Regulation

Published on March 21st, 2017

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Global Shipping Lines in the Line of Fire from Indian Authorities

Global container shipping lines have taken the Indian Customs Department to court in Mumbai over a directive that require carriers to register under a rule framed in 2009 to act as so-called Customs cargo service providers.

Carriers fear that registering under the Handling of Cargo in Customs Areas Regulations, 2009, would help the Indian authorities “indirectly control and regulate” them.

Maersk Line, CMA CGM and MSC are among the carriers that have filed separate petitions in the Bombay High Court seeking legal clarity on whether such a registration is necessary or not, a shipping line executive said. The petitions were first heard by the court on 6 March and the proceedings will continue.

The Container Shipping Lines Association (CSLA), an industry lobby, is a co-petitioner in the case challenging the Customs directive to the lines.

A customs cargo service provider refers to an entity responsible for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods and includes a custodian such as a port terminal operator, a container freight station (CFS) or n inland container depot (ICD).

Following the directive, carriers had pleaded with the Customs authorities to exclude them from the rule, but their requests went unheeded, prompting lines to approach the court for a decision.

“The regulations shall be applicable to all ‘Customs Cargo Service Providers’ (CCSPs) that is to say all persons operating in a customs area and engaged in the handling of import/export goods. These include the custodians holding custody of import/export goods and handling such goods and all persons working on behalf of such custodians such as fork lift or material handling equipment operators etc. The regulations would also cover consolidators/break bulk agents and other persons handling imported/export goods in any capacity in a customs area”, Subhash Agrawal, a Commissioner of Customs, wrote in a public notice.

“It is a fact that shipping lines, freight forwarders and non-vessel operating common carriers (NVOCCs) are responsible for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods in a customs area and therefore required to comply with provisions of Handling of Cargo in Customs Areas Regulations, 2009. Imported goods and export goods remains in the exclusive possession of such shipping lines, freight forwarders and NVOCCs. They are also required to issue “Delivery Order” before importer can take delivery of imported goods”, Agrawal wrote.

“Accordingly, all participants of the logistic supply chain such as shipping lines, freight forwarders and NVOCCs fall under the afore-mentioned definition of “Customs Cargo Services providers” and are hereby required to get themselves approved as “Customs Cargo Services Providers” under Handling of Cargo in Customs Area Regulations, 2009”, Agrawal stated.

Lines have disputed this stand.

“What happens over here is, when we are registered with the Customs or licensed with the Customs it implies that the license or registration can also be de-registered or de-licensed. That means the Customs will have full control over what you are doing. Whether right or wrong, they can put a lot of pressure on you with a stick in their hands that they will otherwise cancel your license or de-register you,” a shipping line executive said.

“The Customs will then say you do this, reduce your tariff, reduce your rate, change your procedure, facilitate this, do this, do that. Customs will have full control over us whether it is legal or not. Indirectly they can regulate us, they can exert pressure through this registration”.

Lines say they don’t do any work in a Custom bonded area. “My container may go there; but I don’t do anything. The Customs said you give delivery of cargo, I said I’m sorry I do not give delivery of cargo”.

“The physical delivery of the cargo is given by the custodian to the merchant after the clearance of Customs. I don’t do anything. All I do is write a letter telling that particular custodian please deliver the cargo to these guys. The moment I issue a delivery order, my contract of carriage under various global laws is completed. The delivery order is issued in my office. So, I’m not even getting into the custodian’s premises inside the custom bonded area to issue the document”.

“We told Customs officials to keep us out of it. We explained that we don’t do anything here. Why do you want us to be registered, you want control over us, is that the idea?”

“So, what they are trying to do is, they are trying to use this registration as a tool to control the shipping lines. I’m sorry you cannot do that, it is not as per your law. You made the law, you are the regulators, the law under which you regulate does not provide for this, but they said no you have to do it”.

“So, they dug their heels in and we said ok might as well get the interpretation of the law. If the court says go register, we will go and register”, the executive said.

“The intention is to regulate the shipping lines, regulate our charges. The terminal handling charges (THC) should be this, the inland haulage charges (IHC) should be this, they don’t want the market forces to apply. They are dismantling the market forces and looking to regulate us”, the executive added.

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