Bangladesh - Liquid Cargo Shortage On Shore Tank Figures

September 2004

When the customs authorities in Bangladesh issue penalties for liquid cargo shortages these are invariably based on  shore tank figures. Penalties are issued even where other measurements show that there is, in fact, no shortage.

While the Customs Adjudicating Authority continue to rely on shore tank figures, the Appellate Authority will consider other evidence and allow appeals from penalties where such evidence shows that there is no shortage.

In a case which came before the Appellate Authority in 2001* an ullage survey of a cargo of soyabean oil had been carried out in the presence of surveyors attending on behalf of the owner, the receiver and the customs authority respectively as well as the duty customs officer and the ship's chief engineer. The ullage report, which bore the seals of all the surveyors, showed a small excess compared with the bill of lading quantity. After discharge to shore tanks in the presence of the same parties, a dry tank certificate was issued. However, the calculations based on shore tank figures showed a shortage.

The figures were as follows:

Source Quantity (M/Ts) Shortfall/Excess (M/Ts) Bill of Lading 16,000.00 - Ullage Report 16,014.822 +14.822  Shore Tank  15,821.800  -178.200

Before the Customs Adjudication Authority it was held that the carrier is responsible for the short landing, no matter how it is caused. On the basis of the rate of duty applicable to the cargo and at the rate of 125%, a penalty of 1,414,571.00 TK**  was imposed.

Owners appealed. On the facts of the case the Appellate Authority held that as no shortage had been found before discharge into the shore tanks the carrier could not be held liable for the apparent shortage based on the shore tank figures.*** 

Shore tank readings are notoriously unreliable. Nonetheless, it remains Bangladeshi Customs practice to rely on these readings. This case shows, however, that good evidence to contradict shore tank based calculations will be accepted by the Appellate Authority and makes appeal worthwhile.

It is good practice for members to arrange their own surveys for many reasons. This case highlights the benefits of doing so. In the absence of such evidence members will have nothing with which to challenge shore tank calculations and,  therefore, no means by which they might appeal the imposition of a customs penalty.  

 

With thanks to Finlays, Chittagong, for supplying this information.

*Order-in-Appeal No.51/2001

**$24,000 approx - rate as at 29.09.04

***s156 (1) 24 (2) The Customs Act 1969 was relied upon as authority for this finding.