Computation of freight of time chartered/daughter vessel - Board issues draft circular
The issue regarding computation of freight of time chartered/daughter vessel and it’s inclusion in the assessable value was taken up in detail by the committee headed by Shri R.K.Chakraborti, the then Member (L&J), and it was held that the freight of daughter vessel would have to be treated as extension of freight and not as part of landing charges. It was also suggested that the same should be calculated on normative basis on the World Scale Norms. The World Scale gives the rate in terms of US$ PMT annually for a standard vessel of capacity 75000 MT between two geographical points whose co-ordinates in terms of latitudes and longitudes are available with World Scale Organisation (WSO), and for different sizes of vessels and for different months, the rate can be determined after applying a multiplying factor (monthly average freight rate assessment) arrived on the basis of market trends world over.
The above issue was discussed in the Chief Commissioner’s Conference held on 1st October 2005 at Mumbai. The conference agreed that the recommendations of the Shri R.K.Chakraborti Committee should be accepted and that pending cases of assessments should be finalized as per the two alternative methods of computation of cost of transportation for daughter/time chartered vessel. The first option which is based on the World Scale rates duly adjusted on the basis of AFRA rates, should be followed wherever the World scale rates are available for the transportation between high seas and respective minor ports in India. In cases where the World Scale Freight Rate Index is not available, the cost element required for arriving at the freight rate may be based on the benchmarks used by the World Scale Association. In both cases, Wharfage and transshipment charges should be added to arrive at the total freight. It was also made clear that the data in respect of these calculations should be submitted by the respective importers to the satisfaction of the assessing officer. Accepting services by the Cost Accountants may also be considered by the respective Commissionerates depending upon the extent of complexity of the cases.
Now Board has decided that all pending cases involving lighterage charges would be finalized on the basis of World Scale Rates and AFRA wherever available. In case of minor ports where WSO rates along with AFRA are not available, the concerned Commissioners should direct the shipping companies to get the WSO rates fixed. All pending provisional assessments should be finalized accordingly
Board’s draft does not mention whether they want suggestions and if so where to send them.
Board’s draft circular