Circular No. 34 dated 3^rd May 2000

I am directed to refer to the Board's Circular No. 31/ 99-Cus., dated the 27th May, 1999 on above-mentioned subject. It has been brought to the notice of the Board that 90% of Indian cargoes are being transhipped over foreign ports i.e. Dubai, Singapore, and Colombo, as transhipment through these ports is cheaper than that through the Indian Ports. Such transhipment through foreign ports results in outgo of foreign exchange. To promote transhipment of cargoes through Indian Ports through costal vessels and development of JNP as a hub port, the following suggestions were made, which have been strongly recommended by the Ministry of Commerce as well as Ministry of Surface Transport -

(A)    Carriage of transhipment containers together with domestic containers should be allowed on coastal transhipment vessels to reduce the cost of export.

(B)    The amount of Bond required to be paid for each slot (presently Rs. 6 lakhs) at JNPT should be reduced as it lead to operators having to deposit huge amount as Bond. As an alternative Mother Bond may be accepted and the same could be debited/ credited instead of bond for each and every consignment.

2.      The above-said suggestions were examined by the Board, and the following decisions have been taken to promote transhipment of cargo through Indian ports.

i)       Carriage of domestic containers alongwith transhipment containers for import/ export containers shall be allowed on coastal vessels. However, to check the possibility/ replacement of transhipment goods, all the transhipment containers as well as domestic containers should be sealed by one time bottle seal at the port of loading. To distinguish the domestic containers from transhipment container, carriers should be asked to suitably paint the domestic containers with bold letters "FOR COASTAL CARRIAGE ONLY". Further, carriers shall file two manifests, one the import/ export general manifest for the transhipment containers and other for domestic containers.

ii)      Considering that in case of exports, drawback is paid at the port of origin without waiting for proof of exports from the gateway port, the requirement of Bond with sufficient security cannot be dispensed with. The Bond alongwith security is, therefore, required to be taken from the carriers. However, to avoid the multiplicity of bonds, carriers may execute Mother Bonds instead of individual bonds. Such bonds will be accepted and maintained by the Commissioners of Customs at the port of origin and these will be like running bonds. The Mother Bond can be debited at the time of transhipment of import/ export containers at the port of origin and these will be credited on receipt of proof of safe landing of containers at the port of destination. The value of Mother Bond can be arrived on the basis of the average number of containers carried in the vessels, time taken for submission of proof of safe landing of containers at the destination ports, frequency of such transhipment as well as the average value for containers.

iii)     The difficulties as expressed by Trade regarding blockage of huge sum of money towards security furnished to Customs have been considered and, it has been decided that the bank guarantee furnished as security would be released as soon as proof of safe landing of containers at destination port is submitted by the carriers. Although, the bond taken from the carriers will be of the nature of running bond, the bank guarantees furnished towards security will be taken for each trip of vessels and released after receipt of safe landing of containers carried in that trip and destination port. Therefore, it can be said that the bond will be of the nature of a running bond, but security can be furnished for each trip of vessel separately.

           This will reduce the burden on carriers and at the same time revenue will be safeguarded.

iv)     The facility of Mother Bond as mentioned in para (ii) above shall be optional. The carriers shall be free to execute bonds and security for each trip as per existing practice or execute Mother Bond as mentioned above.

3.      The above instructions should be brought to the notice of the Trade as well as departmental officers by way of issuing suitable public notice/ standing orders.

4.      Difficulties, if any, in implementation of the above said instructions may be brought to the notice of the Board. Kindly acknowledge receipt of the circulars.