IndiaFilings » Learn » Transhipment of Cargo

Transhipment of Cargo


Transshipment of Cargo

Several ports, airports, Container Freight Stations (CFS), and Inland Container Depots (ICD) having Customs clearance facilities have been established in the country to reduce overcrowding at the gateway airports/ ports and to allow importers and exporters to take Customs clearance of imported and export goods at their doorsteps. The objectives of implementing the Customs facility to the doorstep of importing community and decongesting the gateway ports/ airports require the movement of imported cargo or export cargo between a port/ airport and other port/ airports, ICDs/ CFSs in India or a port/ airport abroad.

Payment of Duty

According to the Customs Act 1962, duty becomes payable once the imported goods are landed at the port or airport. To avoid payment of duty at the port of landing in cases where goods are to be carried to another airport/ port or ICD/ CFS or a port/ airport abroad. The Act also provides a facility for the transshipment of cargo without making payment of duty. The goods can be transhipped from one airport/ port to another airport/ port/ CFS/ ICD/ either by air, rail, vessel, or road or by a combination of more than one such mode of transport.

Transshipment Permit

A transshipment Permit is a consent granted by the Customs at the port/ airport while unloading the imported goods to shipping agents for carriage of goods to another port/ airport/ ICD/ CFS in India. The shipping agents must apply with the five transshipment forms, sub-manifest, and a copy of IGM to the Customs. The Customs surveys the details furnished by the shipping agents in the application for transshipment. If the documents are in order and there is no alert notice made against the shipping agent, permission for transshipment will be granted.

Categories of Carriers

To make sure that the imported cargo on which the duty has not been paid is not pilfered during transporting to another port/ airport/ ICD/ CFS and reaches safety, a bond with bank guarantee is executed by the carrier engaged for the transshipment of goods. The quantum of bank guarantee for transshipment to be furnished by different categories of pages is given below.

  • The carriers in the public sector, like the Central/ State Government undertakings, are exempted.
  • All carriers of the containerized cargo used for handling more than 1000 TEUs as import containers in a financial year are exempted, irrespective of whether the movement is by road, coastal shipping, or rail. Those carriers with an annual transshipment volume below the limit of 1000 TEUs but with a good track record would be considered for an exception from BG on merit by the jurisdictional Commissioner of Customs.
  • The custodians of ICDs/ CFSs operating as carriers of transshipment cargo between the ICDs, CFSs, and gateways shall remain in the terms and conditions of their bank guarantees executed with Customs for custodianship of ICDs/ CFSs over the safety and security of cargo being transhipped by them. The details of such bank guarantee will be informed to the Commissioner of Customs having jurisdiction over the gateway port. The custodians of ICDs/ CFSs will be permitted to tranship the cargo against the bank guarantee, and they will not be required to execute a separate bank guarantee for the transshipment.
  • The remaining carriers must furnish a bank guarantee of 15% of the bond amount.

Terms of Bond

The bond terms are when a carrier produces a certificate from the Customs of the destination port/ airport/ ICD/ CFS for the safe arrival of goods; the bond stands discharged. If the said certificate is not furnished within a month or within such an extended period by the concerned officer, an amount equal to the value or the market price is the imported goods are forfeited.

Bond Value

The bond value has to be equal to the value of the goods. Taking into account the difficulties of the shipping agents in producing the documents for determining the value of the goods that are sought to be transhipped, the bond value is determined depending on the notional value of the goods, which is an average value of the cargo per container transhipped in the past.

Running Mother Bond

The carriers will be permitted to execute a running mother bond instead of individual bonds to avoid a multiplicity of bonds. The value of the mother bond can arrive based on the average number of containers carried per trip. This average time is taken for submission of proof of sale landing of containers at the destination ICDs/ CFSs, the frequency of such transshipment, and the notional value of the container. A mother bond being a running bond, its amount may be high. If a running bank guarantees 15% of the total bond amount taken, it might block a considerable sum of money. To avoid such blockage of money of carriers, an option has been given to furnish a running bank guarantee or an individual bank guarantee for every transshipment; the latter can be released as soon as the lading certificates from the destination customs are produced. The bond or mother bond and the bank guarantee are debited during the transshipment of the import/ export containers at the port of origin and then credited on receipt of proof of sale lading of the containers at the port/ ICD/ CFS of the destination. Further, the EDI system has a bond module that will be utilized entirely once the ‘message exchange facility’ is operationalized between two ports. In an online environment, the bond re-credit is automatically done in the EDI system on receipt of an electronic message between the Gateway port and the destination port or between two Customs Stations.

Sealing of Containers

After issuing the transshipment permit and the execution of bonds, the containers are sealed with a ‘one-time bottle seal’ by the Customs. If the containers are already sealed with a ‘one-time bottle seal’ by the shipping agents, there is no requirement for sealing again by the Customs. Once the sealing and the checking of seals by the Customs is over, the containers are moved from the gateway port and then carried by the shipping agents to the destination port/ ICD/ CFS by vessels, rail, or road. Transshipment formalities in all these modes are similar.

Coastal Containers

The Indian flag foreign going vessels operating in routes covering more than one Indian port to a port outside India have been allowed to carry coastal vessels with imported and exported cargo between two Indian ports. Moreover, the coastal vessels are also permitted to carry coastal containers along with imported/ exported cargo between two Indian ports. Safeguards have been prescribed to guard against the possibility of replacing transshipment goods with domestic containerized cargo. All transshipment and domestic containers must be sealed by a ‘one-time bottle seal’ at the loading port. The domestic containers must be painted boldly, stating ‘For Coastal Carriage only’ for their identification. The Carriers must file a manifest for domestic containers.

Destination Formalities

  • At the destination, the carrier has to present the sealed cover containing the copy of the transshipment permit to Customs. The Customs enquires about the containers, seals, etc., concerning the transshipment permit. The carrier has to obtain a certificate about the landing of the container from Customs.
  • If the seals are broken during the examination of the containers by the Customs, a survey of the contents of the containers will be conducted in the presence of the Customs Officer carrier, importer, or his representative and representative of the insurance company. The airlines have to pay the duty for pilferage in terms of the condition of the bond that they execute with the Customs at the loading port.
  • The carriers must acquire the containers’ landing certificates from the Customs at the destination port/ ICD/ CFS and submit the same to the Customs at the originating port. The Customs reconciles the record and closes IGMs depending on the certificates.
  • After the safe landing of containers at the respective destination port/ CFS/ ICD, authorized agents or the importers have to follow all the Customs formalities, including the Bill of Entry, assessment, examination of goods, etc., that are required for the clearance of goods.

Duty-Free Import of Containers

Customs duty exemption is provided in Notification No. 104/94-Cus., dated 16-031994, which facilitates the containers taken out of the port without duty payment subject to the execution of the bond. The shipping agents have to file this bond with the container cell of the Custom House, binding themselves to re-export containers within six months of their import to India. The period of six months can be further extended by the Deputy/ Assistant Commissioner of Customs for a further period that is not more than six months at a time in terms of the said Notification.

Clearance Procedure

The procedure for clearance of containers that are imported temporarily is as follows:

  • The nature of the bond should be a ‘continuity bond.’
  • No Bank Guarantee/ Security has to be furnished with the bond.
  • The bond should be executed by the shipping line, Non-Vessel Owning Common Carrier (NVOC), Steamer agents, or their official authorities.
  • The bond amount has to cover only the duty element of the imported containers, not the cargo it carries.
  • The validity period of the bond has to be made in a year, extendable till the period requested by the person executing the bond.
  • Till the module for automatic matching of the imported and export containers within the permissible time is rolled out at all Customs ports, the process of monitoring of period of temporary importation will be done manually.