Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 25 August 2026

Case Overview

  • Parties: Union of India & others (Appellants) vs. Board of Trustees of the Port of Bombay (Respondent).
  • Background: The respondent, a Major Port Trust constituted under the Major Port Trusts Act, 1963, received show‑cause‑cum‑demand notices dated 18 Jun 1996, 02 Apr 1997, 28 Apr 1997 and 24 May 2000 demanding customs duty for goods pilfered while in its custody. Orders dated 06 Nov 1997, 02 Oct 1997, 06 Oct 1997 and 17 May 2001 confirmed the duty demanded.
  • Interim Development: On 11 Oct 2000, the Commissioner of Customs (Import) issued a Notification and a Public Notice approving the Mumbai Port Trust (MbPT) as “custodian” of the area notified under Section 8 of the Customs Act, invoking powers under Section 45(1).
  • Subsequent Appeals: The respondent appealed the original orders before the Commissioner of Customs (Appeals); the appeal was dismissed by a common order dated 30 Jul 2002, which affirmed the original orders.
  • High Court Intervention: The respondent filed Writ Petition No. 1278/2003 in the Bombay High Court, challenging both the 30 Jul 2002 order and the 11 Oct 2000 Notification. On 28 Jul 2009, the High Court held that Section 45(1) allows recovery of duty only from a person expressly approved by the Commissioner and not from a statutory body like the Mumbai Port Trust; consequently it set aside the four duty orders and declared the Notification ultra vires and beyond jurisdiction.
  • Appeal to Supreme Court: Union of India and others appealed the High Court judgment. Counsel for the appellants (Sri V. Chandrashekara Bharati) argued that the saving clause in Section 45(1) does not preclude the Commissioner’s power to approve a custodian even if custody is also provided under the Major Port Trusts Act, and that the non‑obstante clause in Section 45(3) imposes duty liability irrespective of other laws. Counsel for the respondent (Sri Rakesh Khanna) contended that the Major Port Trusts Act already governs custody and that the Commissioner lacked authority to approve the Trust as custodian, rendering the Notification ultra vires.
  • Statutory Framework Discussed: The judgment examined the Customs Act (particularly Sections 45(1)‑(3) and Section 13), the Major Port Trusts Act (Sections 42‑45), and relevant case law on saving and non‑obstante clauses. It highlighted that Section 45(3), inserted by Act 22 of 1995, uses a non‑obstante clause to make the custodian liable for customs duty on pilfered goods, overriding any other law.
  • Key Legal Reasoning: The Court observed that the Major Port Trusts Act imposes a conditional civil liability (as a bailee under the Contract Act) only when a receipt is issued, whereas Section 45(3) creates an independent statutory duty to pay customs duty to the Revenue. The non‑obstante clause therefore prevails, and the saving clause in Section 45(1) does not bar the Commissioner’s approval of the Trust as custodian.

Final Outcome

  • The Supreme Court held that the Notification dated 11 Oct 2000, issued by the Commissioner of Customs (Import) under Section 45(1) of the Customs Act, is valid.
  • The High Court judgment of 28 Jul 2009 that declared the Notification ultra vires and quashed the duty orders is set aside.
  • The Court did not interfere with the High Court’s quashing of the pre‑2000 show‑cause‑cum‑demand notices, noting that liability under Section 45(3) could not arise for periods before the Notification’s issuance.
  • No order as to costs was made.

Topics: Custodian Notification, Customs Duty on Pilfered Goods