Institute Cargo Clauses (A) cover general average and salvage charges

Trade expert cites FTP Para 1.08 and CBIC circulars requiring that export consignments not be detained beyond three days, and clarifies documentation norms under the Advance Authorisation scheme

Q: We refer to your article (‘India’s trade hurdle: Bureaucrats unchecked, exporters unheard’ – BS 06.10.2025) where you have mentioned the government's instructions not to detain export cargo and release goods sent for testing within three days. Can you please give the specific references?

 

A: Para 1.08 of FTP says that ‘consignments of items meant for exports shall not be withheld/delayed for any reason by any agency of Central/State Government. In case of any doubt, authorities concerned may ask for an undertaking from the exporter and release such consignment’. Para 4(d) of CBIC circular no.01/2011-Cus dated January 4, 2011 says that ‘export goods detained for purpose of tests etc. must be dealt with on priority and the export allowed expeditiously unless the prohibited nature of goods is confirmed. Continued detention of any export goods in excess of three days must be brought to the notice of the Commissioner of Customs, who will safeguard the interest of the genuine exporters as well as the revenue’. CBIC reiterated these instructions through its circular no.30/2013-Cus dated August 5, 2013 and said that ‘there can be no justification to hold up export consignments for long periods unless the export goods are prohibited under Customs Act, 1962 or ITC (HS) Policy and that essentially genuine exports must be facilitated and there should be no delays or hold ups of export goods’.

 

Q: In reply to my question on whether any procedure has been prescribed for exports through third-party under advance authorisation scheme, you have quoted from Para 4.26 (ii) of the FTP. I find that Para 4.26 refers to the DFIA scheme and not the advance authorisation scheme. Please clarify.

 

A: The reference to documentation on exports by merchant exporter is mentioned only at Para 4.26 (ii) of Chapter 4, which covers all the variants of the duty exemption scheme. In my opinion, the same procedure applies to exports through merchant exporter under the advance authorisation scheme also. I have, in my answer, made a reference to paragraphs 2.41, 2.42, 11.59(a) and 11.61 of FTP also. A reading of all the provisions together makes it clear that in respect to exports through third-party the same documentation is required. I have also mentioned that the merchant exporter should also mention the advance authorisation number and date on the same shipping bill.

 

Q: We would like to know if the Institute Cargo Clauses (A) covers general average and salvage charges.

 

A: Yes. Clause 2 of the Institute Cargo Clauses (A) says that ‘this insurance covers general average and salvage charges, adjusted or determined according to the contract of carriage and/or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from any cause except those excluded in Clauses 4, 5, 6 and 7 below’. Broadly, the excluded clauses cover damages from misconduct of the assured, ordinary leakages or deterioration, inherent vice, delays, insolvency of carriers, insufficiency of packing, unseaworthiness of the vessels, unfitness of container, war, strikes, riots, civil commotion, terrorism etc.