Customs duty liability for pilfered goods does not extend to a statutory port trust holding custody under port law.

Section 45(3) of the Customs Act fastens liability for pilfered imported goods only on a person covered by Section 45(1), namely a customs-approved custodian or a person holding goods under another lawful custody arrangement recognised by the statute. A major port trust holding goods under the Major Port Trusts Act is a statutory bailee for loss or damage to the importer, but that role does not create liability to pay customs duty to the State. Read with Section 160(9), the port trust's custody powers remain intact and Section 45(3) cannot be stretched to impose duty on a statutory port authority.

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Issues: Whether a major port trust, holding imported goods in custody under the Major Port Trusts Act, 1963, is liable to pay customs duty on goods pilfered while in its custody under Section 45(3) of the Customs Act, 1962.

Analysis: Section 45(1) of the Customs Act, 1962 contemplates custody either by a person approved by the Commissioner of Customs or custody arising under another law in force. Section 45(3) fastens duty liability on the person referred to in Section 45(1) where imported goods are pilfered after unloading in a customs area. The Port Trust, however, holds the goods by virtue of the statutory scheme under the Major Port Trusts Act, 1963 and is not an approved person under the customs statute. The Board's responsibility for goods under Section 43 of the Major Port Trusts Act, 1963 is that of a bailee for loss or damage to the importer, which is distinct from liability to pay customs duty to the State. Read with Section 160(9) of the Customs Act, 1962, the Port Trust's statutory custody powers are not displaced, and Section 45(3) cannot be extended to fasten duty liability on a statutory port authority.

Conclusion: The Port Trust is not liable to pay customs duty under Section 45(3) of the Customs Act, 1962 for pilfered goods held in custody under the Major Port Trusts Act, 1963.

Final Conclusion: The impugned demand orders and the notification approving the Port Trust as custodian were held to be without jurisdiction and liable to be struck down, and the petition was allowed.

Ratio Decidendi: Liability under Section 45(3) of the Customs Act, 1962 attaches only to a person approved under Section 45(1), and does not extend to a statutory port authority holding goods in custody by virtue of another enactment.

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