Chapter 11

TRANSHIPMENT OF CARGO

In India, a number of ports, airports, Inland Container Depots(ICD), Container Freight Stations(CFS) having Customs clearance facilities have been developed to reduce congestion at the gateway ports/airports and to allow importers and exporters to take Customs clearance of imported and export goods at their door steps. Sometimes, cargo meant for third country lands at an Indian port or airport. It has to be carried to its actual destination. The objectives of bringing the Customs facility to door step of importing community & decongesting the gateway ports/ airports, can be achieved only if movement of imported cargo or export cargo is allowed between a port/airport and other ports/airports, ICDs/CFSs in India or a port/airport abroad .

2. As per the Customs Act, duty becomes payable immediately after imported goods are landed at a port or airport. To avoid payment of duty at the port of landing in cases where goods are to be carried to another port/airport or ICD/CFS or to a port/airport abroad, the Customs Act provides a facility of transhipment of cargo without payment of duty. The goods can be transhipped from one port/airport to another port/airport/ICD/CFS either by vessel, air, rail or road or by combination of more than one such mode of transport..

3. The procedure for transhipment provided in section 54 of the Act is applicable for imported cargo only. In regard to export cargo cleared from a port/ACC or ICD/CFS and exported through some gateway port/airport, a similar procedure is being followed to allow carriage of Customs cleared export cargo from a port/airport/ICD/CFSs to another port/airport.

Procedure for transhipment of containerised imported cargo

A. from gateway port to another port/ICD/CFS in India

4. The imported cargo unloaded at a port is allowed to be transhipped to another port/ICD/CFS or a port abroad, if the cargo is mentioned in the import manifest for such transhipment. The transhipment procedure of imported cargo is governed by the provisions of section 54 of the Customs Act and the Goods Imported (Conditions of Transhipment) Regulations, 1995. Broadly, the transhipment procedure is as follows:

(i) Transhipment Permit:

5. A "transhipment permit" is the permission granted by the Customs, at the port/airport of unloading of imported goods, to shipping agents for carriage of goods to another port/airport/ICD/CFS in India. The shipping agent submits an application along-with transhipment forms (5 copies), sub-manifest and a copy of IGM to the Customs. The Customs scrutinizes the details furnished by the shipping agents in the application for transhipment. In case, the documents are in order and there is no alert notice against the shipping agent, permission for transhipment is granted by the Customs.

(ii) Execution of Bond and Bank Guarantee:

6. To ensure that imported cargo, on which duty has not been paid, are not pilfered en-route to another port/airport/ICD/CFS and reach there safely, a bond with bank guarantee (@ 15% of bond value) is executed by the carrier engaged for the transhipment of the goods. The carriers in public sector i.e. CONCOR and CWC are exempted from the requirement of bank guarantee for transhipment of goods. The terms of the bond is that if the carrier produces a certificate from Customs of the destination port/airport/ICD/CFS for safe arrival of goods there, the bond stands discharged. In case such certificate is not produced within 30 days or within such extended period as the proper officer of Customs may allow, an amount equal to the value, or as the case may be, the market price of the imported goods is forfeited.

7. The bond value should be equal to the value of the goods. However, considering the difficulties of shipping agents in producing documents for determination of value of the goods sought to be transhipped, the bond value is determined on the basis of notional value of the goods, which is an average value of cargo per container transhipped in the past.

8. To avoid multiplicity of bonds, the carriers are allowed to execute mother bonds instead of individual bonds. The mother bonds are like running bonds. The value of mother bond can be arrived on the basis of the average number of containers carried per trip, the average time taken for submission of proof of safe landing of containers at the destination ICDs/CFSs, frequency of such transhipment as well as notional value of cargo per container. As mother bond is a running bond, its amount may be high. If a running bank guarantee @ 15 % of total bond amount is taken, it may block huge sum of money. To avoid blockage of money of carriers, an option has been given to them to furnish either a running bank guarantee or individual bank guarantees for each transhipment. Individual bank guarantee for each transhipment is released as soon as the landing certificates from destination Customs are produced.

9. The bond or, as the case may be, mother bond and bank guarantee are debited at the time of transhipment of import/export containers at the port of origin, and the same is credited on receipt of proof of safe landing of containers at the port/ICD/CFS of destination.

(iii) Execution of Bond for Re-export of Containers:

10. As the containers themselves are liable to duty, Customs duty exemption is provided vide notification No. 104/94-Cus. dated 16/3/94 which, inter-alia, facilitates its being taken out of the port without duty payment subject to execution of bond. The shipping agents are required to file this bond with the container cell of the Custom house in terms of the notification No. 104/94-Cus. dated 16/3/94, binding themselves to re-export containers within six months of their import into India. The period of six months may be extended by the Deputy/Assistant Commissioner of Customs.

(iv) Sealing of Containers:

11. After issuance of transhipment permit and execution of bonds as mentioned above, containers are sealed with "one time bottle seal" by the Customs. In case, containers are already sealed with "one time bottle seal" by the shipping agents, containers are not required to be sealed again by the Customs. In such cases, shipping agents are required to inform the serial number of seals to Customs, which is just verified by the Customs.

(v) Carriage of Containers:

12. After sealing and/or checking of seals by Customs, containers are moved from the gateway port and carried by the shipping agents to destination port/ICD/CFS by vessels, rail or road.

(a) Carriage by Rail:

13. Presently, rail movement is undertaken only by CONCOR, a Public Sector Undertaking (PSU) under the Ministry of Railways. The CONCOR, being a PSU, is exempt from execution of bank guarantee for transhipment. However, a bond is required to be executed by them. After completing all the above-said formalities, containers are allowed to be loaded on wagons under the supervision of Customs. The fact of such loading of the containers is endorsed by the preventive officer on all copies of transhipment permit and one copy of the permit is given to the steamer agent. One copy is retained for record, one copy accompanies the container and the fourth copy is handed over in a sealed cover to the carrier i.e. CONCOR. The carrier has to hand over the sealed cover to the Customs authorities at the destination.

(b) Carriage by Vessels:

14. The CBEC Circular 31/99-Cus. dated 27/5/1999 allows carriage of imported container from gateway port to another port by vessels. For transhipment through a vessel, procedure as explained above, i.e. issue of transhipment permit, execution of bond, sealing of containers etc., needs to be followed. The formalities required to be followed for transhipment through vessels are similar to those followed for transhipment by rail.

15. To optimize the capacity utilisation of vessels, carriers have been allowed to carry domestic cargo along-with the transhipment containers. However, to guard against the possibility of replacement of transhipment goods with domestic containerised cargo, some safeguards have been prescribed. All the transhipment containers as well as domestic containers are required to be sealed by "one time bottle seal" at the port of loading. The domestic containers are required to be suitably painted with bold letters " For Coastal Carriage only" for their identification. Further, carriers are required to file a manifest for domestic containers.

(c) Carriage by Road:

16. The containers are also allowed to be carried from the gateway ports to ICDs/CFSs by road. Many custodians of ICDs/CFSs, particularly those which are not connected by rail, carry the container by road. The formalities to be followed are similar to those followed for transhipment by rail.

(vi) Formalities at the Destination:

17. At the destination, carrier is required to present the sealed cover containing a copy of transhipment permit to Customs. The Customs checks the particular of containers, seals etc. with reference to transhipment permit. The carrier is required to obtain a certificate regarding landing of container from the Customs.

18. In case, the seals are found to be broken at the time of examination of containers by the Customs, a survey of contents of the containers is conducted in presence of Customs officer, carrier, importer or his representative and representative of insurance company. Shortage, if any, noticed is recorded and is signed by all those present. The carriers are required to pay the duty for pilferage in terms of the condition of bond executed by them with the Customs at the port of loading. This is apart from other action which can be taken under section 116 of the Customs Act, 1962.

(vii) Submission of Landing Certificates to Customs at the Originating Port:

19. The carriers have to obtain the landing certificates of containers from the Customs at the destination port/ICD/CFS and submit the same to the Customs at the originating port. The Customs reconciles its record and closes IGMs on the basis of these certificates.

(viii) Clearance of the Goods:

20. After safe landing of containers at the destination port/ICD/CFS, the importers or their authorised agents are required to follow all Customs formalities such as filing of bill of entry, assessment, examination of goods etc., for clearance of the goods.

B. from Gateway Port to a Port Abroad:

21. For transhipment of containers from a port in India to a port abroad, shipping agents have to file transhipment application along-with relevant documents to Customs. The Customs scruitinises the application and if these are found to be in order, permission to tranship the cargo is granted. In such cases, execution of bond or bank guarantee is not required. After issuance of transhipment permit, goods are allowed to be loaded on to the ship under the Customs supervision. The preventive officer supervising the loading is to acknowledge loading of such cargo. The record is reconciled on the basis of endorsement of the preventive officer and copy of EGM showing details of such transhipment.

A. from Gateway Port to EPZ and SEZ:

22. The procedure for transhipment of cargo from gateway port to Export Processing Zones(EPZs) and Special Economic Zones(SEZs) is similar to what has been stated above for transhipment of cargo from port to another port/ICD/CFS above. For transhipment to EPZs and SEZs, a bond with bank guarantee is required to be furnished. The Customs in EPZ/SEZ give suitable landing certificate after checking, which is to be submitted to Customs at the originating port.

Movement of export cargo from port/ICD/CFS to gateway port

23. The export cargo, after its clearance at a port/ICD/CFS, may be carried in sealed containers to the gateway port for export. Broadly, the procedure in this regard is as follows:

(a) The exporters are required to bring their goods meant for exports to the Port/ICD/CFS and file six copies of Shipping Bill with all necessary documents like GR form, AR-4 Form, Certificate issued by Export Promotion Councils, documents regarding quotas wherever applicable etc.. In addition to the usual information given in the shipping bill, the exporter is required to mention the gateway port of export on the shipping bill along-with the serial number(s) of the container(s). The Shipping Bills are assessed as usual, the goods are examined, samples drawn, and if required, inspection carried out by other agencies to check compliance with provisions of various Allied Acts before export is permitted. The original GR form is forwarded to the concerned branch of Reserve Bank of India.

The examination order is given on the duplicate and two transference copies of the Shipping Bill. The examination report is required to be recorded on all these copies. After examination of the goods, container is sealed by the Customs with "one time bottle seal". The duplicate copy of Shipping Bill is retained at the ICD/CFS/port and the transference copies are forwarded to the gateway port. The E.P. copy of shipping bill is required to be suitably endorsed/stamped by the Customs officer to the effect that the goods are to be transhipped at the gateway port mentioned on the shipping bill for their destination outside India.

The goods cleared for export at the port/ICD/CFS is allowed to be carried to the gateway port for export subject to the conditions of execution of bond similar to that provided for transhipment of import goods under relevant Regulations, and if export goods are manifested for the final destination through the gateway port. The FOB value of goods is to be debited from the continuity bond executed by the custodians. The carriers/custodians transporting the goods, are to be handed over the transference copies of Shipping Bills in a sealed cover.

The containers are allowed to be carried from a port/ICD/CFS to the gateway port by vessel or rail or road or by combination of two or more of these modes of transport.

The drawback is required to be paid to the exporters as soon as the shipping bills are passed and goods are shipped at the originating port/ICD/CFS subject to the condition that the necessary bond has been executed by the Steamer Agent/carrier to bring back and submit the proof of export to the Customs within 90 days.

At the gateway port, the containers are normally allowed to be exported under Customs supervision after checking the seals. In case seals are intact and documents are in order, no further examination of goods is undertaken. The preventive officer supervising the export of container, endorses the fact of shipment in both the transference copies. Steamer agent has to file Export General manifest(EGM) in duplicate.

One copy of transference shipping bill along-with a copy of EGM is sent back to the originating port/ICD/CFS.

At the originating port/ICD/CFS, export manifest and transference copy of shipping bill, received from the gateway port, are co-related with the duplicate copy of the shipping bill and other relevant documents for closure of export manifest and cancellation of bond.

Bonded Trucking facility:

24. To give flexibility to trade to choose mode of transport and to facilitate movement of LCL cargo, a scheme has been introduced to allow movement of export cargo and imported cargo between a port/ICD/CFS and gateway port in closed trucks. Broadly, the features of the scheme for movement of export and imported cargo are as follows:

A. Export :

25. A procedure allowing carriage of export goods in truck from manufacturing factories/ICDs/CFSs to the airport for further shipment by air or to the port for further consolidation of such goods into a container and subsequent export has been laid down. Prior to introduction of the facility, full container load(FCL) cargo was allowed to be transferred under Customs/Central Excise seal from ICD/CFS or from the factories (in case of container stuffed inside the factory) to the gateway port. The truck movement of export cargo allows carriage of smaller packages belonging to more than one exporter in one truck which is to be sealed after stuffing in the ICD/CFS. In case the goods are moving in truck from the manufacturing factory, factory owner or exporter is responsible to account for the goods, whereas in case of goods moving from ICD/CFS, the custodian of the ICD/CFS is responsible to account for the goods. The procedure for movement of export cargo by truck has been prescribed in the CBEC Circular No. 57/98-Cus., dated 4/8/1998. Broadly, the procedure is as follows:

(a) Under the scheme, shipping bills in six copies along-with all necessary documents like GR form, AR form, certificates issued by Export promotion Councils, documents regarding quotas wherever applicable, etc. are to be filed by the exporters. The shipping bills are assessed and examined at the ICD/CFS as is being done for cargo to be carried in containers to the gateway port. The examination report is recorded on the duplicate copy as well as on the two transference copies of shipping bills. The duplicate copy of shipping bill is retained in the ICD/CFS and transference copies are sent to the gateway airport or port. FOB value of the goods is debited from the continuity bond executed by the custodians.

(b) After the examination of goods is over, all the packages are handed over by the Customs authorities to the custodians along-with two transference copies of the shipping bills, certified copy of invoice, packing list and other documents in a sealed envelope. All the packages are stuffed in the trucks under the supervision of Customs and representative of custodians. After the stuffing, trucks are sealed with temper proof bottle seals. The endorsement that the trucks are sealed, are made on both the transference copies of shipping bill. The seal number of seals is endorsed on all the documents.

(c) At the gateway port or airport, documents are presented to the Customs, who verifies the genuineness of documents and checks the marks and numbers of the seals on the truck. If the seals are found intact and documents in order, the goods are allowed to be de-stuffed from the trucks under Customs supervision. The goods are then stuffed in containers by the shipping agents under Customs supervision. In case of export by air, goods after de-stuffing from the truck, are palletized and loaded in the aircraft under the Customs supervision. The preventive officer, supervising de-stuffing of goods from the trucks and stuffing of such goods in containers or as the case may be, palletisation of goods, endorses the transference copies of shipping bills with "shipment allowed" endorsements. At the time of actual shipment endorsement "let export" is made on the transference copies of the shipping bills and AR-4. One copy of shipping bill is retained at the gateway port/airport and the other is sent back to originating ICD/CFS.

(d) In case seals are found broken or some discrepancy is noticed, goods are subjected to 100% examination. Action in terms of the bond can be taken against the carrier in such cases.

B. Imports:

26. Movement of import cargo from the airports/air-cargo complexes to another airport/air-cargo complex/ICD/CFS by truck has also been allowed vide CBEC Circular No. 69/99-Cus. dated 6/10/1999. Broadly, the procedure is as follows:

(a) Under the scheme, the airlines or their agents or custodians of gateway airport/air-cargo complex or the custodians of destination ICDs/CFSs/airports/ACCs are appointed as custodians of imported cargo to be transhipped in bonded truck from an airport/ACC to another airport/ACC/ICD/CFS. The transhipment under the scheme is governed by the provisions of the Goods Imported (Conditions of Transhipment) Regulations, 1995. The cargo to be transhipped needs to be manifested as for transhipment by the incoming international carrier.

(b) The custodian executes a suitable running bond with a bank guarantee for an amount approved by the jurisdictional Commissioner of Customs for proper accountal of goods. The amount is debited from the bond when transhipment cargo is taken by the custodians and the bond is credited when the proof of handing over of the cargo to Customs at final destination is produced.

(c) The custodians are required to submit the list of trucks together with registration numbers to be used for movement of each transhipment cargo. The cargo to be transhipped, after its unloading at the airport, is immediately shifted to transhipment warehouse of airlines or custodian. In case, the airlines/custodian does not have a transhipment warehouse, the import cargo duly passed with transhipment application is received by them from the Airport Authority of India"s (AAI) custody to their make up area specially earmarked for the purpose of palletisation/containerisation on the same day under the Customs supervision.

(d) The custodian has to submit transhipment application along-with a copy of airway bill to Customs. After scrutiny of the application, transhipment permit for transhipment of cargo is issued. On getting the permission for tanshipment, goods are shifted from the warehouse into truck under the supervision of Customs. After loading of goods, truck is sealed with one time bottle seal by the Customs.

(e) The Customs at the destination check the Customs seal and description of packages as per the transhipment permit. The custodian is responsible for the safety and security of the cargo. After unloading of the goods at the destination airport/ACC/ICD/CFS, the Customs makes suitable endorsement on the copies of transhipment permit, a copy of which is retained by the Customs at the destination airport/ACC/ICD/CFS and other copy is returned to the originating airport. The custodians are required to submit proof of safe arrival of goods at the destination, to the Customs at the originating airport/ACC within 30 days from the despatch of goods, failing which suitable action in terms of the condition of bond may be taken against the custodians.

Transhipment of cargo by air:

27. The CBEC Circular No.47/96-Cus., dated 16/9/1996 provides a detailed procedure for transhipment of imported cargo by air (i) from an airport in India to another airport in India, and (ii) from an airport in India to an airport abroad. The circular also provides a procedure for movement of export cargo from an inland airport in India to an airport abroad through a gateway airport in India. The movement of cargo between the gateway airport and inland airport is allowed in Indian Airlines flights and also in private sector airlines flights. The procedures in brief are as follows:

(i) Transhipment of cargo from a gateway airport to an inland airport:

(a) The transhipment of imported cargo from a gateway airport to an inland airport is governed by the Goods Imported (Conditions of Transhipment) Regulations, 1995. The airlines bringing the import cargo, files an application for transhipment permit along-with copies of airway bills to Customs. The Customs, after scrutiny of details furnished in the application, issues transhipment permit. After issuance of transhipment permit, goods are allowed to be stuffed in closed trucks and taken to transhipment warehouse of the domestic carrier under the Customs preventive escort.

(b) On receipt of the goods at the warehouse of domestic carrier, the Customs Officer posted in the warehouse has to acknowledge receipt of the goods and make suitable endorsement on the copies of the transhipment permit accompanying the goods. A copy of transhipment permit is returned to the transhipment warehouse of airlines where from the goods originated. The domestic carrier has to execute a bond with security in terms of the said regulations. On receipt of goods, domestic carrier has to prepare EGMs clearly mentioning transhipment cargo as international cargo and submit the same to the Customs. The transhipment cargo is loaded in the aircraft in presence of Customs. Two copies of EGMs are also sent to Customs at the destination airport.

(c) The Customs at the destination airport, has to check the packages with reference to EGM and make suitable endorsement on the EGMs. One copy of EGM is returned to the Customs officer at the warehouse of domestic cargo at the airport where from cargo originated, for reconciliation of their record. One copy is to be retained there.

(ii) Transhipment of cargo received at an airport in India from an airport abroad to an airport abroad:

The cargo to be transhipped to any foreign destination is to be sorted out immediately after landing at an Indian airport and is transferred to special enclosure meant for storage of transhipment cargo under Customs supervision by the concerned airlines. Before transhipment of any goods, cargo transfer manifest is required to be presented in triplicate to the Customs. One copy is retained at the warehouse of the airlines. The remaining two copies with cargo are handed over to the carrier, who is to carry the goods to foreign destination. The loading of cargo in the aircraft is undertaken under the Customs supervision. The officer supervising the loading makes suitable endorsement on the bill of transhipment and send a copy back to the warehouse of the airlines.

(iii) Movement of export cargo from an inland airport to an airport abroad through an intermediate airport in India:

(a) The shipping bills are filed, assessed and goods examined as usual at the originating airport. The domestic carrier has to furnish a bond to Customs to ensure that goods are safely exported out of India. The domestic carrier is to carry cargo only under E.G.M. duly certified by the Customs.

(b) At the gateway airport, the cargo received from the inland airport is removed from the aircraft to the transhipment warehouse of domestic carrier under Customs supervision. The domestic carrier presents the EGM copies brought from inland airport, to the officer in-charge of warehouse.

(c) After storage of goods in transhipment warehouse, the domestic carrier files cargo transfer manifest to the Customs. After obtaining the permission from the Customs, goods are taken in closed trucks under Customs supervision to the warehouse of foreign airlines. After shipment of cargo, the officer in-charge of warehouse will reconcile his records on the basis of EGM submitted by the foreign airlines. The Customs officer at the warehouse of the foreign airline has to make suitable endorsement evidencing receipt of cargo and subsequent export on the copies of EGM brought by domestic carrier from the originating airport. A copy of the said EGM is to be sent back to the originating airport for accountal of goods by the Customs at the originating airport. In case duly endorsed copy of EGM is not received by the Customs at the originating airport within 30 days, action may be taken in terms of the conditions of the bond.

(Reference: Goods Imported (Conditions of Transhipment) Regulations, 1995 issued vide notification No. 61/95-Customs(Nt) dated 26/9/1995. Circulars No. 47/96-Cus., dated 16/9/1996, 57/98-Cus., dated 4/8/1998, 31/99-Cus., 27/5/1999,69/99-Cus., dated 6/10/1999, 34/2000-Cus., dated 3/5/2000, 56/2000-Cus., dated 5/7/2000,61/2000-Cus., dated 13/7/2000).

Presented by eximkey.com