TaxTMI 
TaxTMI 
30 Apr 2025
In India, demurrage refers to the charges incurred when goods are not cleared from customs within the specified time frame. These charges are levied by the port authorities or customs as compensation for the extended storage of goods at the port or customs area. Here’s how demurrage typically works if goods are not cleared in a timely manner:
1. Free Storage Period: Goods are allowed a free storage period at the port or customs area, which varies depending on the specific port and the nature of the cargo. Typically, this period is around 3-5 days for imports (but can vary).
2. Commencement of Demurrage Charges: After the expiration of the free storage period, demurrage charges start applying. The rate of demurrage can vary depending on the type of goods, port, and duration of delay, and can be daily or based on other terms specified by the port authority.
3. Demurrage Fees: Demurrage fees can be imposed by the Customs Department and the Port Trust (if the goods are being stored in a port or customs warehouse). The rate for demurrage often increases incrementally, with higher charges applied for each additional day of delay.
4. Payment of Demurrage Charges: The consignee or the importer is responsible for paying these demurrage charges. Failure to clear the goods in a timely manner and pay the charges may lead to legal action, seizure, or disposal of the goods.
5. Extension or Waiver: In certain circumstances, if the delay is due to administrative issues or reasons beyond the control of the importer (such as government processing delays), it may be possible to request a waiver or extension from the customs or port authorities. Such requests are typically made on a case-by-case basis and are not guaranteed.
6. Customs Clearance Process: To avoid demurrage charges, it is essential to complete all customs documentation and clear the goods as soon as possible after arrival. Delays in clearance can be caused by incomplete documentation, disputes over duty payments, or issues related to the customs examination process.
Summary:
Demurrage charges in India are imposed to encourage timely clearance of goods from customs and to compensate for the use of limited port or warehouse space. If goods are not cleared within the free storage period, demurrage fees can quickly accumulate, potentially leading to high costs.