Pharma cos pay heavy demurrages at ports, CFS authorities supersede govt orders

The Director-General of Shipping had advised ICDs, CFS, shipping lines etc. to not charge, levy or recover any demurrage, ground rent beyond allowed free period etc., for the delay in evacuation of cargo caused by reasons attributable to lockdown measures

Even after letters issued by different Commissioner of Customs offices, under the Government of India, to authorities of shipping lines and operation terminals to waive of demurrages charges, late fee, non-levy penalties and rentals for any delay due to nationwide lockdown in the country, many have flouted the orders and insist that full/heavy demurrages are paid by pharma companies.

The logistics chain of most businesses has been adversely impacted due to the lockdown. The chain includes activities of all stakeholders (Importers, Exporters, Customs Brokers, Transporters, Labour, etc.) dealing with the clearance of cargo from Customs facilities viz. port, Inland Clearance Depots (ICDs) and Container Freight Station (CFSs). As a result, importers are not able to clear import consignments for reasons that are beyond their control. In such a circumstance, numerous importers and trade associations had requested for the waiver of penal charges which are collected from the custodians of imported goods lying at various ports beyond the normal free period by ICDs and CFSs.

With an objective of continuation of the trade facilitation, the Central Board of Indirect Taxes and Customs (CBIC) issued a letter dated 23.04.2020, stating that in the above context, it is seen that the Director-General of Shipping (DGS), Shipping vide Order No. 7/2020 dated 29.03.2020 advised the Indian seaports, carriers, shipping lines not to impose any container detention charges on import and export shipments for the lockdown period. Vide DGS Order No. 8/2020 dated 31.03.2020 it was advised not to charge, levy or recover any demurrage, ground rent beyond the allowed free period etc., for non-containerised cargo for the lockdown period due to delay in evacuation of cargo caused by reasons attributable to lockdown measures. Further, the Ministry of Shipping has again in its Order No. PD-14033/4/2020-PD VII dated 21.04.2020, which supersedes its Order No. PD- 14300/4/2020-PD VII dated 31.03.2020, directed, inter alia, that no penal charges, demurrages, detention charges, dwell time charges etc. shall be levied and ports shall ensure strict implementation by port users including ICDs, CFS, shipping lines etc.

According to the Government of India, the CBIC circular no 133/95 -cus dated December 22, 1995, specifies that a CFS is taken to be an extended arm of the port and it functions as the Docks.

Commenting on the poor implementation process, Dr Dinesh Dua, Chairman, Pharmexcil said, “It may be taken on record that a lot of such notifications and circulars are shared with shipping lines and terminal operators to obey such standing instructions, but no one is willing to accept these orders and are charging demurrages heavily. The only thing required is a robust implementation of such orders. Only once these are implemented forcefully will the industry have some semblance of equanimity to function in such challenging and critical times, hence it needs immediate and urgent intervention from the government.”

S V Veeramani, Chairman and Managing Director, Fourrts Laboratories expresses similar concerns and says, “We welcome the steps initiated by different port authorities. However, the ground reality is different as some of the CFSs authorities are not implementing or partially taking into consideration and forcing us to pay the full demurrages.”

He also informed that due to a nationwide lockdown, companies are finding difficulties in getting containers on time due to transportation issues, hence it results in delay reaching the port. If the given orders are followed properly, it will reduce the burden on the importers and exporters and help the industry to ease out the business.”

Anwar Daud, Managing Director, ZIM Laboratories, said, “The Kolkata circular makes the position clear that lying of goods beyond the permissible time is delay triggered by force majeure (an act of God). The move by the Government of India through the Office of Principal Commissioner of Customs Kolkata is welcome and needs to be uniformly implemented at all the ports through their respective authorities issuing similar circulars. It endorses the force majeure clause which is already applicable, vide Ministry of Finance’s earlier circular.”

The Principal Commissioner of Kolkata Customs Port has issued a letter informing that the Orders issued by the Directorate General of Shipping and the Ministry needs to be followed strictly.

The Commissioner of Chennai Customs Port has also issued a letter informing that the office is receiving complaints that CFSs are initiating for full payment of ground rent and other charges for the delay in clearance of containers, which could not be cleared due to the reasons caused by nationwide lockdown, to prevent the spread of COVID-19 in the country. Therefore, the authority has requested to consider the waiver of ground rent, penalties and demurrage charges during the lockdown period from March 25, 2020, till an extended period.

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