Ports Governed By Major Port Trusts Act Liable To Pay Customs Duty On

Pilfered Goods Under Customs Act : Supreme Court

Case Details

Case Title: Union of India & Ors. v. The Board of Trustees of the Port of Bombay

Case No.: Civil Appeal 4477 of 2010

Bench: Justice B.V. Nagaratna

Justice Manmohan

Counsel for Appellants: Adv. Mr. N Venkataraman, A.S.G. Mr. Gurmeet Singh Makker,

AOR Mr. Raman Yadav, Adv. Mr. Arijit Prasad, Adv. Mr. V C Bharathi, Adv. Mr. S A

Haseeb, Adv. Mr. Padmesh Mishra.

Counsel for Respondents: Mr. Rakesh Khanna, Sr. Adv. Mr. Abhishek Puri, Adv. Mr. Sahil

Grewal, Adv. Ms. Surabhi Gupta, Adv. Mrs. Reeta Dewan Puri, Adv. Mr. P. N. Puri, AOR

Date of Judgment: 25 August 2026

Summary

The Supreme Court of India looked at whether a Port Trust should pay customs duty when

imported goods are stolen while they are in its care. The Court said that the Customs

Commissioner has the power under Section 45(1) of the Customs Act, 1962 to officially

make the Mumbai Port Trust responsible for the goods. Once the Port Trust is officially made

the custodian, it can be asked to pay customs duty for goods that are stolen from its custody

under Section 45(3). However, the Court made it clear that this responsibility cannot be

applied to the past. The Port Trust would be responsible only from the date it was officially

made the custodian.

What happened?

The Board of Trustees of the Port of Bombay was a statutory Port Trust under the Major Port

Trusts Act, 1963. Between 1996 and 2000, some imported goods went missing while they

were in the Port Trust’s custody. The Customs Department therefore demanded customs duty

from the Port Trust under Section 45(3) of the Customs Act, 1962.Later, on 11 October 2000,

the Commissioner of Customs officially notified the Mumbai Port Trust as a custodian under

Section 45(1) of the Customs Act.The Port Trust challenged this action. The Bombay High

Court agreed with the Port Trust and held that the Customs Commissioner could not notify it

as a custodian because its custody was already governed by the Major Port Trusts Act. The

Union of India then approached the Supreme Court.

Supreme Court’s Observation

The Supreme Court took a different view. It explained that the Customs Act specifically deals

with pilfered imported goods, while the Major Port Trusts Act mainly deals with the Port

Trust’s responsibility for loss or damage as a bailee.The Court therefore held that there was

no conflict between the two laws and that the Commissioner of Customs had the power to

notify the Mumbai Port Trust as a custodian under Section 45(1).

Final Order

The Supreme Court held that:

(a) The notification dated 11 October 2000 was valid.

(b) The Bombay High Court’s decision quashing the notification was set aside.

(c) However, customs duty could not be recovered for pilferage that occurred before 11

October 2000, because the Port Trust had not yet been approved as a custodian under Section

45(1).

Conclusion

The Supreme Court clarified that a Port Trust can be held responsible for customs duty on

imported goods that are pilfered while in its custody, once it has been officially notified as a

custodian. However, the law cannot be applied backwards to impose liability for a period

when such notification did not exist.