2026-VIL-89-SC-CU
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CUSTOMS Supreme Court Cases

Customs duty on pilfered goods - Custody of imported goods under Major Port Trusts Act and Customs Act - Interaction between saving clause in Section 45(1) and non obstante clause in Section 45(3) of Customs Act - Whether the Notification dated 11.10.2000 approving respondent-Port Trust as the custodian of the notified customs area under Section 45(1) of the Customs Act is valid and consequently whether liability for pilfered goods could be fastened on the respondent in terms of Section 45(3) of the Customs Act - HELD - The saving clause in Section 45(1) operates only where another law for the time being in force itself fastens liability in respect of pilfered goods upon the custodian. The Major Port Trusts Act does not create any specific liability on the Port Trust for customs duty on pilfered goods and deals only with the bailee's civil liability towards the owner of goods under Sections 42 and 43 thereof - The liability under Section 43 of the Major Port Trusts Act is fundamentally different from the liability created under Section 45(3) of the Customs Act - Section 45(3), inserted by Act 22 of 1995 with effect from 26.05.1995, deliberately employed a non obstante clause so as to give it an overriding effect to the liability created thereunder, notwithstanding the saving clause contained in sub-section (1). The expression used in the non obstante clause, notwithstanding anything contained in any law for the time being in force, necessarily includes the Major Port Trusts Act. Pilferage of goods is distinct from general loss or destruction of goods - Section 13 of the Customs Act absolves the importer from liability in respect of pilfered goods, and it is precisely to address the lacuna that Parliament introduced sub-section (3) of Section 45, thereby fastening the liability to pay duty on the person approved under sub-section (1). Section 45(2) of the Customs Act imposes statutory duties upon the custodian to maintain proper records and prevent removal of goods except with permission of proper officer, regardless of the legal source of custody. Pilferage is a consequence of breach of these statutory obligations, and it is for this reason that liability is fastened on the approved custodian for pilfered goods. The Commissioner of Customs was fully justified in issuing the Notification dated 11.10.2000 approving the respondent-Port Trust as custodian under Section 45(1) of the Customs Act. There is no conflict between Section 45 of the Customs Act and Sections 42 and 43 of the Major Port Trusts Act - The fact that the Board may have contractual or statutory rights of indemnity or recovery against another person responsible for the loss does not detract from its primary statutory liability under Section 45(3) of the Customs Act to discharge the customs duty payable to the revenue - The Notification dated 11.10.2000 issued by the Commissioner of Customs (Import) in exercise of the powers conferred under Section 45(1) of the Customs Act is valid. The impugned judgment of the High Court to the extent it held otherwise and quashed the said Notification is set aside - The challenge to the show cause-cum-demand notices pertaining to the period prior to the date of the Notification dated 11.10.2000 is not pressed by appellants as no liability under Section 45(3) could have arisen in the absence of an approval under Section 45(1). Accordingly, the impugned judgment to the extent it quashed the show cause-cum-demand notices prior to 11.10.2000 is not interfered with. The appeal is disposed of accordingly
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