News Update

CBDT Notifies Vivad se Vishwas SchemeGoyal discusses rising freight cost, shipping delays & congestion at the portsCustoms - First Schedule - Chapter 98 - Clarificatory explanation on 'laboratory chemical' insertedKentucky Sheriff accused of shooting dead District Judge inside courthouseM/s Konoike Transport approved as Strategic Buyer for disinvestment of FSNLCus - Gold seized from appellant & auctioned without considering cogent evidence furnished; seizure invalidated, auction proceeds be refunded with interest: CESTATIndia grants USD 50 mn budgetary support for one more year to MaldivesFATF smacks on India's back for measures to tackle illicit financeCX - Rule 4 of Central Excise Valuation Rules 2000 are rightly invoked where assessee suppresses material facts about clearance of finished goods to related entity: CESTATTMC disowns Minister’s statement that women were drinking during protestBRICS Summit: India showcases Legal Reforms and InitiativesST - For the amenities provided by service recipient, the cost thereof cannot be included in assessable value of service in hands of appellant being service provider, therefore, demand is not sustainable: CESTATChina, India are not rivals rather cooperators, says Chinese envoyRM exhorts Navy to be prepared for every situation in today's volatile global scenarioI-T - Revenue is not permitted to express different opinion based on very same facts disclosed during original assessment proceedings: HCIndia trashes report on Indian ammunition reaching UkraineI-T - No distinction to be made between direct and indirect expenses that are eligible for deduction under Section 35 D of the Income Tax Act: HCBiden hopeful of further cut in rates by FedI-T - Non-investment of sale consideration or portion thereof in designated capital gains would not come in way of assessee claiming exemption so long as assessee had invested said amount for construction: HCLanka to go to polls for New President tomorrowI-T - Assessee sought repeated adjournments without valid reason; costs of Rs 2000/- per appeal imposed on assessee; nevertheless, case remanded for de novo hearing, given tight scheduling of notices & interests of justice: ITATIsrael incinerates 1000 rocket launcher barrels of HezbollahI-T - Interest received by credit cooperative society from investment held, cannot be treated as it's operational income, as interest received is not from credit facilities provided to its members as envisaged u/s 80P(2)(a)(i): ITATSEBI hammer falls on Axis Capital; Ban imposed from acting as investment banker in debt marketI-T - Where DVO has power to estimate value independently & fails to do so, then PCIT's action to seek fresh report & revise the assessment, is outside scope of Section 263: ITATCJI asks lawyers to use SC Platform for recorded ordersNPS Vatsalya - FM launches pension scheme for minorsIP Saarthi - Govt launches AI/ML-based search engine for TrademarksNACIN hosts 3-day roundtable on IPR; Govt envisages greater role of Customs in IPR protectionUS Presidential Poll: Tall promises by Hopefuls elbow economy closer to tax-doom-loop!Fed lives up to global expectations; cuts interest rate by 0.5% - first cut in last 4 yearsMandaviya chairs meeting to provide Social Security to Gig and Platform WorkersCAQM announces revised GRAP schedule for Delhi-NCR
 
Light dues on deck cargo - current problem 'contained' but will Customs recover for past losses?

OCTOBER 29, 2008

By Ashwani Kumar, Superintendent of Customs

LIGHT Houses serve as an aid to navigation and pilotage at sea. Light Houses have been put up by the Govt along the coast for assisting ships in navigation and to help the ships in steering clear of danger. These Light Houses are provided, maintained and controlled by the Directorate General of Lighthouses and Lightships, [D.G.L.L.], Noida. Light-dues is a system of user charges levied on all commercial ships.  It is essentially a cost recovery mechanism. In India, Light-dues are levied on ships that are engaged in international trade.  Light-dues on coastal ships and sailing vessels have been abolished w.e.f 08.10.2000.  Section 13 of the Light House Act, 1927 empowers the Customs to recover Light-dues.  Light-dues paid in accordance with the provisions of the Light House Act, 1927 are valid for a period of 30 days. The Light-dues collected by the Customs Department are remitted to DGLL. 

The prevailing rate of light dues is  Rs. 8/- per tonnage. The term tonnage is derived from the taxes paid on tuns (casks) of wine. In modern maritime usage “tonnage” specifically refers to a calculation of the volume or cargo volume of a ship.  The term is still sometimes incorrectly used to refer to the weight of a loaded or empty vessel. One tonnage is equal to a volume of 100 cu.ft.[2.83 cubic meter].  Gross Register Tonnage (GRT) represents the total internal volume of a Ship. It is a measurement of the enclosed spaces within a ship.    GRT was replaced with Gross Tonnage (GT) in 1994 under the Tonnage Measurement Convention of 1969 but is still a widely used term in the industry. Net Register Tonnage (NRT) was replaced with Net Tonnage (NT).  Net Tonnage represents  the volume of the holds of a ship which carry cargo.        

The International Convention on Tonnage Measurement of Ships 1969 : (Entry into force 18.07.1982), adopted by the International Maritime Organization (IMO) provides a universal Tonnage measurement system for calculation of Gross Tonnage & Net Tonnage of a ship.  The Convention has been ratified by most of the maritime nations, including India.  We have introduced the Regulations of the Convention in our legislation under the Merchant Shipping Act, 1958 for implementation. The G.T and N.T of the ship are arrived at after measurements of the inner volumes of spaces.  Spaces open to sea and weather are not taken into account while computing G.T and N.T. of a ship. [ Ref. Regulation 6[3] of the International Convention 1969 and corresponding Rule 5[3] of the Merchant Shipping Rules 1987 framed under The Merchant Shipping Act 1958]

Section 12(1) of the Light House Act 1927 reads: For the purpose of levy of light-dues, the tonnage of a ship or sailing vessel shall be reckoned as under the Merchant Shipping Act, 1958, for dues payable on a ship’s tonnage including the tonnage of any space added under the said Act to the tonnage of ships by reason of  such space being utilized for carrying cargo (highlighted for emphasis). Thus according to Section 12(1)  Ships are required to pay light-dues for the entire earning spaces that are utilized for carrying cargo and that essentially includes volumes of spaces occupied by Deck Cargo, if any. Deck cargo means the cargo carried on open deck of the Ship. There is voluminous traffic of Container Ships and a good number of containers are carried as Deck Cargo. General Purpose ships sometimes carry Deck Cargo such as dangerous goods, project cargo, timber, livestock etc. There is a provision under Rule 10 of The Merchant Shipping [Tonnage Measurement of Ships]  Rules 1987 to measure such spaces occupied by Deck Cargo or any other space not included in the computation of Net Tonnage and the tonnage of spaces so utilized for carrying cargo  be added to the relevant tonnage for the purpose of levy of dues.

In November 2007 it was brought to the notice of the Customs Department that ships have been paying light-dues  simply on the Net Tonnage of the Ship and not on the Deck Cargo. Customs at Mumbai and Nhava Sheva came out with Public Notices 52/2007 and 09/2008 highlighting the provisions of Law and Rules in force, according to which Ships were required to pay Light Dues for such volumes of spaces utilized for carrying Deck Cargo in addition to the Light Dues the Shipping Lines had been hitherto paying only against the NT of the ship. 

The overzealous ship agents association MANSA (Mumbai and Nhava Sheva Ship Agent Association) opposed the implementation of the Customs Notices on frivolous  grounds that the notices are not applicable to Container ships. In order to settle all doubts, the Customs  put the notices in abeyance and referred the matter to the Office of the Director General Shipping for their expert opinion. The arguments advanced by MANSA did not hold water. The Office of D.G Shipping concurred with the stand taken by the Customs. After receiving confirmation from  D.G Shipping , the Customs Department  reintroduced the Notices in May 2008 for enforcement.

The Customs have since started collection of additional light dues from ships which carry Deck Cargo in accordance with the provisions of the L. H. Act 1927 read with the M. S. Rules 1987.  The most affected ones are Container ships. In modern container ships almost 60 % of the boxes are on deck and 40 % boxes are carried below deck. It is absolutely legal for ships to carry as many containers as deck cargo as long as the load lines of the ship are not submerged and the vision of the navigating officer from the bridge of the ship is unobstructed. But when it comes to payment of Light Dues the Municipal Law requires that Ships are supposed to pay light dues for the entire volumes of spaces available for carrying cargo. Mundra and Kandla ports have followed the notices implemented by Mumbai and Nhava Sheva Customs. In order to maintain uniformity in the mode of collection of  light-dues, all major and non major ports need to follow the P.N.no.9/2008 dtd.17-01-2008 on Light-dues issued by Jawaharlal Nehru Custom House.

Having enjoyed the privilege of non-payment of light-dues in respect of deck cargo for several years, the container shipping lines and the shipping agents handling container vessels, are disturbed with the introduction of notices and orderly collection of dues. MANSA has reportedly taken up the matter with the Ministry of Shipping, DGLL and requested CSLA [ Container Shipping Lines Association ] and INSA [Indian National Ship owners Association ] to intervene. The stakeholders in container ships have expressed their resentment through the newspapers  stating that the levy of light-dues on boxes carried on deck is unjustified and the L.H. Act enacted in 1927 need to be changed.

Light-dues charged on N.T. as well as on the deck cargo of a ship is certainly in accordance with the laws and rules in force as explained in the foregoing paras.  D.G.L.L. has not revised the rate of light-dues in  the past 10 years and at the prevailing rate of Rs.8/- per tonnage the dues leviable on a standard box of 20 feet works out to Rs. 92 approx., which appears to be quite reasonable. In any case, the fact remains that the exchequer has been deprived of crores of Rupees of revenue on account of non payment of light-dues in respect of deck cargo by the container shipping lines for the past several years till 2007.

(The views expressed are strictly personal of the author)

TIOL Tube Latest

TIOL Tube brings you an interview with former US Secretary of Treasury, Mr. Larry Summers who was recently in Delhi.

AR not Afar by SK Rahman



Shri Ram Nath Kovind, Hon'ble 14th President of India, addressing the gathering at TIOL Special Awards event.