Guidelines for Ship Breaking Units

The following Public Notice was issued by the Commissioner of Customs (Import) New Customs House, Mumbai on 18th May 2010.

[Customs Public Notice No. 19 dated 18th May 2010]

1.   Some of the important guidelines framed by the Hon’ble Court in the above referred Writ Petition

2.   Process for Anchoring

3.   Process of Beaching

4.   Boarding of the Vessel

5.   Rummaging

6.   Filing of Bill of Entry

7.   Examination of Vessel

8.   Assessment of Bill of Entry

9.   Final Destruction of Wireless Equipment

Annexures

1.   Refusal of NOC for Anchorage

2.   Refusal of NOC for beaching after physical examination of the vessel

3.   List of documents to be submitted by the importer to the Group AC for assessment of the Bill of Entry

4.   Undertaking.

The import of Vessels and other floating structures for breaking up (hereinafter called ‘Vessels’ or ‘Ships’) is permitted under “Free Importability” as per the provisions of the Foreign Trade Policy, 2009-2014. All ocean going vessels, whether Indian or Foreign Flag, sold for scrapping purposes are treated as vessels imported into India and shall be liable to customs duty under Heading No.89080000 of CTA, 1975 at the rates prevailing as per provisions of Section 15 of the Customs Act, 1962.

2.     The Hon’ble Supreme Court, by the Order dated 17.02.2006 in the Writ Petition No 657/1995, had constituted a Committee of Technical Experts (CTE) to study the entire gamut of deficiencies in the infrastructure for carrying out the ship breaking activities and to recommend the procedure to be followed in the case of Import of such Vessels for breaking up. While delivering the Order dated 06.09.2007, the Hon’ble Supreme Court pronounced that the Government of India shall formulate a Comprehensive Code incorporating the recommendations made by the Committee of Technical Experts (CTE) and until the code comes into play, the recommendations of the CTE shall be operative by virtue of this order and the Maritime Board, State Pollution Control Board, Officials of the Customs Department, National Institute of Occupational Health shall oversee the arrangement and implementation of the recommendations of CTE. The Collector of the concerned District shall be associated when the actual dismantling takes place.

3.     Some of the important guidelines framed by the Hon’ble Court in the above referred Writ Petition are:

(i).   The vessel owner or recycler should submit specified documents well in advance of the arrival of the vessel for recycling for a desk review by the Port Trust in consultation with State Pollution Control Board and Customs department.

(ii)    After the desk review, a decision will be taken regarding permission for anchorage of the vessel. In case, permission is refused by any of these three agencies, the vessel owner would be entitled to both review and appeal.

(iii)   Once a decision is taken to accord permission for anchorage, instructions for safe anchorage would be issued by the Port Trust.

(iv)   At anchorage, the vessel would be boarded by representatives of Customs Department / State Pollution Control Board / Explosives Dept / Atomic Energy Research Board to verify the submissions / data provided for desk review.

(v)    After verification, beaching permission will be given by Port Trust based on clearance granted by the above agencies. Here again, review and appeal mechanism is suggested.

4.     Even though, this judgment was delivered with respect to the ship breaking activities in Alang Port, Gujarat, the Hon’ble Supreme Court had specifically mentioned that such mechanism shall also apply to other ship breaking activities in other coastal states also.

5.     After consulting all the stake holders, including the officers of Customs from other sections, Maharashtra State Pollution Control Board (MSPCB), Mumbai Port Trust (MbPT), and the trade, the present practice of assessment of Bills of Entry for clearance of vessels for breaking up is formulated and the present Public Notice is issued in supercession of the existing instructions.

6.     Process for Anchoring

6.1   As per Para 3.1 of the Supreme Court’s order dated 06.09.2007, the importer should submit the following documents well in advance of the arrival of the vessel for desk review by the MbPT in consultation with MSPCB and Customs Department :

a)     Name of the Ship

b)     IMO Identification No.

c)     Flag

d)     Call Sign

e)     Name of the Master of the Ship and his nationality

f)     List of the crew

g)     GRT/NRT/LDT of the ship with supporting documents

h)     Ship Registration Certificate

i)      A report by the importer on his assessment of hazardous wastes / hazardous substances on board of the vessel and with regard to the structure of the ship, as far as practicable by reference to the ship’s drawings, technical specifications, stores, manifest in consultation with the ship builder, equipment manufacturers and others as appropriate. In the case of ships of special concern, in addition to identification, the marking of all areas containing hazardous wastes / substances, would also be necessary.

6.2   On receipt of all the above mentioned documents from the importer, the Superintendent of Customs, Preventive (General), under the jurisdictional control of Commissioner of Customs (General), will undertake the desk review for granting N.O.C. for anchorage to MbPT. Such exercise shall be completed within two working days.

6.3   In case, where there is no objection for anchorage, the Superintendent shall forward NOC to the Docks Manager, MbPT for anchorage in the prescribed format.

6.4   In case of refusal for anchorage, the Superintendent, Preventive (General) shall forward the report in the format as enclosed in Annexure “1” assigning specific reasons for such refusal to the importer.

6.5   In case the importer feels aggrieved by such refusal, he may file review application within a period of five working days before the Assistant Commissioner / Deputy Commissioner, Preventive (General), who shall dispose of such application within three working days from the date of receipt of the application. The Assistant Commissioner / Deputy Commissioner, Preventive (General), may hear the importer or his representative personally, if they so desire. In case no review application is received within the prescribed time, the Superintendent, Preventive (General) will forward the report of refusal for anchorage in the prescribed format to the Docks Manager, MbPT.

6.6   The Assistant Commissioner / Deputy Commissioner, Preventive (General) after going through the merits of the case and after hearing the importer may uphold or overrule the decision of the Superintendent, Preventive (General). In case the Assistant Commissioner / Deputy Commissioner, Preventive (General) overrules the decision of the Superintendent, then he shall communicate the same to the Superintendent who shall in turn forward NOC to the Docks Manager, MbPT for anchorage in the prescribed format.

6.7   In case the Assistant Commissioner / Deputy Commissioner, Preventive (General) uphold the order of the Superintendent, he shall communicate the same to the Importer assigning specific reasons for such refusal to the importer in the format given at Annexure “1”.

6.8   In case the importer feels aggrieved by the order of review passed by the Assistant Commissioner / Deputy Commissioner, Preventive (General) he may file an appeal within five working days before Joint / Additional Commissioner, Preventive (General) who shall dispose of the same within a period of five working days from the date of receipt of appeal. The Joint / Additional Commissioner, Preventive (General) may hear the importer personally, if they so desire.

6.9   In case no further review application is received within the prescribed time, the Superintendent, Preventive (General) will forward the report of refusal for anchorage in the prescribed format to the Docks Manager, MbPT.

6.10 The Joint Commissioner / Additional Commissioner, Preventive (General) after going through the merits of the case and after hearing the importer may uphold or overrule the decision of the Assistant / Deputy Commissioner, Preventive (General). In case the Joint Commissioner / Additional Commissioner, Preventive (General) overrules the decision of the Assistant / Deputy Commissioner, Preventive (General), then he shall communicate the same to the Superintendent through the Assistant / Deputy Commissioner, Preventive (General) and the Superintendent shall in turn forward NOC to the Docks Manager, MbPT for anchorage in the prescribed format.

6.11 In case the Joint Commissioner / Additional Commissioner, Preventive (General) upholds the order of the Assistant / Deputy Commissioner, Preventive (General) for refusal for anchorage, he shall communicate the same to the Importer with specific reasons. The Superintendent, Preventive (General) will forward the report of refusal for anchorage in the prescribed format to the Docks Manager, MbPT.

6.12 In all such cases, where NOC has been granted for anchoring, the final decision shall be taken by the MbPT for granting of anchorage to the vessel.

7.     Process of Beaching

7.1   The modalities of beaching permission are discussed in Para 3.2 of Supreme Court Order, referred at Para 3 above.

7.2   At the Anchorage the ship will be boarded by the Superintendent of Customs, Preventive (General) along with the Boarding Officer, under the jurisdictional control of Commissioner of Customs (General), who will physically verify the data provided and submissions made by the importer, which was submitted for desk review preferably along with representatives of other agencies, namely Maharashtra State Pollution Control Board / Explosives Department / Atomic Energy Research Board. The Superintendent, Preventive (General) shall be accompanied by the Boarding Officer who performs his duties as proper officer under Section 30 of the Customs Act,1962.

7.3   Boarding of the Vessel

1.     In the present case of import of vessels for breaking up, an additional copy of the IGM shall be collected by the boarding officer, along with the original copy of IGM. The IGM shall be verified for its correctness by the boarding officer before grating entry inwards.

2.     The Boarding Officer will ascertain the quantity of oil on board the vessel. He may seek the assistance of the Government approved surveyor who is generally allowed to board the vessel along with the customs officials for verifying the quantity of the fuel and oil by using the sounding method. If considered necessary, an adequate and representative sample may be used for the verification.

At the time of boarding of the vessel, the master of the vessel has to submit a list of all the Wireless Radio Equipment on board the vessel to the Boarding Officer. The Boarding Officer will then carry out search of the vessel and compare the said list with the equipments found on board to verify the genuineness of the said list. Thereafter, he shall assign running serial numbers to each of the equipments. The said list shall then be signed by the Master of the vessel and by the Boarding Officer, and be kept in the file maintained by the Preventive (General) section along with other documents submitted to the Boarding Officer. As Walkie Talkies are not permanent fixtures unlike other radio / wireless equipment, the Master of the vessel shall bring all Walkie-Talkies declared in the list of Wireless Radio equipments and submit them to the Boarding Officer. These, unless crucial / essential, will then be destroyed in the presence of Master of the vessel and two independent panchas, and a proper panchanama recording the proceedings drawn.

7.4   The Importer shall also submit the Gas Free and Fit for Hot Working certificate in respect of oil cargo tanks and slop tanks to the Superintendent, Preventive (General) for verification.

7.5   The Superintendent, Preventive (General) shall decide whether the ship can be permitted for beaching or not.

The Superintendent, Preventive (General) on satisfying that beaching permission can be given, will direct the Boarding Officer to grant the Entry Inwards and shall prepare a report addressing the Assistant Commissioner / Deputy Commissioner, Assessing Group recommending NOC for beaching in the prescribed format.

7.6   In case of refusal for beaching, the Superintendent, Preventive (General) shall forward the report in the format enclosed in Annexure “2” assigning specific reasons for such refusal to the importer.

7.7   The appeal mechanism in case of anchorage goes, mutatis mutandis, in this case also.

In case of Appellate Authority upholding the refusal of Beaching, no entry inwards shall be given by the Boarding Officer.

7.8   In the case of Nuclear Powered Ships, Desk review has to be conducted by AERB and the officers from that organization has to board the vessel for physical inspection

8.     Rummaging

All vessels imported for the purpose of breaking should be compulsorily rummaged under the supervision of the Superintendent (R&I)

9.     Filing of Bill of Entry

9.1   Once the Entry Inwards is granted, the Importer may file the Bill of Entry.

Examination of Vessel

9.2   The Assessing Group will immediately give first check examination to the Bill of Entry.

9.3   Later, the Importer / C.H.A. shall approach the Docks appraising Department for getting the vessels examined for first appraisement and for preparation of Local Invoice for the inventoried items, as per examination order. The Vessel shall be examined in the presence of the Assistant Commissioner / Deputy Commissioner, Docks. Thereafter, the Docks Offices shall forward the Bill of Entry to the Group.

Assessment of Bill of Entry

9.4   The Assistant Commissioner / Deputy Commissioner, concerned Group shall pass the Bill of Entry for generation of duty challan. The duty will be calculated on the basis of the first check examination. The AC / DC, concerned Group shall make amendments to the Bill of Entry wherever necessary based on the examination report received. The Bill of Entry at this point is not assessed from the valuation point of view. This measure is to facilitate the trade so that beaching permission may be granted to the importer immediately after the payment of duty. The importer has to pay the provisional duty as per the challan generated and come back to the AC / DC, Concerned Group who will then recall the Bill of Entry with the comment that the Bill of Entry will be reassessed after the receipt of complete set of documents from the importer as mentioned at Annexure "3" and after the receipt of the Destruction Report. The Importer shall give an Undertaking that they will carry out the destruction of the wireless equipment and that they will pay the differential duty, if any. The Undertaking shall be on a stamp paper in the format at annexure “4”, signed before the notary in the presence of two witnesses.

9.5   Thereafter an NOC for Beaching will be granted by the Assistant Commissioner / Deputy Commissioner, concerned Group in the prescribed format which will be forwarded to the MbPT.

9.6   The Importer will thereafter re-submit the Bill of Entry along with the documents mentioned at Annexure “3” to the concerned Appraising Group for assessment of the Bill of Entry with regard to value of the vessel within next ten working days. In case of failure, the undertaking given as per Annexure “4” will be enforced.

9.7   Ship stores and POL carried in extra tanks aboard the ship would be assessed on merits.

10.   Final Destruction of Wireless Equipment

10.1 After the vessel is beached, the importer has to get the remaining wireless equipments destroyed under the supervision of Superintendent of Customs, Preventive (General) within the next five working days. While destroying these equipments, the Superintendent shall compare the serial number in the Boarding Officer’s report with the serial number marked physically by the Boarding Officer. The declaration of the Captain should also be cross checked. The destruction should be carried out in the presence of the representative of the importer and two independent panchas, and a proper panchanama must be drawn.

10.2 The destruction report in the prescribed format shall be signed by the Assistant Commissioner / Deputy Commissioner, Preventive (General) which shall be forwarded in a sealed cover to the Assessing Group. The Assessing Group will now finally assess the bill of entry and forward the bill of entry to the Docks with appropriate comments for granting final out of charge by the docks.

10.3 The Out of charge will finally be granted by the appropriate officer at the Docks.

10.4 The Cutting Permission in the prescribed format will be finally given by Assistant Commissioner / Deputy Commissioner, Preventive (General) after the out of charge of the vessel.

10.5 The above instructions shall also apply to all goods falling under Chapter 89 of the Customs Tariff Act, 1975 and which were imported availing the benefit of Notification No 21/2002-Cus, dtd 01.03.2002, with Sr. No 352, 353, and 354 having condition mentioned at Sr.No 72, as amended and later the importer decided to break them up.

11.   This Public Notice will be operative with immediate effect.

12.   The contents of the notice may be brought to the knowledge of the constituent members by the respective trade and CHA associations.

13.   Any difficulty encountered in the implementation of this Public Notice should be immediately brought to the notice of the undersigned.

F.No. S / 1 - 46 / 2009 EDI

Annexures

1.      Refusal of NOC for Anchorage

2.      Refusal of NOC for beaching after physical examination of the vessel

3.      List of documents to be submitted by the importer to the Group AC for assessment of the Bill of Entry

4.     Undertaking.

Annexure 1

Office of Commissioner of Customs (General)

New Custom House, Mumbai

F.No.                                                      Dt:

To

M/s_____________

Gentlemen

Sub: NOC for Anchorage of Vessel M.V___________

Please refer to your letter dated ____________ regarding request for according No Objection for Anchorage as provided under para 7 of the Public Notice___________

The documents submitted by you have been scrutinized by the Department.

It is regretted to inform you that your request for granting NOC for Anchorage is rejected on the following grounds.

1.        

2.        

3.        

An appeal against this decision lies with ___________. The appeal may be filed within the time period as mentioned in the Public Notice.

Yours Sincerely

Superintendent of Customs (P)

PSO (Admin). Mumbai.

Annexure 2

Office of Commissioner of Customs (General)

New Custom House, Mumbai

F.No.                                                     Dt:

To

M/s_____________

Gentlemen

Sub: NOC for Anchorage of Vessel M.V____________

Please refer to your letter dated ____________ regarding request for according No Objection for Anchorage as provided under para 7 of the Public Notice___________

The documents submitted by you have been scrutinized by the Department.

It is regretted to inform you that your request for granting NOC for Anchorage is rejected on the following grounds.

1.        

2.        

3.        

An appeal against this decision lies with ___________. The appeal may be filed within the time period as mentioned in the Public Notice.

Yours Sincerely

Superintendent of Customs (P)

PSO (Admin). Mumbai.

Annexure 3

List of documents to be submitted by the importer for assessment

1.       IEC Code

2.       Physical Delivery Certificate

3.       Notice of Readiness(NOR)

4.       Commercial Invoice certified by the Bank.

5.     Memorandum of Agreement, if any, duly signed in original

6.     Original Survey Report of independent surveyor. It covers ROB and others

7.     Letter of Credit.

8.     Bill / instruments of sale of proof of transfer of ownership of the purchased vessel.

9.   Lloyds Register (for verification of ownership, Weight Registration).

10.  Copy of Builders Certificate to establish LDT of the vessel.

11.    Copy of International tonnage certificate

12.   Port worthiness certificate from surveyor

13.   Capacity plan and lead line chart for draft of the ship showing details for loading of cargo with stability and trim position effecting in Light Displacement Tonnage.

14.   Registration Certificate of the ship and last Port Clearance Certificate.

15.   Inventory list of the ship's property item with principal general ship's particulars and fittings and items on board the ship including moveable gears, ship's stores inventories required as per regulations and consumables including Remnant Oil Bunker, items etc., duly certified by the master of the vessel, at the time of allowing entry inward for such vessel.

16.   Payment receipts from seller / buyer, for commission involved into transaction of sale, if any.

17.   Possession Licence from communication department for wireless equipments on board the vessel, if any.

18.   Permission/provision if/as required under the Import Trade ControlAct.

19.   I.T.C. licence for clearance/possession of Dangerous drugs, Narcotics, Tobacco and other prohibited items, if any, on board the vessel.

In addition to the above, the Assistant Commissioner, Assessing Group should have in his possession the set of documents given for Desk Review to be received from Superintendent, Preventive (General) in sealed cover.

Annexure 4

(To be executed on Rs.100 non judicial Stamp Paper)

Know All Men By These Presents That I/we........................ .................................. (Name and Address of the Importer), hereinafter called the “Importer” (which expression shall include its successors/heirs, executors, administrators and legal representatives) am/are held and firmly bound unto the President of India hereinafter called the “President” (which expression shall include his successors and assigns) in the sum of Rs................. (Value of Vessel in Rupees.) to be paid to the President for which payment well and truly to be made, I/we bind myself/ourselves, my/our successors, heirs, executors, administrators and legal representatives firmly by these presents.

Sealed with my/our seal(s) this.......................... day of...................19..........

Whereas

The Importer had filed a Bill of Entry No.___________ dt.___________ for clearance of Vessel _________ imported for breaking up and paid the duty of Rs.__________ vide Challan No. _______, dt____________

Whereas

As per Para 10.8 of the Standing Order No.__________, I/We hereby undertake to

1.     pay the Differential duty if any.

2.     carry out the destruction of the remaining wireless equipment within the next five working days.

3.     produce the remaining documents enumerated at Annexure 3 of the Public Notice no. 19/2010 within the next ten working days

4.     that in case of failure to satisfy the abovementioned conditions, the subject vessel will become liable for appropriate action under the provisions of the Customs Act, 1962

Now the condition of the above written undertakings such that –

If the importer within the said period as mentioned in the abovementioned paragraph submits such documents and furnish such information as may be called for by the Proper Officer, and upon the satisfaction of the Proper Officer

Then the above written undertaking shall be void and of no effect otherwise the same shall remain in full force and virtue.

And it is hereby agreed and declared by the importer as follows:-

1.     This bond is given under the orders of the Central Government for the performance of an act in which the public are interested.

2.     The President through the in the manner laid down in sub-section (1) of Section 142 of the Customs Act, 1962 without prejudice to any other mode of recovery.

The Schedule above referred to

(Particulars of the goods)

In witness whereof the importer has herein set and subscribed its hands and seals the day, month and year first above written.

Signed and Delivered by and

on behalf of the importer

at........................

in the presence of

1. ......................

2. .......................

Accepted for and on behalf of the

President of India

(Designation of Authorised Officer)

In the presence of

1. ......................

2. ......................