News (Business Recorder, 10 December), that FBR and Ports Ministry decided to constitute a Local Shipping Rates Advisory Committee appears designed to silence the trade for couple of years as the Shipping Rates Advisory Board, constituted in 2001, now proposed to be replaced, did for 8 years.
The issue of illegal charges, evaded for over a decade through tactical manoeuvring, thanks to a powerful/tangible lobby of shipping companies the Honourable Federal Tax Ombudsman, in the hearing of my complaint against the Revenue Secretary, on 14 December upon statement in support of the news item that the FBR and Ministry of Ports would constitute a committee to regulate terminal handling charges, aptly remarked "no charge is due, what would be regulated".
Basic of international shipping is: i. United Nations Commission on International Trade Law: "Carrier shall subject to this Convention and in accordance with the terms of contract of carriage carry the goods to the place of destination and deliver them to the consignee.
ii. The Hague Rules, contained in the International Conference defined "Freight" includes all charges payable to the Carrier in accordance with the Applicable Tariff and this Bill of Lading.
(iii) Rule 419(iii) of SRO 450(1)/2001 under Customs Act 1969 calls: The carriers shall issue delivery orders to the importers against the bill of ladings as have been filed by them where against the terminal operators shall only honour those delivery orders as are issued by the carrier that manifested the cargo to customs authorities.
iv. Carriers' responsibility ceases after discharge of the goods: Shipping companies do not handle at the port.
v. After discharge of cargo, Port authorities/ licensees handle it till delivery to the consignee. Freight in consideration of delivery means: carrier lifts from load port and delivers at destination. For freight pre-paid mode THC is payable by Lines/carriers/Operator to Terminal Operator, whereas for freight to pay / freight on board mode it is payable by shippers/consignees under the Schedule of Charges under KPT Act with prior approval of the Federal Government.
But, shipping companies recovered Rs 13 billions a year (on 1,992,952 container of 20'- (Source Director PICTL - Dawn 21.10.09) as THC @ Rs 6,550 per container and Terminal Operators extracted US $90m per annum at US $45 per container. Hidden charges in violation of Custom Act and KPT Act are additional - quite substantial. Earlier NTC proposed to merge all charges to be renamed "Logistic" charges. Now FBR wants to endorse charges on the bill of lading.
How the change of nomenclature would legalise illegal charges or how in the light of definition that freight includes all charges in the applicable Tariff and "the" bill of lading would resolve the issue, fails comprehension, Under what law Terminal Handling Charges would be "regulated" and whether rates for "Local shipping" or "local rates" for international shipping would be regulated is puzzling. Decades may elapse to address the point.
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