Case Note & Summary
The dispute concerned demands for customs duty on imported goods pilfered while in the custody of the Board of Trustees of the Port of Bombay, a Major Port Trust constituted under the Major Port Trusts Act, 1963. The Assistant Commissioner of Customs issued four show cause-cum-demand notices dated 18.06.1996, 02.04.1997, 28.04.1997 and 24.05.2000, seeking to recover duty under Section 45(3) of the Customs Act, 1962 for pilferage during 1996 to 2000. Adjudication orders dated 06.11.1997, 02.10.1997, 06.10.1997 and 17.05.2001 confirmed the demands. In the meantime, by Notification and Public Notice dated 11.10.2000, the Commissioner of Customs (Import) declared Mumbai Port Trust as custodian under Section 45(1) of the Customs Act for the notified customs area. The port trust's appeals to the Commissioner of Customs (Appeals) were dismissed by common order dated 30.07.2002. Aggrieved, the respondent filed Writ Petition No.1278 of 2003 before the Bombay High Court. By order dated 28.07.2009, the High Court allowed the writ petition, held that recovery of duty under Section 45(1) is only from a person approved by the Commissioner and not from a body constituted under law, set aside the duty orders, and declared the Notification dated 11.10.2000 without jurisdiction and ultra vires Section 45(1). The Union of India appealed to the Supreme Court. The appellants argued that the saving words in Section 45(1) do not exclude the Commissioner from approving a person in whose custody imported goods remain merely because another statute also places goods in that person's custody; the port trust was not immune from duty; and the notification was a valid exercise of power under Section 45(1). The respondent contended that its custody flowed from the Major Port Trusts Act, the Commissioner had no power to approve it, and Section 45(3) cannot independently create liability; alternatively, the notification dated 11.10.2000 could not apply to pilferage before that date. During the hearing, the appellants fairly conceded that the demands for the pre-notification period could not be sustained because the respondent had not been approved as custodian under Section 45(1) at the time of the pilferage. Consequently, the Supreme Court stated that the controversy was confined to the correctness of the High Court's declaration that the Notification dated 11.10.2000 was without jurisdiction and ultra vires. The question framed was whether the notification approving the port trust as custodian was valid and whether liability could be fastened accordingly under Section 45(3). The judgment text provided ends while reproducing Section 45 of the Customs Act and does not include the court's final analysis and operative order on the validity of the notification.
Headnote
A) Customs Law - Custody and Duty on Pilfered Goods - Liability Under Section 45(3) Requires Prior Approval Under Section 45(1) - Customs Act, 1962, Sections 45(1), 45(3) - The appeal arose from demands for customs duty on goods pilfered between 1996 and 2000; the respondent port trust was not approved as custodian under Section 45(1) until Notification dated 11.10.2000. Appellants conceded that pre-notification demands could not be sustained because liability under Section 45(3) attaches only to a person approved at the time of custody. Held that the appeal was confined to the validity of the post-notification custodian approval (Paras 2, 3.3, 3.4).
B) Customs Law - Saving Clause Interpretation - 'Save as otherwise provided in any law for the time being in force' - Customs Act, 1962, Section 45(1) - Major Port Trusts Act, 1963 - The court examined whether the Commissioner of Customs was barred from approving a Major Port Trust as custodian because its custody already flowed from the Major Port Trusts Act. The appellants contended the saving clause did not exclude such approval, while the respondent contended the Commissioner lacked power because custody was already governed by another law. The provided extract ends before the court's final reasoning on this point, so no final holding is available (Paras 3.1.1-3.2.4).
Issue of Consideration
Whether the Notification dated 11.10.2000 approving the respondent-Port Trust as the custodian of the notified customs area under Section 45(1) of the Customs Act, 1962 is valid, and whether liability for pilfered goods could be fastened on the respondent under Section 45(3) pursuant to that notification.
Law Points
- Liability under Section 45(3) Customs Act
- 1962 attaches only to a person approved under Section 45(1)
- statutory custody under Major Port Trusts Act
- 1963 does not automatically create customs duty liability
- notification under Section 45(1) operates prospectively
- saving clause in Section 45(1) does not necessarily exclude Commissioner's approval power
- pre-notification demands cannot be sustained
Case Details
2026 LawText (SC) (08) 107
Civil Appeal No. 4477 of 2010
V. Chandrashekara Bharati, Rakesh Khanna
The Board of Trustees of the Port of Bombay
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Nature of Litigation
Civil appeal before the Supreme Court against a Bombay High Court order allowing a writ petition and setting aside customs duty demands and a custodian notification.
Remedy Sought
The appellants Union of India sought to set aside the Bombay High Court order dated 28.07.2009 and restore the customs duty demands and the validity of the Notification dated 11.10.2000; the respondent port trust resisted the appeal and sought upholding of the High Court order.
Filing Reason
The Union of India was aggrieved by the High Court's holding that recovery of duty for pilfered goods under Section 45(3) could only be from a person approved by the Commissioner under Section 45(1), that the Notification dated 11.10.2000 was without jurisdiction, and that the duty orders dated 06.11.1997, 02.10.1997, 06.10.1997 and 17.05.2001 should be set aside.
Previous Decisions
Assistant Commissioner of Customs confirmed duty demands through orders-in-original dated 06.11.1997, 02.10.1997, 06.10.1997 and 17.05.2001; Commissioner of Customs (Appeals) dismissed the respondent's appeals by common order dated 30.07.2002; Bombay High Court allowed Writ Petition No.1278 of 2003 by order dated 28.07.2009, set aside the duty orders and held the Notification dated 11.10.2000 ultra vires Section 45(1).
Issues
Whether the Notification dated 11.10.2000 approving the respondent-Port Trust as custodian under Section 45(1) of the Customs Act, 1962 is valid.
Whether liability for pilfered goods under Section 45(3) can be fastened on the respondent pursuant to that notification.
Whether the saving clause in Section 45(1) excludes the Commissioner's power to approve a Major Port Trust already in statutory custody under the Major Port Trusts Act, 1963.
Submissions/Arguments
The appellants argued that the saving words in Section 45(1) do not exclude the Customs Commissioner from approving a person in whose custody imported goods remain merely because another statute also places goods in that person's custody.
The appellants contended that the port trust's custody under the Major Port Trusts Act does not make it immune from payment of import duty under the Customs Act.
The appellants submitted that the notification dated 11.10.2000 was a valid exercise of power under Section 45(1) and not without jurisdiction.
The respondent contended that its custody of imported goods flows from the Major Port Trusts Act, and the Commissioner had no power to approve it as custodian because custody was already prescribed by another law.
The respondent argued that Section 45(3) cannot independently create liability against it, and the High Court was correct in holding the notification ultra vires.
The respondent alternatively submitted that the notification dated 11.10.2000 could not apply to pilferage occurring before that date.
The appellants fairly conceded during hearing that the demands for the pre-notification period could not be sustained because the respondent had not been approved as custodian under Section 45(1) at the time of the pilferage.
Judgment Excerpts
Save as otherwise provided in any law for the time being in force, all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Principal Commissioner of Customs or Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII.
Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilferred after unloading thereof in a customs area while in the custody of a person referred to in sub-section (1), that person shall be liable to pay duty on such goods at the rate...
Consequently, the controversy in the present appeal is confined to the correctness of the High Court's declaration that the Notification dated 11.10.2000 issued under Section 45(1) of the Customs Act is without jurisdiction and ultra vires the said provision.
Procedural History
Assistant Commissioner of Customs issued show cause-cum-demand notices dated 18.06.1996, 02.04.1997, 28.04.1997 and 24.05.2000 to recover customs duty from the respondent for pilfered goods during 1996-2000. Adjudication orders dated 06.11.1997, 02.10.1997, 06.10.1997 and 17.05.2001 confirmed the duty demands. Notification and Public Notice dated 11.10.2000 declared Mumbai Port Trust custodian under Section 45(1) of the Customs Act. The respondent preferred appeals before Commissioner of Customs (Appeals), which were dismissed by common order dated 30.07.2002. The respondent then filed Writ Petition No.1278 of 2003 before the Bombay High Court. By order dated 28.07.2009, the Bombay High Court allowed the writ petition, set aside the duty orders, and declared the Notification dated 11.10.2000 without jurisdiction and ultra vires Section 45(1). Aggrieved, the Union of India filed Civil Appeal No.4477 of 2010 before the Supreme Court.
Acts & Sections
- Customs Act, 1962: Section 2(11), Section 2(12), Section 2(13), Section 2(14), Section 2(15), Section 2(25), Section 2(26), Section 2(34), Section 2(43), Section 2(44), Section 8, Section 12, Section 13, Section 23, Section 45(1), Section 45(2), Section 45(3)
- Major Port Trusts Act, 1963:
