Every year, millions of consignments arrive at India’s seaports, airports, and inland container depots. For most importers — especially those new to international trade — the moment a vessel docks at port marks not the end of the journey but the beginning of a complex legal and administrative process. Understanding this process is essential, because the moment your goods enter a ‘customs area’, financial liabilities can begin accumulating that are difficult to reverse if ignored. This article is the first in a seven-part series on demurrage and detention charges in India and the warehoused goods trap under Indian customs law. It explains, in plain language, what happens when goods arrive at an Indian port, who takes charge of them, what ‘customs areas’ mean in law, and — critically — the two types of charges that begin running from the very first day of arrival.

The Journey of a Consignment: From Vessel to Clearance

To understand why charges accumulate, it is important to visualise the step-by-step journey of an imported consignment under Indian law:

1. Vessel Arrival: The ship carrying goods arrives at an Indian port (e.g., Mumbai, Chennai, JNPT/Nhava Sheva, Mundra).
2. Import Manifest Filing: The carrier (shipping line) files an Import General Manifest (IGM) under Section 30 of the Customs Act, 1962, declaring the cargo on board.
3. Unloading: Goods are physically unloaded from the vessel and brought into the customs area.
4. Custody Transfer: The moment goods enter the customs area, they come under the custody of the appointed custodian (explained below).
5. Bill of Entry Filing: The importer or their Customs House Agent (CHA) files a Bill of Entry under Section 46 of the Customs Act, declaring the goods for clearance.
6. Assessment and Examination: Customs officers assess the declared value, classify goods under the tariff, and may physically examine the consignment.
7. Duty Payment and Out-of-Charge Order: Once duties are paid and satisfied, the proper officer issues an ‘out-of-charge’ order, enabling the importer to remove goods from the customs area.

Every day that passes between steps 3 and 7 — between goods entering the customs area and the importer collecting them — charges are accumulating. These are demurrage and detention charges, and they are the financial centrepiece of the entire series.

What is a ‘Customs Area’?

The term ‘customs area’ is defined in Section 2(11) of the Customs Act, 1962. It means the area of a customs station and includes any area in which imported goods or export goods are ordinarily kept before clearance by customs authorities.

Customs areas in India include the following types of facilities:

An important legal distinction: an ICD is a full-fledged customs station — it is, in law, equivalent to a seaport or airport. A CFS, on the other hand, is merely a ‘customs area’ within the jurisdiction of a Port Commissioner of Customs; it cannot have independent customs administration. This distinction has practical consequences for jurisdiction and applicable regulations.

Key Point: Once goods enter a customs area, they are under the control of the customs authorities and the appointed custodian. The importer cannot remove goods without customs’ written permission.

Who is a Custodian and What Does Section 45 Provide?

Section 45 of the Customs Act, 1962 provides that imported goods brought into a customs area shall be in the custody of an entity approved by the Commissioner of Customs as the ‘custodian’ of those goods. The custodian holds the goods on trust — responsible for their safe storage until the importer obtains an order of clearance from the proper officer of customs.

Key responsibilities of a custodian under Section 45 and HCCAR 2009:

• No goods may be removed from the customs area without the written permission of a customs officer.
• The custodian must not deal with goods (open packaging, repack, sample, move to another spot) without written customs authorisation.
• If goods are lost or pilfered while in custody, the custodian is liable to pay customs duty on the lost goods under Section 45(3) — as confirmed by the Delhi High Court in Container Corporation of India v. Commissioner of Customs.
• All custodians must comply with the Handling of Cargo in Customs Areas Regulations, 2009 (HCCAR 2009), issued under Notification No. 26/2009-Cus (NT), dated 17.03.2009.

It is crucial to note that Section 45, strictly speaking, applies only to imported goods. Export goods stored in customs areas are governed under separate provisions and instructions issued from time to time.

The Customs Cargo Service Provider (CCSP)

With the growth of international trade, the concept of the ‘Custodian’ evolved into the more comprehensive framework of the Customs Cargo Service Provider (CCSP) under Chapter X of HCCAR 2009 and, subsequently, under the HCCAR Amendment Regulations 2024.

A CCSP is any person or entity that provides services relating to the entry or departure of conveyances, loading or unloading of cargo, or temporary storage of imported or export goods in a customs area. This includes port trusts, CFS operators, ICD operators, Air Cargo Complexes, and similar entities. CCSPs must be licensed/approved by the Commissioner of Customs and must comply with the detailed obligations set out in Regulation 6 of HCCAR 2009.

Under HCCAR Regulation 6(1), a CCSP is required, among other things, to:

• Account for all goods entrusted to their custody.
• Not release goods without permission from customs officers.
• Maintain proper records of goods received and released.
• NOT charge rent or demurrage on goods that are seized, detained, or confiscated by customs officers [Regulation 6(1)(l)] — a provision that is the cornerstone of the entire article series.

The Authorized Carrier: A Different Entity

Separate from the CCSP/custodian is the ‘Authorized Carrier’ — the shipping line or its agent who brought the goods to India. Under the Sea Cargo Manifest and Transshipment Regulations, 2018 (SCMTR 2018), a shipping line or its Indian agent who is registered as an ‘Authorized Sea Carrier’ has obligations parallel to (but different from) those of the CCSP. The carrier controls the container — the metal box itself — while the CCSP controls the storage space. This creates two distinct charge heads that importers face.

Demurrage vs. Detention Charges in India: The Critical Distinction

The most commonly confused terms in customs logistics — and the source of the heaviest financial losses for importers — are demurrage and detention charges. They are legally and commercially distinct:

Understanding the distinction between demurrage and detention charges is not merely academic. In litigation, courts have repeatedly ruled on which of the two charges applies to a given situation and who bears liability — often leading to very different outcomes. The Supreme Court in Shipping Corporation of India Ltd. v. C.L. Jain Woollen Mills (AIR 2001 SC 1806) held that where goods were illegally detained by customs, the importer is exempted from demurrage liability — but the carrier (Shipping Corporation) and Container Corporation were directed to consider waiving their charges if an application is filed by customs authorities.

Free Period and the Running Clock

Every port and every shipping line grants a ‘free period’ — a specified number of days during which goods may be stored or the container kept without any charge. For most major Indian ports, the free storage period for imported goods is between 3 to 7 days from the date of unloading. After this, demurrage kicks in. For container detention, the free period is typically 3–7 days after the container is released from the port terminal, as per the carrier’s Bill of Lading terms.

Charges typically escalate in tiers: a lower rate for the first 30 days, and higher rates thereafter. At some ports, charges after 60 days are levied at 100% of the applicable rate. This is why a two-year investigation by a customs agency like DRI can result in astronomical demurrage figures — making the waiver provisions under HCCAR and SCMTR extremely important.

Why This Matters: The Trap

The ‘warehoused goods trap’ arises when an importer is caught in circumstances beyond their control — such as a DRI/SIIB seizure, a customs hold for verification, or a refusal by customs to permit re-export — and demurrage and detention charges accumulate for months or years. The importer, already facing potential penalties or duty liability, also faces crushing logistics charges from the custodian and the shipping line. The law provides protections — but only if the right steps are taken at the right time. This series explains those protections in full.

Conclusion

When goods arrive at an Indian port, a complex interplay of statute, regulation, contract, and administrative action begins. The custodian (CCSP) takes physical charge under Section 45 of the Customs Act. The authorized carrier holds the container. Both can charge the importer for extended stays. The key takeaway from this article is that demurrage and detention are two different charges, with two different legal bases, two different charging parties, and two different waiver regimes. Articles 2 through 7 of this series build step by step on this foundation, culminating in a practitioner’s guide to navigating the intersection of Section 69 re-exports, customs seizures, and the mandatory waiver obligations under Indian law.

References

1. Customs Act, 1962, Sections 2(11), 30, 45, 46, 47 — India Code — https://www.indiacode.nic.in/bitstream/123456789/15359/1/the_customs_act,_1962.pdf
2. Handling of Cargo in Customs Areas Regulations, 2009 (HCCAR) — CFSAI — https://cfsai.in/wp-content/uploads/2023/03/5.pdf
3. Sea Cargo Manifest and Transshipment Regulations, 2018 (SCMTR) — ICEGATE — https://www.old.icegate.gov.in/Download/SCMTR_250719.pdf
4. Chennai Customs: Custodian of Cargo — https://chennaicustoms.gov.in/custodian-of-cargo/
5. CFS vs ICD vs Seaport vs Airport — EximPe (2026) — https://eximpe.com/blog/b2b/cfs-vs-icd-vs-seaport-vs-airport-how-your-choice-impacts-import-costs-speed-compliance
6. CFS and ICD Difference — CBEC Clarification — https://taxindiaonline.com/RC2/printBNewspdf.php?newsid=9143
7. Customs Cargo Service Providers — TaxGuru — https://taxguru.in/custom-duty/customs-cargo-service-providers-under-customs-act-1962.html
8. Demurrage and Detention — Indian Perspective, Singhania Law (2025) — https://singhanialaw.com/indian-perspective-on-detention-and-demurrage-2/
9. Container Corporation of India v. Commissioner of Customs (Delhi High Court, 2024) — TaxGuru — https://taxguru.in/custom-duty/custodian-liable-pay-duty-goods-pilfered-custody-delhi-hc.html
10. Shipping Corporation of India Ltd. v. C.L. Jain Woollen Mills (AIR 2001 SC 1806) — CaseMine — https://www.casemine.com/judgement/in/56ea8cc1607dba382a0790c1
11. Understanding Demurrage and Detention in Freight Forwarding — Pazago (2024) — https://blog.pazago.com/post/difference-demurrage-detention-shipping

The post What Happens When Your Goods Arrive at an Indian Port? Demurrage and Detention Charges in India Explained appeared first on Bhatt & Joshi Associates.