Consequences of Short Delivery

a short-delivery by a vessel can be an offence under the Indian Customs Act, 1962, leading to potential penalties for the person-in-charge of the vessel (typically the Master or agent).

Here’s why and the relevant provisions:

Section 116 of the Customs Act, 1962 deals specifically with the “Penalty for not accounting for goods.” This section states:

If any goods loaded in a conveyance for importation into India, or any goods transhipped under the provisions of this Act or coastal goods carried in a conveyance, are not unloaded at their place of destination in India, or if the quantity unloaded is short of the quantity to be unloaded at that destination; and if the failure to unload or the short unloading is not accounted for to the satisfaction of the proper officer, the person-in-charge of the conveyance shall be liable to a penalty not exceeding twice the amount of duty that would have been chargeable on the goods not unloaded or the deficient goods, as the case may be, had such goods been imported.

In the case of coastal goods, the penalty shall not exceed twice the amount of export duty that would have been chargeable on the goods not unloaded or the deficient goods, as the case may be, had such goods been exported.

Explanation:

• Goods Loaded for Import: If goods that were loaded onto a vessel for import into India are not fully unloaded at the designated Indian port, it constitutes a short-delivery.
• Transhipped Goods: Similarly, if goods meant for transhipment (being moved through India to another destination) are short-delivered at the Indian transhipment port, it can also be an issue.
• Coastal Goods: Short delivery of goods being transported along the Indian coast is also covered.
• Not Accounted For: The crucial aspect is whether the short-delivery is “accounted for to the satisfaction of the proper officer.” This means the Master or agent needs to provide a valid and acceptable reason for the discrepancy.

Situations where a short-delivery might be acceptable if satisfactorily explained:

• Loss or Damage at Sea: If the goods were lost or damaged due to perils of the sea (e.g., storm, accident) and this can be proven with proper documentation (like the ship’s logbook, surveyor’s reports).
• Discharge at Another Port Due to Emergency: If the vessel had to divert to another port due to a genuine emergency (e.g., medical evacuation, severe weather) and some cargo was offloaded there. Again, this needs to be supported by evidence.
• Pilferage or Theft Before Arrival (with evidence): While less likely to be fully accepted, if there’s evidence of theft before the vessel’s arrival in India and it was reported, it might be considered.

However, if the short-delivery cannot be satisfactorily explained, it becomes an offence under Section 116, and the Master (person-in-charge) can be liable to a penalty. The penalty is linked to twice the amount of duty that would have been applicable to the missing goods had they been properly imported.

In summary, a short-delivery by a vessel is a serious matter under the Indian Customs Act, 1962. While explanations for the shortage may be considered, if the shortfall is not adequately justified to the Customs authorities, it can lead to penalties for the person-in-charge of the vessel.

The Consequences of having an SLSC clause on a Bill of Lading on Short landing of Cargo

The presence of the clause “Shipper’s load, stow and count” (SLSC) on a bill of lading can be a relevant factor but it is unlikely to be a complete and automatic defense against a shortlanding claim under Section 116 of the Indian Customs Act, 1962, especially when the shortlanding is attributed to a strike of tally clerks.

Here’s a breakdown of why:

Understanding “Shipper’s Load, Stow and Count”:

• This clause indicates that the carrier (the vessel and its owners/agents) has not independently verified the quantity or condition of the goods loaded into the container or onto the vessel.
• The carrier is essentially saying they are relying on the shipper’s declaration of the cargo.
• It aims to shift responsibility for discrepancies arising from the loading process (like incorrect counts or improper stowage leading to damage inside a sealed container) from the carrier to the shipper.

Why SLSC is NOT a Complete Defense Against a Shortlanding Claim due to a Strike:

1. Focus of Section 116: Section 116 holds the “person-in-charge of the conveyance” (typically the Master or agent) liable for goods that are not unloaded at their destination or are short-landed, unless the failure or shortage is satisfactorily explained to the Customs officer. The emphasis is on the arrival and unloading at the Indian port.

2. Tally Clerks and Discharge: Tally clerks are usually appointed at the port of discharge to count the goods as they are being unloaded from the vessel. Their count is a key record for determining the quantity of goods that actually arrived in India. A strike by tally clerks directly impacts the ability to accurately record the discharged quantity.

3. Carrier’s Responsibility at Discharge: Even with an SLSC clause, the carrier still has a responsibility to:

   • Deliver the goods that were loaded and transported to the destination port.
   • Ensure the unloading process is conducted with reasonable care.
   • Account for any discrepancies that occur during the voyage or at the time of discharge.

4. Strike as a Potential Explanation, Not Automatic Defense: A strike by tally clerks could potentially be a factor contributing to the difficulty in accurately determining the landed quantity. The Master or agent might argue that the lack of tallying due to the strike makes it impossible to definitively confirm a shortlanding or the exact extent of it.

5. Need for Satisfactory Explanation: The crucial phrase in Section 116 is “accounted for to the satisfaction of the proper officer.” To use the strike as a defense, the Master or agent would need to provide a compelling explanation that satisfies the Customs authorities. This might involve:

   • Evidence of the strike: Official notifications, port authority statements, etc.
   • Demonstrating due diligence: Showing what steps were taken despite the strike to account for the cargo to the best of their ability (e.g., vessel’s own records, photographic evidence of unloading).
   • Potentially linking the SLSC clause to the difficulty in verifying the landed quantity due to the lack of tallying. The argument could be that since they relied on the shipper’s count at loading, the inability to get a proper tally at discharge due to the strike further complicates the verification process.

How Customs might view the situation:

• Customs authorities will likely investigate the reasons for the shortlanding.
• They will want to see evidence that the quantity loaded (as per the shipper’s declaration under SLSC) matches the quantity that arrived in India, or a satisfactory explanation for any discrepancy.
• The strike of tally clerks might be considered a factor that hindered the accurate determination of the landed quantity, but it doesn’t automatically absolve the carrier of responsibility, especially if there are other indications of a genuine shortlanding (e.g., broken seals on containers upon arrival, discrepancies in the vessel’s manifest).
• Customs might still impose a penalty if they believe the shortlanding occurred before the strike or if the carrier didn’t take adequate steps to secure and account for the cargo despite the strike.

In conclusion, while the “Shipper’s load, stow and count” clause can protect the carrier against claims arising from discrepancies in the loading process, it is unlikely to be a foolproof defense against a shortlanding claim under Section 116 of the Indian Customs Act, 1962, particularly when the alleged cause of the inability to verify the landing is a strike of tally clerks. The Master or agent would need to provide a separate and satisfactory explanation to the Customs authorities regarding the shortlanding, and the strike might form part of that explanation but not be the sole basis for exemption from penalty.