TARIFF AUTHORITY FOR MAJOR PORTS

NOTIFICATION

New Delhi, the 29th January, 2001

No. TAMP/76/99-KPT.—In exercise of the powers conferred by Sections 48 and 49 of the

Major Port Trusts Act, 1963 (38 of 1963), the Tariff Authority for Major Ports hereby amends the

Scale of Rates of the Kandla Port Trust relating to levy of storage/rental charges on cargoes lying inside

the port for more than 60 days, as in the Order appended hereto.

SCHEDULE

Case No. TAMP/76/99-KPT

The Kandla Port Trust (KPT)

...

Applicant

(Passed on this 5th day of January 2001)

The Kandla Port Trust (KPT) had Initially submitted a proposal in September 100©

about fixing demurrage charges on cargoes lying inside the port on rental or warehousing terms for

more than 90 days.

2.1.

The KPT then proposed to include the following clause relating to uncleared /

unshipped cargo lying inside the port for more than 90 days:

" Demurrage charges at the highest rate prevailing will be levied after 90 days on

uncleared / unshipped cargoes lying on rental / warehousing terms in the Port for

more than 90 days. However, the 90 days period will be extended to the extent of

the delayed period wherever the delay is beyond the control of importer / exporter

like delay in getting clearance from the PHO, non release of cargoes by the

Customs for analytical & chemical tests other than ordinary process of

appraisement, detention of cargoes by Directorate Revenue Intelligence / Port and

cargoes not released due to litigation in the Court of Law."

2.2.

Supporting the proposal, the KPT had mentioned that the shippers had a tendency

to store their cargo inside the port for Indefinite period, since storage charges for cargo on

warehousing and rental terms were very low. As a result, there was a congestion for storage

accommodation inside the port and some importers were diverting their cargo to some other ports

due to non availability of adequate storage area at the KPT.

The above proposal of the KPT was circulated to various representative bodies of

port users. A joint heanng was held on 7 March 2000 at the KPT. Since the proposal was

inadvertently not circulated to some of the concerned user agencies, rt was then decided to re-

circulate the proposal. The proposal was again circulated. Comments ware received from the

users and another joint hearing was fixed on 14 July 2000 at the KPT. In the meanwhile, the port

Intimated that in the Board meeting held on 29 June 2000 It was decided to revise Its earlier

proposal to levy demurrage on cargo lying inside the port area for more than 90 days. The

proposed joint hearing was, therefore, postponed.

4.1.

The KPT sent its revised proposal vide its letter dated 25 July 2000. In its revised

proposal the KPT suggested the following rates for storage/rental charges:

Period

0-60 days

61-90 days

91 -180 days

Beyond 180 days

Rate

As per existing rate of lowest slab

200% of above lowest slab

250% of above lowest slab

300% of above lowest slab

4.2.

The KPT stated that it had revised its original proposal bearing in mind various

difficulties expressed by the users and after taking into consideration the following factors:

(i).

The dwell time of cargoes moving through the Kandla Port,

(ii).

The covered / open storage accommodation available.

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART III—SKC\ 4|

(lii).

The level of traffic and the types of cargoes moving through the Port and their

demand for storage area,

(iv).

The existing storage / rental charge, and

(v).

The competition from nearby ports.

The above proposal of the KPT was circulated to various users. The comments

received from them are summarised below.

Kandia custom House Agents¹ Association (KCHAA)

(i).

There shall be a maximum of only three slabs under the heading 'period' instead

of four slabs as proposed by the KPT. The first period may be 0 - 90 days instead

of 0 - 60 days as proposed by the KPT.

(ii).

The rates can be 200% of the lowest slab for the period from 91-180 days and

250% of the lowest slab for the periods beyond 180 days.

(iii).

The schedule of the storage charges proposed by them would not add too much

burden on cargoes moving into and out of Kandia towards storage charges but at

the same time act as a sufficient deterrent against long storage of cargoes within

the port area.

The Oandhldham phnmbef of ffornm»rcc and industry (QCCl)

(i).

The KPT has not given any statistics for diversion of traffic an account of shortfall

of storage space and the GCCI also does not have any knowledge of such

diversion.

(il).

The KPT is presently facing competition from Adani and Plpavav Ports. Any

increase in service cost will result in increase of economical handling cost at

Kandia Port

(ill).

The port users at Kandia port will have to honour certain additional coat as

compared to other ports, an account of statutory obligations like dock safety, dock

labour board and collective bargaining power of the trade unions.

(iv).

The KPT has not chosen to go for general revision of its Scale of Rates every 3

years in accordance to the guidelines. Instead various piecemeal revision have

been undertaken either with the approval of the Board of Trustees or with the

approval of the Government The trade will not get an opportunity to evaluate

overall increase in the Scale of Rates if this premature increase is permitted.

(v).

The proposed revision is nothing but change from the monthly pattern to day

pattern and the increase proposed is 200%.

(vi).

It will not be in the overall interest of the KPT to embark on any further increase in

the existing provisions and to continue the system at least for a further period of

one year. There are instances that one or two dry cargo berths and oil jetty

remained un-occupied.

(vii).

In the interest of trade and traffic passing through the KPT, the matter may be

reconsidered to prevent port users to move to other ports.

The Kandia Port Steamship Agents' Association (KPSAA)

(i).

The revised rates are too steep. The reasons and circumstances warranting

revision are not clear.

(il).

The traditional traffic of Kandia is aiready being diverted to Mundra and Navlakhi.

The trade is looking at the corf, congeniality and other benefits.

(iii).

Piecemeal revision of rates is an irritant and a port which is a service organisation

should avoid this at any cost. In order to assess the overall impact in costs, levy

of demurrage should be dealt along with a proposal for general revision of rates.

(iv).

The KPT has built new godowns and also open plots and there has been no

instances that the smooth operations of the port suffered due to space congestion.

No case has been made out that the KPT is in urgent need to augment its income.

Had the KPT exercised the provision of Section 61 and 62 of the MPT Act on a

regular basis, congestion arising in the port could have very well been mitigated.

(v).

The proposal is unrealistic and certain very vital and pertinent issues have

unfortunately been lost sight of the change in the system of proposing rental

charges on a day to day basis instead of on monthly basis which is not

acceptable. The reason for doing so is not informed.

6.1.

A joint hearing in this case was held on 16 September 2000 at the KPT premises

in Gandhidham. During the joint hearing following submissions were made:

The Kandla Port Trust (KPT!

(i).

The proposal is mainly to reduce congestion in the Port

(li).

In the revised proposal, the slab is reduced from 0 - 9 0 days to

0 - 6 0 days with

reference to the provision in Section 61 of the MPT Act

According to this

provision, the port can sell the cargo after 60 days.

(iii).

We are spending Ra.40 crores to develop 70 hectares of land more for custom

bonded storage area.

(iv).

Nearly 40% of the cargo remains for more than 90 days.

(v).

We take note of the idea about comprehensive revision of Scale of Rates. But, it

will take time. In the meanwhile, some proposals will come up; they cannot be

held back.

(vi).

(a).

Only bulk cargo gets the 'rental' facility, because the custody remains with

the consignee.

(b).

In break-bulk cargo the port gives a receipt and becomes bailee. So, we

have to exercise care, watch and ward, etc.; and, therefore, the cost has

to be more. In such case there is demurrage.

(c).

Sections 61 - 62 of the MPT Act are not only for 'unclaimed' but for

'uncleared' cargo also.

(d).

Our proposal is only for cargo lying beyond 60 days. The increase in

demurrage is not steep.

(e).

The August 1998 circular was a part of de-congestion drive. Those

circumstances still continue. Congestion is still there and, therefore, there

is no need to revise the system.

(f).

In the August 1998 circular, the limit was 60 days. Thereafter, double the

rate as penalty for unauthorised occupation. We want to formalise now

with the TAMP approval instead of taking action under Sections 60 and 61

of the MPT Act.

The Kandla Custom House Agents' Association (KCHAA)

(i).

Please introduce three slabs and not four as proposed by the Port and reduce the

rates.

VQ)<J>\\-/(K,I

- "5

THE GAZETTE OF INDIA: EXTRAORDINARY

| PART III—SEC. 4]

(ii).

Compare rates with nearby new Ports. Any increase in cost will divert the traffic

(iii).

Take into account the factors like time taken for clearance,

(iv).

There is no congestion now in the Port.

(v).

Gujarat Government has reduced the maximum permissible load to be carried by

trucks. This also delays the clearance. Gujarat Government wants to develop

Mundra and Pipavav Ports. They want to crush KPT. So we must anticipate

delays.

(vi).

The KPT is the only Port giving storage area both to importers and exporters on

rental terms and not demurrage terms.

The Kandla Port Steamship Agents' Association fKPSAA)

(i).

'Free days' are not given.

(ii).

There is competition from minor Ports. We are fast losing cargo.

(iii).

Piecemeal revision is bad. One cannot appreciate the overall cost position. The

TAMP should insist on comprehensive revision.

(iv).

Is this revision required now at all? Can it not wait for sometime?

(v).

Auction of unclaimed cargo was held after 0 years. If it is held at regular Intervals,

there will be no congestion; there will be no need to raise rates.

Oandhtdham Chamber of Commerce and Industry (GCCI)

(i).

We have plenty of space. There is a proposal to increase the area further. Where

is the congestion?

(ii).

This is not a main source of revenue.

(in)-

Our concern should be to retain the cargo. We should not raise rates now and

further drive away cargo. Let it not be seen as a prestige issue. In view of the

competition please withdraw this proposal.

(iv).

Earlier the unit was 'month'; it is proposed to be 'days' now. Please retain

'month'.

(v).

It is not correct to say that users treat KPT as the storage space.

(vi).

The 60 days limit in Section 60 - 61 of the Act is for 'unclaimed cargo' and not for

all. Why penalise 95% for the sake of dealing with 5%.

(vn).

The first slab should be 0 - 90 days.

(viii).

Please take into account the Board discussions held in 1996 when revision was

approved.

(ix).

In future, revision proposals should take into account differential impact of different

cargo on Port revenue. Today bulk cargo gets a preferential treatment.

6.2.

During the joint hearing, the KPT submitted statements showing (i) cargo position

as on 15 September 2000 (ii) existing storage charges and proposed rental charges (iii) present

and proposed storage charges; and, (iv) the cargo position of rental plot as on 14 September

2000.

With reference to the totality of information collected during the proceedings of this

case, the following position emerges:

(i).

The KPT allows storage of cargo on three different sets of terms and conditions

viz (i) Transit terms; (ii) Warehousing terms; and, (iii) Rental terms. Under transit

terms, demurrage is levied on a slab basis which goes upto 400% of the base rate

from the 4th week of storage after expiry of the free period.

Likewise, the

warehousing charges also go upto 400% of the base rate beyond the 8th week.

Under rental terms, the base rate is for storage upto first three months which goes

up by 50% for storage beyond three months.

(ii).

The Port has proposed amendments to the storage charges on rental terms with

the objective of reducing congestion. No revision has been proposed under transit

and warehousing terms, perhaps, due to the realisation that the existing charges

and slab of periods may act as sufficient deterrent against keeping the cargo

uncleared from port premises.

(iii).

tt is noteworthy that the KPT has revised its earlier proposal, bearing in mind

various difficulties expressed by the users. The port has also mentioned that it

has considered not only the various statistical details of dwell time, space

availability, future demand, etc., but also the competition it faces from nearby

ports, while formulating its revised proposal. This categoric statement made by

the Port adequately allays the apprehension expressed by the KPSAA and GCCI

about possible diversion of KPT traffic to other nearby minor ports.

(iv).

The rental space for storage of cargo is allotted by the Port based on an

application made by the user. The existing Scale of Rates stipulates that any

unauthorised occupation of rented spaces shall be liable for payment of double

the rent, as penalty. There is also a further stipulation that the space allotted shall

be vacated on receipt of notice to the effect from the Traffic Manager failing which

it will be treated as unauthorised storage.

The Traffic Manager of the KPT had issued a circular in 31 August 08 informing

the Trade that no renewal of land allotted on rental / warehousing terms would be

considered, if the stay was more than 60 days.

In view of the KPT decision of not renewing allotment of areas under rental terms

beyond 60 days, storage of cargo beyond 60 days becomes unauthorised. And,

as per the existing provision in the Scale of Rates, double the rent is to be levied

for unauthorised occupation.

The proposal of the KPT is to formalise the above position in the Scale of Rates.

The KPT has not proposed any increase in the base rate. That being so, the

GCCI objections about change of unit from month to days and steep increase in

rates are not correct.

(v).

The option of fixing the period of allotment is with the KPT. It can restrict such

period to any reasonable limit. Citing the congestion at the port and the provisions

under Section 61 and 62 of the MPT Act, the Port has fixed such time limit as 60

days.

Beyond this time limit, the Port can proceed to auction the cargo. This

proposal has, however, been made to take care of circumstances warranting

storage beyond 60 days; and, in such an eventuality the penal rates must induce

speedy clearance of cargo. Viewed from this perspective, the proposal deserves

to be approved.

(vi).

The objections of the GCCI and KPSAA about piecemeal revision of rates instead

of a comprehensive

review of Scale of Rates merit consideration.

comprehensive revision proposal gives an opportunity to assess the total impact

of the revision at one go and also forecloses opportunities of overlap of allocation

of costs.

This Authority allows piecemeal proposals also, as warranted by

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART III—SEC 4]

changes in circumstances. It is to be recognised that tariff revision does not

necessarily end in tariff increase. Such a review at regular intervals needs to be

undertaken to rationalise the rates and condltlonallties. Bearing this mind this

Authority has also prescribed a two-year cycle of tariff revision.

The incidence of proposals for pieoemeal revision made by the KPT is on the rise.

It is noteworthy that almost all major ports, except the KPT have proposed

comprehensive reviews of their Scale of Rates by this Authority since its creation

in April 1997.

In this backdrop, the KPT Is advised to come up with a comprehensive proposal

for revision / review of the existing tariffs within next four months. The instant

proposal need not wait for completion of such an exercise, since an elaborate

consultation process has already been followed and considerable efforts from all

concerned have been invested into it.

In the result, and for the reasons given above, and based on a collective

application of mind, this Authority approves the proposal of the KPT for the following amendments

to Scale 'G': Schedule of Storage / Rental charges in Chapter I of its Scale of Rates:

A).

Open areas:

a).

c .

Period of occupation

0 - 6 0 days

61-90 days

91 - 1 8 0 days

Beyond 180 days.

Rate par 10 sq. mtr. or part thereof

Kutchha

plots

(uncamenttd

unasphaKed)

Rt.

35.00

70.00

87.50

105.00

Pucca

plots

(cemented

asphalted)

Rt.

60.00

120.00

150.00

180.00

Bins

and

ralMdpHnth

Rt.

70.00

140.00

175.00

210.00

B).

Covered areas:

Period of occupation

- & -

c).

0 - 60 days

6 1 - 9 0 days

91 - 1 8 0 days

Beyond 180 days.

Rate per 10 sq. m*r. or part thereof

Ground Floor

(Re.)

150.00

300.00

375.00

450.00

First Floor

(Rs.)

130.00

260.00

325.00

390.00

Note:

Period for the purpose of calculation shall be counted taking Into account

the period of stay of the cargo, both for open and covered areas.

The KPT is directed to include the above amendments accordingly in its

Scale of Rates.

S SATHYAM, Chairman

[ADVT -III/IV/143/Exty/2000|

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