Custodial duty liability under customs law requires conclusive proof of pilferage during custody; demand fails without it.

Custodial liability under section 45(3) of the Customs Act, 1962 arises only where pilferage of imported goods during the custodian's custody is conclusively established. Here, the seal was initially intact, the shortage was noticed only later on opening the container for auction valuation, and the record did not prove that the missing goods were removed while under the port trust's custody. The materials also suggested possible short landing and discrepancies in cargo particulars, making misdeclaration by the shipper or vessel agent a plausible explanation. On those facts, duty could not be fastened on the custodian and the demand was unsustainable.

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Issues: Whether customs duty under section 45(3) of the Customs Act, 1962 could be fastened on the port trust as custodian when pilferage of imported goods during its custody was not conclusively established.

Analysis: Liability under section 45(3) arises only if imported goods are pilfered while in the custody of the approved custodian. The evidence showed that the container seal was initially intact, that the shortage was discovered only when the container was opened much later for auction valuation, and that there was no conclusive material proving that the missing goods were removed while under the port trust's custody. The record also indicated that the goods were treated as short landed, forwarding for customs examination had not actually taken place, and there were discrepancies in the cargo particulars, making misdeclaration by the shipper or vessel agent a plausible explanation. On these facts, the statutory condition for fastening duty on the custodian was not satisfied.

Conclusion: The duty demand on the port trust as custodian was not sustainable, and the order dropping the demand was upheld.

Final Conclusion: The appeal failed because the Revenue did not prove pilferage during the port trust's custody, so liability under the custodial duty provision could not be imposed.

Ratio Decidendi: Duty under section 45(3) of the Customs Act, 1962 can be imposed on a custodian only when pilferage of imported goods during custody is conclusively proved.

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