the whole
thing on to the Port by alleging that refusal of permission to re-process the
cargo within the port area was responsible for its (forced) evacuation from
the port area and all the consequential complications. This is indeed a most extraordinary stand for any exporter to
take. As argued by the KPT,
there was acute shortage of storage space inside the port even for
export-worthy cargo; that being so, there was very little
manoeuvrability for the port to permit re-processing of damaged cargo within
the port area. It has to
be recognised in this context that, in any case, the port area
is not meant for processing activities.
The evacuation of the cargo in the circumstance was inevitable. And,
its declaration as rejected / shut-out cargo was a natural
corollary resulting in closure by the KPT of the original
transaction.
(vi).
When the re-processed cargo re-entered the port it was naturally
treated as a fresh consignment covered by a new Shipping Bill. The Petitioner has contended that this was unfair since the
cargo was exactly the same. This
contention is just not tenable for the reason that the cargo had been
transferred to another party and all the documents relating to the transaction
had also changed. The fact
remains that the first consignment was not exported.
Incidentally, as has rightly been stressed by the KPT,
even if the cargo is treated as the same, it will not entail any
particular benefit to the Petitioner; the demurrage will still be the
same.
It is noteworthy in this connection that, notwithstanding the
fact that the cargo was taken out of the port area for re-processing,
the KPT continued to treat it as export cargo and extended the benefits
available viz., free period as for export and a 50%
rebate in demurrage applicable to export cargo.
(vii).
Treating the whole case as one transaction without any interruption may
have some implication for the Petitioners claim for remission;
the request may become more tenable; but, that is a matter
entirely within the discretion of the Board of Trustees. It shall not be possible (or, even, appropriate)
for this Authority to attempt to adjudicate on matters within the purview of
the Board of Trustees under Section 53 of the Major Port Trusts Act.
(viii).
The GCCI and the KCHAA have strongly supported the case of the
Petitioner with observations about circumstances beyond the control
or the KCA, merits of the case, genuineness
of the exports problems, etc. While all this may be factually correct, as has earlier
been cited in this analysis, these are arguments extraneous to the KPTs
considerations. The KPT
does not get any grant-in-aid from the Government; it is expected to be
self-reliant financially. It
cannot, therefore, afford to lose its legitimate revenue
earnings because of business problems of importers/ exporters.
(ix).
The Petitioner has cited two earlier cases to allege discriminatory
treatment. As can be seen
from the facts given by the KPT [please see paragraph 6 above],
the consideration shown to M/s. Liladhar Pasoo Forwarders in their case
pertaining to vessels M/.V. HONEY B and M.V.
KAPITAN K was because of the delay caused by the Traffic Managers
office. That being so,
the Petitioner cannot seek to draw any benefit by citing it as a precedent.
In the other case where M/s. Liladhar Pasoo Forwarders had acted
on behalf of M/s. Satnam Overseas Limited, the KPT had shown
special consideration to grant remission. Only, the advice of the Government
has been cited by the KPT as a reason for the special consideration. This
response of the KPT cannot be said to hold much force because this was also a
case of delay in export due to recalcitrance of a third party which cannot
justify any demand for the port to forgo its legitimate revenue earnings. In the event, the Petitioner can have a genuine
grievance that the same standards are not being applied to grant of remission
in their case.
Be that as it may, grant of remission is entirely within the
discretion of the Board of Trustees; it is not a matter open for
adjudication by this Authority. Parties
aggrieved by such (allegedly) arbitrary Orders under Section 53 of the Major
Port Trusts Act have to seek redress in the appropriate court of law. Neither
can this Authority do anything about it nor can it be cited as a precedent to
seek from this Authority concessions in tariffs.
8.
In the result, and for the reasons given above, and based
on a collective application of mind, this Authority finds no merit in the
petition of M/s. Krishna Clearing Agency; and, accordingly, rejects it.
(
S.
Sathyam )
Chairman