Container lines get court stay against Customs order on terminal handling charges

P Manoj Mumbai | Updated on March 19, 2020 Published on March 19, 2020

The Customs order had allowed the EXIM trade to pay the charges directly to terminals, bypassing lines

A group of global container shipping lines operating from India has secured a court stay against a Customs Department decision allowing exporters and importers to pay terminal handling charges (THC) directly to terminals, bypassing carriers.

The Customs Department move, aimed at cutting logistics costs and enhancing ease of doing business, was challenged in the high courts of Mumbai, Madras and the Madurai bench of the Madras High Court by the Container Shipping Lines Association (CSLA) India, a lobby group for global container carriers, which includes Maersk Line, MSC and CMA CGM.

“The High Court of Madras and the Madurai bench of the Madras High Court have stayed the Customs decision issued through public notices in separate jurisdictions,” a person briefed on the development said.

A spokesman for CSLA confirmed the stay orders but declined to comment further saying the matter was “sub-judice”.

The Mumbai High Court is yet to grant a stay on the petition filed by CSLA.

Jurisdiction challenged

Exporters having authorised economic operator (AEO) status and importers having AEO status and those availing direct port delivery (DPD) facility for containerised cargo were permitted to pay THC directly to the terminal operators instead of paying through shipping lines from February 5, according to the Customs decision.

The CSLA is challenging the Customs Department’s “jurisdiction” over the issue.

“The Customs department is intervening into contracts between two parties. They have no jurisdiction over the contract between the Bill of Lading (B/L) holder and the shipping line. Customs has no locus standi to say: do this, do that,” said an executive with a European shipping line.

“We are seeking to keep the Customs intervention out of it. Whatever is to be sorted out, we will sort out, but the government need not come into the picture,” he said.

The CSLA, he said, has filed petitions in different high courts because “the Customs in one jurisdiction will not take cognisance of court orders in other jurisdictions”.

In container trade, THC is currently levied by the port terminals on the shipping lines for services such as unloading cargo containers from a ship and carting them to the storage yard in case of imports and vice versa for exports. Lines, in turn, recover this amount from the importers/exporters as an extra charge over and above ocean freight. The Bill of Lading – a contract between the line and a customer – demarcates the ocean freight and local charges such as THC and for delivering the container at the nearby container freight station or inland container depot.

The trade (importers/exporters) have often accused the lines of recovering THC that was more than what they (lines) pay to the terminals to clear the containers. In short, they claim the recovery is not on an exact back to back basis, but with a mark-up.

Shipping lines have rejected allegations that they were collecting “excessive charges as THC”, arguing that the charges recovered by shipping lines are “transparent” and is “put up on their websites in India for all to check”.

“The THC is a free market cost that should be left to the customers to decide upon,” Sunil Vaswani, Executive Director, CSLA (India) told BusinessLine in January.

Changing the mechanism for collection of THC will disrupt the way business is carried out in a free market without factoring in the risks and investments involved, he added.

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Published on March 19, 2020
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