Legal principle

Custody of imported goods derived from another statute, such as the Major Port Trusts Act, does not bar approval of that person as custodian under Section 45(1) or fasten liability on him under Section 45(3) for duty on pilfered goods, because pilferage is a distinct statutory liability to the revenue not covered by the saving clause, though no such liability can be fastened for periods prior to the approval.

Court decision

The Supreme Court allowed the appeal in part: it held the Notification dated 11.10.2000 issued under Section 45(1) approving MbPT as custodian to be valid, and set aside the High Court's judgment dated 28.07.2009 to the extent it quashed that Notification. However, the quashing of the show cause-cum-demand notices pertaining to the period prior to 11.10.2000 was not interfered with, since the appellants did not press that challenge, no liability under Section 45(3) could arise absent an approval under Section 45(1). The appeal was disposed of accordingly with no order as to costs.

Facts

The respondent, Mumbai Port Trust, is a Major Port Trust constituted under the Major Port Trusts Act, 1963, from whose custody imported goods were pilfered during 1996-2000. The Assistant Commissioner of Customs issued four show cause-cum-demand notices (18.06.1996, 02.04.1997, 28.04.1997 and 24.05.2000) seeking recovery of customs duty under Section 45(3) of the Customs Act, 1962, which were confirmed by orders-in-original dated 06.11.1997, 02.10.1997, 06.10.1997 and 17.05.2001. Pending adjudication, the Commissioner of Customs (Import), by Notification and Public Notice dated 11.10.2000, exercised powers under Section 45(1) to declare MbPT 'custodian' of the area notified under Section 8 of the Customs Act. The Commissioner (Appeals) affirmed the duty demands, but the Bombay High Court allowed the Port Trust's writ petition, quashed the Notification as ultra vires Section 45(1) and set aside the duty-confirming orders. The Union of India appealed to the Supreme Court.

Key provisions

• Section 45(1), Customs Act, 1962 — Restrictions on custody and removal of imported goods
• Section 13, Customs Act, 1962 — Duty on pilfered goods
• Section 43, Customs Act, 1962 — Exemption of certain classes of conveyances from certain provisions of this Chapter
• Section 42, Customs Act, 1962 — No conveyance to leave without written order
• Section 8, Customs Act, 1962 — Power to approve landing places and specify limits of customs area
• Section 23, Customs Act, 1962 — Remission of duty on lost, destroyed or abandoned goods
• Section 6, Customs Act, 1962 — Entrustment of functions of Board and customs officers on certain other officers
• Section 24, Customs Act, 1962 — Power to make rules for denaturing or mutilation of goods
• Section 160, Customs Act, 1962 — Repeal and savings