Supreme Court Clarifies Customs Liability of Major Port Trusts

The Supreme Court has held that ports governed by the Major Port Trusts Act can be liable to pay customs duty on imported goods that are pilfered while in their custody, provided the port has been approved as a custodian under Section 45(1) of the Customs Act, 1962.

The judgment was delivered in Union of India & Ors. v. The Board of Trustees of the Port of Bombay by a Bench comprising Justice B.V. Nagarathna and Justice Manmohan. The Court upheld the Customs Commissioner’s notification approving the Mumbai Port Trust as a custodian under the Customs Act.

The Court clarified that the liability under the Major Port Trusts Act and the Customs Act operates in different spheres. While the Major Port Trusts Act deals with the civil responsibility of a port authority for loss or deterioration of goods, Section 45(3) of the Customs Act creates a separate statutory obligation to pay customs duty on pilfered imported goods.

The ruling further noted that the importer is generally not liable for customs duty on pilfered goods unless the goods are subsequently restored. Therefore, once a port is approved as the custodian under Section 45(1), the statutory liability for customs duty on pilfered goods can fall upon the approved custodian.

The Supreme Court accordingly set aside the Bombay High Court’s finding that the Customs Commissioner lacked jurisdiction to approve the Mumbai Port Trust as a custodian. However, the Court did not revive demand notices relating to the period before the 11 October 2000 notification, as the required approval under Section 45(1) was not then in place.

The judgment strengthens the statutory framework for safeguarding customs revenue and establishes greater accountability for custodians responsible for imported goods in customs areas.