Clearance of Liquid Bulk Cargo forms a significant part of entire activities undertaken by the Customs Officers. The process ensures incoming of many chemicals in liquid state that are otherwise not manufactured indigenously. Mainly, Liquid bulk might involve crude petroleum meant for refining to further yield ‘ready to use fuel’ or chemicals of wide significance from medicine to cosmetics or any other chemical legally permitted for import. Apart from being direct facilitator of economic activities, the import of liquid bulk is a good source of revenue to the government also. Therefore, it is in this backdrop important, to understand the entire process of Import clearance of Liquid Bulk Cargo. From the perspective of payment of duty two kinds of reports are important, read on to understand:
Ullage Report in Perspective
At any customs notified port under Section 7(a) of the Customs Act, 1962 , berths are earmarked for vessels containing liquid cargo known as liquid jetty. After berthing of the vessel boarding formalities by the Customs Boarding Officers are completed and discharge of liquid cargo takes place at liquid jetty .
The discharge is done under customs supervisions under Section 34 of the Customs Act through pipe line to the tanks situated as shore (in the vicinity of port) known as shore tanks. During discharge of the liquid bulk cargo, Ullage Survey Report is prepared and signed by Master of the Vessel and Surveyor and the Boarding Officer (Preventive Officer) . Ullage Survey report is discharge port report indicating quantity of liquid bulk cargo received at the port.
Mis- match of Manifested Quantity and Ullage Report.
If there is a difference of manifested quantity loaded at the shipment port and Ullage Survey quantity received at the destination port , it will be considered as short landing of manifested quantity for which person–in-charge of vessel, who is master of the vessel can be held responsible u/s 116 of the customs Act and can be penalized.
When Duty is Payable on the Basis of Ship’s Ullage Report
Ship’s ullage report formed the basis of assessment for duty when bulk liquid cargo is cleared without being stored in shore tank situated near the port, directly through the tank lorry. ( Para 5 of PN 155/2016 dated 25.11. 2016 issued by JNCH)
The shore tanks are appointed bonded warehouse by the competent authority under section 57 or 58 of the Customs Act. These places are also approved by the Commissioner or Principal Commissioner of Customs in terms of mandate of Section 33 read with Section 8(a) of the Customs Act, which deals with the loading and unloading of goods at other approved places instead of port. Accordingly the liquid bulk goods are discharged under customs supervision and stored in shore tanks located near the port.
Shore Tank and Out Turn Report
Liquid bulk are also assessed to duty on the basis of Out Turn Report , which indicates quantity of liquid bulk stored in tanks situated at shore. The liquid cargo pumped directly into the shore tanks situated near the port which is measured through “dip measurement”.
In case of clearance of liquid cargo under home consumption, Bill of Entry, wherein liquid bulk is stored in shore tank , assessment is done as per out turn report. If quantity received in shore tank is less than the manifested quantity and advance B/E has been filed for entire manifested quantity such B/E can be referred back for re-assessment to Group. When it becomes a case for refund, action can be taken as per provisions of Customs act. If importer has opted filing of B/E in piecemeal manner, then importer is at liberty to adjust short quantity in last B/E. (Para 16 of P.N 155/2016 dated 25.11.2016 issued by JNCH)
Duty on Actual Quantity
In case of Manglore Refinery & Petrochemicals V Commissioner of Customs , Manglore (2015) (323 ELT 423 (SC) , it was held that duty will be payable as per actual quantity received into shore tank and not as per ullage report prepared at the discharge port. This is correct proposition of law in terms of Section 13 and 23 of the Customs Act. The idea is that duty can only be charged what one receives in his hand between unloading of goods and clearance thereof. This is the reason why unjust enrichment is not applicable in respect of short receipt of goods , as when goods are not received , no occasion arises for passing of goods in other hands and duty incidence thereof .
Now as per hon’ble SC judgement Out Turn Report and actual quantity received therein is considered for levy of duty. ( CBIC Circular 34/2016 dated 26.07.2016) ( P.N 109/2016 issued by JNCH). Therefore, the importers are required to pay on actual quantity what they received.
At JNPT port such shore tanks are owned and operated by M/s IMC Ltd, Ganesh Benzoplast and M/s Suraj Agro Pvt Ltd. These are appointed as Private Bonded Warehouse under section 58 of the Customs Act.
Biggest Port of Country, JNPT Clears 03 types of Liquid Bulk Cargo
(1)Edible Oil- Crude palm oil, Soyabean oil, Crude sunflower seed oil, Crude Kernel Oil, RBD palmolean – All falls under chapter 15 of CTH.
(2) Petroleum Products such as base oil- These are of six grade SN 150, 500,700,BS 150, J 150, JS 700- CTH 2710
(3) Chemical – Butyl Acrlyic , Acetone, Phenol etc- Chapter 29. Acetic Acid, Analin – Chapter 38.
If you enjoyed reading this article, you must check the below ones
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- Unjust Enrichment Under Customs- The Both End Advantage
- How Does SIIB(X) Work- A Complete Guide
- Recovery of Drawback Where Remittances have not Been Received
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