SCHEDULE

Case No.TAMP/36/2000 - MBPT

Th« Mumbai Ship to Short Launch

Owner's Association

The Mumbai Port Trust (MBPT)

. . .

- - -

Applicant

Respondent

(Passed on this 14th day of February 2001)

This case relates to a representation received from the Mumbai Ship to Shore

Launch Owner's Association (MSSLOA) relating to payment of licence fees for water

conveyance payable as per the MBPT Scale of Rates.

2.1.

The licence fee for water conveyance levied by the MBPT was revised by this

Authority's Order dated 27 October 1998. As advised, in the said Order, the MBPT had sent a

comprehensive listing which was notified by this Authority on 13 January 1999.

2.2.

This Authority had revised the Scale of Rates charged at Bunders vide Its order

dated 19 July 2000, based on a proposal to this effect received from the MBPT.

3.1.

The MSSLOA has stated in Its representation that the Licence fee for the

Water conveyance has been increased five-fold by the Mumbai Port Trust (MBPT) which is

most unjustified and uneconomical for Launch Owners. The MSSLOA has given the following

main points in its representation:

(i).

It is gMng ship to shore service, which normally is to be given by the MBPT.

As the MBPT cannot cater to the demand of ship to shore service, it has

appointed private launch owners to give services.

(ii).

The MSSLOA has been paying Rs.10/- per GRT to the MBPT as Licence fee for

Water conveyance, which is revised upwards by five times.

(iii).

No such charge is levied on Mumbai Port's Launches, JNPT Launches and

around 3000 Fishing Trawlers, which also ply in MBPT waters. Hence, the

charges levied from them are discriminatory.

(iv).

In the launch Industry, most of the owners are self employed and actually work

on the launches as crew alongwith their relatives and such exorbitant levies are

unaffordable. If the new revised charges are not waived, they will be left with no

other alternative but to stop plying the launches.

3.2.

Subsequently, the MSSLOA has forwarded a copy of its letter dated 16

September 99 wherein it has been stated that the demand for ship-shore service has dropped

considerably due to recession in shipping and reduction in ships call at the Mumbai Port.

A copy of the representation was sent to MANSA, INSA and SCI for their

comments. The MBPT was requested to examine the representation and offer its comments.

The Port was also requested to elaborate the logic followed by it while proposing re-

categorisation of floating craft for the purpose of levying licence fee for water conveyance. The

comments received from them are summarised below:

Mumbai Port Trust (MBPT)

(i).

Prior to the revision by the Authority in 1998, the MBPT Scale of Rates in

Clause 12 (ii) of schedule of Port dues prescribed that the licence fee for water

^^i(loo}^\

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART III—She. 4]

conveyance would be recovered as prescribed in Section I of the Scale of

Rates charged at the Bunders. Thus, the rates prescribed were the same as In

Bunder Scale of Rates (BSR). However, charges prescribed for licence fee

skipped recovery under the impression that if the charges prescribed in Section

I of BSR were paid for the use of Bunders, no further recovery at the same

rates was required to be made by way of licence fee for water conveyance. In

view of this, the MBPT proposed inclusion of a table (table No. XIII) in the

MBPT Pilotage, towage etc., Order clearly indicating payment of licence fee for

water conveyance.

(ii).

Launches, which ply from Bunders as well as from Ballard Pier are required to

pay the charges under both the scales of rates. As the craft plying from

bunders are paying monthly licence fee provided in the BSR, a comparatively

lower rate has been prescribed for them under Table XIII of the relevant Scale

of Rates.

(iil).

In respect of craft operating from bunders, both the charges are recoverable.

However, in such cases the rates prescribed in the Table XIII of the towage

and pilotage fees order are much less compared to the rates prescribed for the

crafts operating from the Ballard Pier which is in the Dock.

(Iv).

The amount payable by the launches cannot be considered to be high

considering the services provided by the MBPT to these launches. They ply to

and from Ballard Pier Jetty several times a day although the licence fees are

charged only once in a month.

(v).

Ship to Shore launches are basically catering to the needs of the vessels

engaged in foreign trade.

(vi).

Ship to Shore launches cannot be compared with the launches used by

Customs, Coast Guard, Navy, etc. These agencies render services to safe

guard the coastal region and the harbour, in particular. Section 2 of Indian

Ports Act 1908 exempts vessel belonging to Central and State Governments

from application of provisions of the Act.

(vii).

As per the First Schedule to the Indian Ports Act (1908) fishing trawlers are

exempted by the Government from payment of Port Dues. The issue of

continuance of exemption from the payment of licence fee for water

conveyance to the fishing trawlers will be examined separately and a separate

proposal will be submitted in due course.

(viii).

The MSSLOA statement that no charges are levied on MBPT's own launches

needs no clarification because paying the charges to self will have no meaning.

No concession is, however, extended to the JNPT's launches.

(ix).

The factors considered for the purpose of levy of licence fees are as under:

0).

00.

(•ii).

(iv).

Type of craft in operation.

The category to which service is

rendered by the craft

The

frequency

which

the

services of MBPT are utilised by

the craft.

Quantum of charges levied and

paid by the craft.

(a) Luxury

(b) Ordinary

(a) Cargo transportation

(b) Carrying of passengers

(a) No. of trips per day

(b) No. of trips per week

(a) For cargo transportation

(b) For carrying of Passengers

Shipping Corporation of India (3CH

0).

The MBPT initially used to levy a charge of Rs.10/- per GRT per month as

licence fees on launches plying in the harbour of Mumbai. The launches plying

from Ferry Wharf, Gateway of India are mainly for passengers. The launches

used from Ballard Pier are exclusively for transportation of ship's officers, crew

& ships' stores / workshop material between Mumbai and vessels anchored in

the inner anchorages, Mumbai.

(ii).

The rate of Rs.10/- per month per GRT was uniform for launches starting from

all the above three points. However, from March 1999, the Mumbai Port Trust

has kept charges for launches starting from Gateway of India and Ferry Wharf

unchanged but have increased the tariff from Rs.10/- per month per GRT to Rs.

50/- per month per GRT on launches starting from Ballard Pier.

(iii).

The vessel traffic at the MBPT is declining. The Launch service companies are,

therefore, burdened with loss of revenue with the five-fold increase in Licence

fees. The Launch owners are passing on the burden to the users i.e. Shipping

Lines.

(iv).

There is no additional facility or service provided by MBPT to the launches at

Ballard Pier to justify an increase of 500% in the Licence Fee.

Indian National Shipowners Association (INSA)

(i).

The Launch Owners are providers of service for mariners / tourists visitors

and passengers.

(ii).

No value addition is provided by the Port.

(iii).

The proposed rate of increase in licence fee is not justified. At the best it

could be a fee not exceeding Rs.50 per launch.

A copy of each of the comments received, was forwarded to MSSLOA for their

information and further comments.

A joint hearing in this case was held on 15 September 2000 in Mumbai. At the

joint hearing, the parties present reiterated their views / arguments already furnished in their

written submissions. The MSSLOA pointed out that they had to go to Bunders because no

other place had been given to them for parking launches. The SCI argued that the levy was

charged even for periods when the launches were not operating.

After the joint hearing, the MBPT filed its further written submission reiterating

its views given earlier. The Port has made the following additional points:

(i).

Recovery of licence fee under the Pilotage Fee Order and BSR is essential in

order to enable two different departments of the MBPT to exercise their

authority in their respective jurisdictions.

(ii).

The composite towage and pilotage service is in deficit for the last couple of

years. The cost statement for this service for 1999-2000 shows a deficit of

88%.

(iii).

Owing to an upward revision of the wages of its employees, the MBPT is

burdened with an additional expenditure of Rs.85 crores annually.

(iv).

In the circumstance, any reduction in the existing charges as requested by the

MSSLOA will result in further increase of the revenue deficit under this activity.

THE GAZETTE OF INDIA: EXTRAORDINARY

[PAR r III—SEC. 4]

The costing details of the activity and the genesis of this fee have been

scrutinised. The scrutiny reveals the following points:

(i).

The Port Dues are levied to cover the cost of conservancy of the Harbour,

which is used by the vessels, launches, etc. The cost statement for 1999 -

2000 of the sub-activity 'Port Conservancy' shows surplus. There is no

separate cost statement for the specific service as no special service or facility

is provided exclusively for these launches. The launches are parked at the

Ballard Pier when not plying and thus there is a small link to the sub-activity

'Berthing & Mooring at the Docks'. This service is, however, predominantly

availed of by larger foreign-going & coastal vessels and revenue from ship to

shore launches being very small will not make any sizeable Impact on the

deficit of the service.

(ii).

The inclusion of Table XIII In the 1968 Order prescribing 'license fee for water

conveyances', classifying boats, craft & launches plying from the Ballard Pier

Jetty along with barges and prescribing a common rate of Rs. 50 per GRT per

month therefor has given rise to the grievance of these launch owners. The

MBPT has clarified that, prior to amendment in 1998, the Order prescribed as

follows:

"12. License fees for water conveyance: The fees for grant of license

for Passenger Boats/Craft will be recovered as prescribed in Section I

of the Scale of Rates charges at Bunders (Approved under TR. No. 81

of 1991)".

This position was Interpreted to mean that separate charges should have been

recovered by the Port Department under this order as well and this skipped

attention. To make this view more explicit, a specific table XIII was

incorporated in the 1998 Order.

(ni).

That the above-cited interpretation is not appropriate will be clear if a

reference is made to para. 5 of the Agenda note included in the preamble of

the MBPT Res. No. 81 of 1991. Amendments were proposed to the Port of

Bombay Passenger Boats (Amendments) Rules, 1978, administered by the

Port Department and to the Bunder Scale of Rates, administered by the Docks

Department with a view to prescribing a composite charge to be recovered by

only one agency instead of two charges by two departments.

(iv).

The rate of Rs. 50 per GRT per mensem prescribed in table No. XIII referred to

above was not objected to by barge-owners' representatives who had

participated in the joint hearing held in June 1998 in the case No. TAMP/2/97-

MBPT. The MBPT officials explained that since it became difficult to recover

anchorage charges as the movement of barges could not be precisely

monitored, a higher composite license fee was proposed for barges.

With reference to the totality of information collected during the processing of

this case, and taking into account the arguments advanced at the joint hearing, the following

position emerges:

(i).

The launches operating from Ballard Pier are subjected to the following levies

of the MBPT:

(a).

Port Dues @ Rs.1.10 per GRT once in 6 months.

(b).

Licence fee for water conveyance @ Rs,50/- per GRT per month under

the Table XIII of Port of Mumbai Pilotage, Tug Assistance, Towage,

Mooring and Other Services Fee Order, 1998 (Revised vide TAMP

Order dated 27 Oct. 1998).

(c).

Licence fee for using Bunder* Q Rs.35/- per GRT per month under

Section I of Bunder Scale of Rates (BSR) (Revised vide TAMP Order

dated 19 July 2000).

(ii).

The MBPT is levying Port Dues for general conservancy of the Port and

Licence fee for regulating the vessels plying in its waters and for use of its

landing, jetties, Bunders etc.

The launches use Ballard Pier jetty as well as Bunders. The Port also charges

them two licence fees accordingly since the Scale of Rates applicable for

Ballard Pier and Bunders are different.

(iii).

The issue of Licence fee for water conveyance did not come to be examined in

depth by this Authority when the MBPT proposal for revision of composite

towage and pilotage fees was considered for approval in October 1998. This

had happened since this tariff item was seen as an insignificant one from the

point of view of revenue generation to the Port; and, more attention was paid to

the fixation of rates relating to pilotage fee and port dues on ocean going

vessels.

Eventhough the overall increase of only 10% was approved by this Authority in

the composite pilotage fee and port dues case of the MBPT, the increase in

licence fee for water conveyance had become more than 10% due to re-

categorisation of vessels proposed by the MBPT. The proposal of the MBPT

did not explicitly speak about the revised categorisation.

However, the

annexes to the proposal did contain a provision to this effect which, as has

been mentioned earlier, escaped detailed scrutiny. Significantly, when that

case was processed, none of the users including the SCI and the INSA had

also raised any objection to the re-categorisation proposed by the Port.

(iv).

Levy of licence fee for water conveyance twice - once for using Ballard Pier

jetty and again for using Bunders appears to be illogical. The levy is on a

monthly basis with no relevance to the number of times the launches use the

Port jetties. This clearly shows that the levy is for general use of Port's

properties and more for regulating the launches plying in the MBPT waters.

That being so, occupation of Ballard Pier jetty or Bunder by the launches is

immaterial. In any case, a launch cannot occupy both Ballard Pier and Bunder

at the same time. The Port's argument that the concerned Scale of Rates are

administered by two different departments of the Port which necessitates two

separate charges is not tenable.

Levy of a composite charge by one

department will not take away the control of other department. From the users'

point of view, they pay to the Port and not to any particular department of the

Port.

It is noteworthy that launches plying from the Gateway of India and the Ferry

wharf do not pay separate charges when they visit the Bunders as these two

places are treated as part of the Bunders. It is reasonable to have a similar

prescription in case of launches operating from the Ballard Pier also. It is,

therefore, necessary to introduce a conditionally in the Bunder Scale of Rates

to the effect that no levy of licence fee in respect of crafts paying such charges

under the Port's Pilotage and Towage Order shall be made under the Bunder

Scale of Rates when these vessels use the Bunders. The licence fee paid

under Pilotage Order shall be taken to cover use of the Bunders also.

Likewise, a similar prescription in the Pilotage, towage, etc. Order is also

necessary to make the licence fee payable by the vessels registered under the

Bunders (under BSR) cover the use of other jetties / landing place of the Port

by such vessels.

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART HI—SF-C 4|

(v).

The revenue from licence fee on ship shore launches is negligible when

compared to the revenue earning of the port from other vessel related charges.

As has been pointed out in sub-para (iii) above, the increase allowed in licence

fee of ship shore launchers during 1998 revision comes to nearly 500% mainly

due to re-categorisatlon proposed by the Port. This steep increase no doubt

needs to be scaled down prospectively since the issue has come in this

focussed manner to this Authority's knowledge. Before any such reduction in

rate is considered, it becomes necessary to consider the following issues:

(a).

The re-categorisation of floating craft for the purpose of levy of licence

fee has already been approved by this Authority and Is now in

operation for nearly two years now. Any alteration in the categorisation

of ship shore launches will have repercussions on the other category of

floating crafts.

(b).

A more or less similar categorisation of floating craft is followed by the

MBPT in its Bunder Scale of Rates for the purpose of levying Licence

fee for use of Bunders. For example, Launches using the new ferry

wharf pay a licence fee of Rs.40 per GRT per month under the Bunder

Scale of Rates. If the rates for the launches using Ballard Pier jetty are

singled out for reduction, possibilities of getting similar representations

from launches using bunders cannot be ruled out.

(c).

It will be appropriate to look into the categorisation of floating craft for

the purpose of levy of licence fee for water conveyance and bunder

charges instead of altering the rate for only one category of launches.

(d).

In the past, this Authority has altered a notified tanff of major ports in

exceptional cases based on representations received from users,

when it had noticed that such tariff or the conditionally associated with

the tariff is found to be totally unreasonable. Otherwise, this Authority

has always left alteration of tariffs to be done at the time of general

revision of tariffs.

(e).

In this case, the categorisation followed by the Port Trust cannot be

termed as unreasonable.

It may have, however, resulted In an

unintended steep increase in case of some of the categories of floating

crafts.

This aspect can be more meaningfully dealt with by

rationalising the categorisation at the time of the next general revision

of tariffs of the MBPT. In its own admission, the Port Is facing a huge

revenue deficit under the activity of providing services at the waterfront

(i.e. Composite Pilotage and Towage and Port Conservancy). It is

appropriate for the port to review the position and come up with a

comprehensive proposal for adjustment of tariffs under this activity.

(vi).

In view of the position explained above, this Authority decides to review the

existing categorisation of floating crafts for the purpose of levy of licence fee

and bunder charges at the time of next general revision of MBPT tariffs for

Composite Pilotage, Towage, Port Dues etc. It is noteworthy that the Applicant

association will get immediate relief in view of this Authority's decision to

abolish levy of the licence fee for use of the Bunders In cases of the floating

crafts paying licence fee for water conveyance under pilotage order.

(vii).

The allegation of the Applicant Association about discriminatory treatment

meted out to them has been adequately disposed of by the MBPTs

explanation of actual position with respect to charging the licence fee for water

conveyance. The provisions in the Indian Port Act 1908 are clear in this

respect and a Port cannot levy charges In total disregard to the statutory

provisions.

The MBPT has, however, pointed out that the issue of levy of Port Dues will be

examined separately In the light of amendments to the Indian Port Act. The

Port has assured that an appropriate proposal after such examination will be

formulated and submitted to the TAMP. Nearly, six months have elapsed after

this assurance was made by the Port, but no such proposal has been

submitted. In this backdrop, the MBPT is advised to examine this issue and

forward its proposal early.

(vlii).

The pleadings of the MSSLOA about self-employment, survival of the industry,

etc., made to justify its demand for a reduction in the licence fee only

sensationalise the issue. From the arguments of the SCI, made at the joint

hearing, it is clear that the launch owners have passed on the burden due to

Increased licence fee to the Shipping Lines.

(ix).

The SCI's argument about levying of charges even during the period when

launches do not operate deserves consideration.

In the Bunder Scale of

Rates, there exists a provision to collect licence fee on annual basis at 8 times

the monthly rate prescribed. Incorporation of a similar prescription in the

Pilotage and Towage order is found to be reasonable. The effect of such a

prescription on port revenue and its operations management is not known

readily. This Authority, therefore, advises the MBPT to examine this issue

separately and come up with its proposal for amendment in the Pilotage and

Towage order.

10.1.

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

application of mind, the representation of the MSSLOA for reduction in the licence fee for water

conveyance is hereby rejected.

10.2.

This Authority, however, approve* inclusion of the following note in the Section

I of the Bunder Scale of Rates:

"Licence fee for use of Bunders shall not be levied separately on vessels

which pay licence fee for water conveyance under the Port of Mumbai Pilotage,

Tug Assistance, Towage, Mooring and Other Services Fees order".

10.3.

Likewise, this Authority also approves the following note under Table XIII of

the Port of Mumbai Pilotage, Tug Assistance, Towage, Mooring and Other Services Fee Order.

"Licence fee for water conveyance shall not be levied separately on vessels

which are registered under the Bunders and paying licence fee under Section I

of the Bunder Scale of Rates ".

10.4.

The MBPT is directed to incorporate the above provisions in its Scale of Rates.

I1 •

The amendments to the MBPT Scales of Rates ordered above shall come into

force on expiry of thirty days from the date of notification of this Order in the Gazette of India.

S. SATHYAM Chairman

[Advt ,/III/IV/l 43/2000/Exty J

Printed by the Manager, Oovt. of India Press, Ring Road. Mayapun, New Delhi-110064

and Published by the Controller of Publications, Ddlii-110054