Transit and charges in keeping national interest
Saturday, 6 November 2010
ACCORDING to news reports, the government has suspended transit and transshipment fees for Indian cargoes and transports on river routes until a further decision, in the face of an Indian demand for withdrawing such fees and repeated requests from Dr Mashiur Rahman. The National Board of Revenue (NBR) also made it clear that the government did not waive the fees, but suspended until the dispute over the transit fees is resolved. "Transit fees have been suspended and the customs authorities have been directed to release the two Indian cargo vessels now detained by Bangladesh customs after receiving undertakings from those."
On this issue, Finance Minister AMA Muhith said on November 2 that would formulate new rules to fix fees for giving transit facility to India for transporting goods through Bangladesh. He explained: "They (India) will use our facilities to transport their goods. Our infrastructure will be used and that involves some costs for the government. So we will have to take something; it may be called fee or anything." As per the international rules, he added, no duty can be imposed for giving transit but fees can be charged.
Earlier, a meeting between Bangladesh and India to resolve a dispute over transit fees ended inconclusively in Dhaka on October 11. The foreign ministry official, as reported, asserted that the Indian argument favouring non-payment of transit and transshipment fees is not logical, and the Bangladesh government rightly introduced the fees. "Neither the 1972 protocol nor any other agreement between the two countries says that Bangladesh can't impose the fees. These types of fees are in existence all over the world, and Bangladesh can't allow any waiver because those will be a source of revenue."
On the other hand, NBR pointed out rightly that "We want to make it clear that the imposed transit and transshipment fees do not contradict the Protocol on Inland Water Transit and Trade. The protocol allows India to use Bangladesh territory for transporting goods. The protocol describes how and which route Indian vessels can use. The fee that India has been paying annually under the protocol so far is paid to the shipping ministry for maintaining river navigability," "There is no logic to offer transit facility without fees for the required services."
Background: Dhaka-Delhi January 2010 agreement: During Prime Minister Sheikh Hasina's visit to New Delhi in January, 2010, Bangladesh and India had agreed under as flows:
l "It was agreed that Ashuganj in Bangladesh and Silghat in India shall be declared ports of call. The IWTT Protocol shall be amended through exchange of letters. A joint team will assess the improvement of infrastructure and the cost for one-time or longer term transportation of ODCs (Over Dimensional Cargo) from Ashuganj. India will make the necessary investment. Both governments agreed to expedite implementation. Contractors from both countries shall be eligible for the work. "
l "With a view to encouraging imports from Bangladesh, both countries agreed to address removal of tariff and non-tariff barriers and port restrictions and facilitate movement of containerized cargo by rail and water"
l "It was agreed that the construction of the proposed Akhaura - Agartala railway link be financed by grant from India. A joint team of the railway authorities of the two countries will identify the alignment for connectivity."
It is absolutely clear and evident that the agreement does not even mention "transit and transshipment" of normal commercial cargoes from one place in India through Bangladesh to another place in India. It entails only one-time or longer term transportation of non commercial ODCs (Over Dimensional Cargo) from Ashuganj.
"Bangladesh have absolutely no obligation to allow "transit and transshipment" of goods from one place in India through Bangladesh to another place in India neither under the Dhaka-Delhi January 2010 agreement nor the governing principles of "Transit and Transshipment in International Trade" as mandated under Article V of GATT 1994 (binding on both Bangladesh and India as members of WTO).
The passage of Indian cargoes at the cost of marginalization of our natural advantage and perpetual loss of our export to seven sisters can never be an option. Bangladesh should adopt its strategy and uphold the doctrine of third country transit as stated by Dr. Manmohan Singh in the inaugural session of 13th SAARC summit, that "All South Asian countries would provide to each other, reciprocally, transit facilities to third countries
However, as a gesture of goodwill, with the mutual approval of terms and conditions on case to case basis, Bangladesh may agree to provide passage through its territory non-commercial cargo or goods and machineries relating to any public sector project for trade and economic development.
Transit Charges: At a joint meeting in April, both sides agreed that Bangladesh would collect transit related services charges under the Bangladesh customs laws. The National Board of Revenue (NBR) has set services charges by a statutory regulatory order (SRO) on June 10 for trans-shipment and transit of goods through Bangladesh. The charges would be Tk 10,000 per TEU container if the cargo is transported by road or rail in such containers and Tk 1,000 per tonne if transported by covered vans or trucks or in bulk by non-container ships and trains.
But the prime minister's adviser on economic affairs, Mashiur Rahman, recently requested the Internal Resources Division to waive charges on Indian vessels plying through Bangladesh river networks and, as reported on 23-12-2010, Dr Mashiur Rahman said. "World practice and principles should be followed in imposing transshipment fees and the practice prior to joint communiqué declared in India will be applicable now as the government is scrutinizing the issue,"
Article V of GAAT 1947: All charges and regulations for traffic in transit (with or without transshipments) are governed by the mandatory provisions of paragraphs 3-5 0f Article V of GAAT 1947.
-- Any contracting party may require that traffic in transit through its territory be entered at the proper custom house, but, except in cases of failure to comply with applicable customs laws and regulations, such traffic coming from or going to the territory of other contracting parties shall not be subject to any unnecessary delays or restrictions and shall be exempt from customs duties and from all transit duties or other charges imposed in respect of transit, except charges for transportation or those commensurate with administrative expenses entailed by transit or with the cost of services rendered.
-- All charges and regulations imposed by contracting parties on traffic in transit to or from the territories of other contracting parties shall be reasonable, having regard to the conditions of the traffic.
-- With respect to all charges, regulations and formalities in connection with transit, each contracting party shall accord to traffic in transit to or from the territory of any other contracting party treatment no less favourable than the treatment accorded to traffic in transit to or from any third country.
-- Obligations regarding the nature of charges or regulations a Member may legitimately impose are set out in paragraphs 3-5. As a general rule, traffic in transit shall be exempt from customs duties. Furthermore, such traffic is to be exempted from "all transit duties or other charges imposed in respect of transit, except charges for transportation or those commensurate with administrative expenses entailed by transit or with the cost of services rendered".
This means that there are only two kinds of charges a member may legitimately impose on traffic in transit: charges for (i) transportation and for (ii) administrative expenses caused by transit or services rendered. And even here (as well as in the case of other permitted formalities and regulations); such charges have to be reasonable (paragraph 4) and non-discriminatory (paragraph 5). The general principle therefore is that transit traffic shall not be a source of fiscal revenue.
According to paragraph 4, all charges and regulations imposed by a Member on traffic in transit shall be "reasonable, having regard to the conditions of the traffic" "…the word 'charges' includes charges for transportation by Government-owned railroads or Government-owned modes of transportation'
Paragraph 5 calls for most-favoured-nation treatment of traffic in transit with respect to all charges, regulations and formalities in connection with transit
Customs transit services: WCO Specific Annex E has standard provisions for Customs transit Services. Some of them are as follows:
l Sealing and identification of consignments,
l Full examination of the goods and recording the results thereof on the transit document;
l Affixing Customs seals or fastenings to individual packages;
l A precise description of the goods by reference to samples, plans, sketches, photographs, or similar means, to be attached to the transit document;
l Stipulation of a strict routing and strict time limits; or Customs escort.
l Where the Customs offices concerned check the Customs seals and fastenings or examine the goods, they should record the results on the transit document.
It should be mentioned here that transit fees are charged in various forms under all transit protocols practiced world over and moreover India itself charges transit charges from Bhutan Nepal and Bangladesh even on advaloram and sectoral basis in violation of GATT Articles 3-5.
Nepal Transit and Warehousing Co. Ltd. (NTWCL), the appointed agent of Indian Customs, levies a clearing fee of 0.20 percent of the FOB value on Export and 0.30 percent of the CIF value on import trade traffic moving through the Phulbari-Banglabandh route.
The charges for issuing the letter of undertaking to the Indian Customs are 0.07 percent for cement and fertilizer, and 0.15 percent for other products on FOB exports and CIF imports.
Transit services: The Indian Customs Clearance for Export: Documents Required for Export to third country by air freight are: 1. Custom declaration forms. 2. Copy of export license if applicable. 3. Commercial invoice. 4. Certificate of origin. 5. GSP form 'A' if applicable. 6. Copy of letter of credit of advance payment statement for Bank. 7.
Foreign exchange declaration forms. 8. Packing list. 9. Photo Copy of income tax registration certificate. 10. Airway bill. 11. Authorization letter to act as custom agents.
Documents required for Export to third country by sea freight are: All above specific documents except of No. 10 and rest of the following documents are required: 1. Transport manifesto, one copy per truck 2. Custom transit declarations. 3. Transit declaration Invoice for goods in transit via India/Bangkok to third country destination 4. Besides, for the export of readymade garments to USA, visa stamp from National Productivity & Economic Center is required.
Customs clearance for import: Documents required for custom clearance for import cargo by air freight are: 1. Import declaration form 2. Airway bill. 3. Invoice. 4. Package list and weight list. 5. Certificate of origin. 6. Insurance policy. 7. Letter of credit. 8. Import License. 9. Firm registration certificate. 10. Income tax registration certificate. 11. Value added tax certificate. 12. Authorization letter to act as custom agents.
Documents required for customs clearance for import of cargo by sea freight via transit through India/Bangladesh are 1. Transport manifesto. 2. Transshipment pass issued by Calcutta custom. 3. Bill of loading. 4. Importer's counter guarantee letter addressed to Nepal Transit and Warehousing Co. Ltd.
The writer is chairman, Fair Trade Advocacy Centre, FBCCI Standing Committee on WTO and RTAs. He can be
reached at e-mail: mahmed019@hotmail.com
On this issue, Finance Minister AMA Muhith said on November 2 that would formulate new rules to fix fees for giving transit facility to India for transporting goods through Bangladesh. He explained: "They (India) will use our facilities to transport their goods. Our infrastructure will be used and that involves some costs for the government. So we will have to take something; it may be called fee or anything." As per the international rules, he added, no duty can be imposed for giving transit but fees can be charged.
Earlier, a meeting between Bangladesh and India to resolve a dispute over transit fees ended inconclusively in Dhaka on October 11. The foreign ministry official, as reported, asserted that the Indian argument favouring non-payment of transit and transshipment fees is not logical, and the Bangladesh government rightly introduced the fees. "Neither the 1972 protocol nor any other agreement between the two countries says that Bangladesh can't impose the fees. These types of fees are in existence all over the world, and Bangladesh can't allow any waiver because those will be a source of revenue."
On the other hand, NBR pointed out rightly that "We want to make it clear that the imposed transit and transshipment fees do not contradict the Protocol on Inland Water Transit and Trade. The protocol allows India to use Bangladesh territory for transporting goods. The protocol describes how and which route Indian vessels can use. The fee that India has been paying annually under the protocol so far is paid to the shipping ministry for maintaining river navigability," "There is no logic to offer transit facility without fees for the required services."
Background: Dhaka-Delhi January 2010 agreement: During Prime Minister Sheikh Hasina's visit to New Delhi in January, 2010, Bangladesh and India had agreed under as flows:
l "It was agreed that Ashuganj in Bangladesh and Silghat in India shall be declared ports of call. The IWTT Protocol shall be amended through exchange of letters. A joint team will assess the improvement of infrastructure and the cost for one-time or longer term transportation of ODCs (Over Dimensional Cargo) from Ashuganj. India will make the necessary investment. Both governments agreed to expedite implementation. Contractors from both countries shall be eligible for the work. "
l "With a view to encouraging imports from Bangladesh, both countries agreed to address removal of tariff and non-tariff barriers and port restrictions and facilitate movement of containerized cargo by rail and water"
l "It was agreed that the construction of the proposed Akhaura - Agartala railway link be financed by grant from India. A joint team of the railway authorities of the two countries will identify the alignment for connectivity."
It is absolutely clear and evident that the agreement does not even mention "transit and transshipment" of normal commercial cargoes from one place in India through Bangladesh to another place in India. It entails only one-time or longer term transportation of non commercial ODCs (Over Dimensional Cargo) from Ashuganj.
"Bangladesh have absolutely no obligation to allow "transit and transshipment" of goods from one place in India through Bangladesh to another place in India neither under the Dhaka-Delhi January 2010 agreement nor the governing principles of "Transit and Transshipment in International Trade" as mandated under Article V of GATT 1994 (binding on both Bangladesh and India as members of WTO).
The passage of Indian cargoes at the cost of marginalization of our natural advantage and perpetual loss of our export to seven sisters can never be an option. Bangladesh should adopt its strategy and uphold the doctrine of third country transit as stated by Dr. Manmohan Singh in the inaugural session of 13th SAARC summit, that "All South Asian countries would provide to each other, reciprocally, transit facilities to third countries
However, as a gesture of goodwill, with the mutual approval of terms and conditions on case to case basis, Bangladesh may agree to provide passage through its territory non-commercial cargo or goods and machineries relating to any public sector project for trade and economic development.
Transit Charges: At a joint meeting in April, both sides agreed that Bangladesh would collect transit related services charges under the Bangladesh customs laws. The National Board of Revenue (NBR) has set services charges by a statutory regulatory order (SRO) on June 10 for trans-shipment and transit of goods through Bangladesh. The charges would be Tk 10,000 per TEU container if the cargo is transported by road or rail in such containers and Tk 1,000 per tonne if transported by covered vans or trucks or in bulk by non-container ships and trains.
But the prime minister's adviser on economic affairs, Mashiur Rahman, recently requested the Internal Resources Division to waive charges on Indian vessels plying through Bangladesh river networks and, as reported on 23-12-2010, Dr Mashiur Rahman said. "World practice and principles should be followed in imposing transshipment fees and the practice prior to joint communiqué declared in India will be applicable now as the government is scrutinizing the issue,"
Article V of GAAT 1947: All charges and regulations for traffic in transit (with or without transshipments) are governed by the mandatory provisions of paragraphs 3-5 0f Article V of GAAT 1947.
-- Any contracting party may require that traffic in transit through its territory be entered at the proper custom house, but, except in cases of failure to comply with applicable customs laws and regulations, such traffic coming from or going to the territory of other contracting parties shall not be subject to any unnecessary delays or restrictions and shall be exempt from customs duties and from all transit duties or other charges imposed in respect of transit, except charges for transportation or those commensurate with administrative expenses entailed by transit or with the cost of services rendered.
-- All charges and regulations imposed by contracting parties on traffic in transit to or from the territories of other contracting parties shall be reasonable, having regard to the conditions of the traffic.
-- With respect to all charges, regulations and formalities in connection with transit, each contracting party shall accord to traffic in transit to or from the territory of any other contracting party treatment no less favourable than the treatment accorded to traffic in transit to or from any third country.
-- Obligations regarding the nature of charges or regulations a Member may legitimately impose are set out in paragraphs 3-5. As a general rule, traffic in transit shall be exempt from customs duties. Furthermore, such traffic is to be exempted from "all transit duties or other charges imposed in respect of transit, except charges for transportation or those commensurate with administrative expenses entailed by transit or with the cost of services rendered".
This means that there are only two kinds of charges a member may legitimately impose on traffic in transit: charges for (i) transportation and for (ii) administrative expenses caused by transit or services rendered. And even here (as well as in the case of other permitted formalities and regulations); such charges have to be reasonable (paragraph 4) and non-discriminatory (paragraph 5). The general principle therefore is that transit traffic shall not be a source of fiscal revenue.
According to paragraph 4, all charges and regulations imposed by a Member on traffic in transit shall be "reasonable, having regard to the conditions of the traffic" "…the word 'charges' includes charges for transportation by Government-owned railroads or Government-owned modes of transportation'
Paragraph 5 calls for most-favoured-nation treatment of traffic in transit with respect to all charges, regulations and formalities in connection with transit
Customs transit services: WCO Specific Annex E has standard provisions for Customs transit Services. Some of them are as follows:
l Sealing and identification of consignments,
l Full examination of the goods and recording the results thereof on the transit document;
l Affixing Customs seals or fastenings to individual packages;
l A precise description of the goods by reference to samples, plans, sketches, photographs, or similar means, to be attached to the transit document;
l Stipulation of a strict routing and strict time limits; or Customs escort.
l Where the Customs offices concerned check the Customs seals and fastenings or examine the goods, they should record the results on the transit document.
It should be mentioned here that transit fees are charged in various forms under all transit protocols practiced world over and moreover India itself charges transit charges from Bhutan Nepal and Bangladesh even on advaloram and sectoral basis in violation of GATT Articles 3-5.
Nepal Transit and Warehousing Co. Ltd. (NTWCL), the appointed agent of Indian Customs, levies a clearing fee of 0.20 percent of the FOB value on Export and 0.30 percent of the CIF value on import trade traffic moving through the Phulbari-Banglabandh route.
The charges for issuing the letter of undertaking to the Indian Customs are 0.07 percent for cement and fertilizer, and 0.15 percent for other products on FOB exports and CIF imports.
Transit services: The Indian Customs Clearance for Export: Documents Required for Export to third country by air freight are: 1. Custom declaration forms. 2. Copy of export license if applicable. 3. Commercial invoice. 4. Certificate of origin. 5. GSP form 'A' if applicable. 6. Copy of letter of credit of advance payment statement for Bank. 7.
Foreign exchange declaration forms. 8. Packing list. 9. Photo Copy of income tax registration certificate. 10. Airway bill. 11. Authorization letter to act as custom agents.
Documents required for Export to third country by sea freight are: All above specific documents except of No. 10 and rest of the following documents are required: 1. Transport manifesto, one copy per truck 2. Custom transit declarations. 3. Transit declaration Invoice for goods in transit via India/Bangkok to third country destination 4. Besides, for the export of readymade garments to USA, visa stamp from National Productivity & Economic Center is required.
Customs clearance for import: Documents required for custom clearance for import cargo by air freight are: 1. Import declaration form 2. Airway bill. 3. Invoice. 4. Package list and weight list. 5. Certificate of origin. 6. Insurance policy. 7. Letter of credit. 8. Import License. 9. Firm registration certificate. 10. Income tax registration certificate. 11. Value added tax certificate. 12. Authorization letter to act as custom agents.
Documents required for customs clearance for import of cargo by sea freight via transit through India/Bangladesh are 1. Transport manifesto. 2. Transshipment pass issued by Calcutta custom. 3. Bill of loading. 4. Importer's counter guarantee letter addressed to Nepal Transit and Warehousing Co. Ltd.
The writer is chairman, Fair Trade Advocacy Centre, FBCCI Standing Committee on WTO and RTAs. He can be
reached at e-mail: mahmed019@hotmail.com