TMI Blog2009 (7) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Port Trust liable to pay duty on goods pilfered while in their possession?" 2. The petitioners are a Major Port Trust, constituted under the Major Port Trusts Act, 1963 (hereinafter referred to as the "Port Trust Act"). The respondents issued several show cause notices as to why customs duty should not be recovered from them for goods which were pilfered whilst in their custody. An order of assessment thereafter came to be passed confirming the duty demanded in terms of the said show cause notices. By the present petition, the petitioners pray that the orders dated 6th November 1997, 2nd October 1997, 6th October 1997, 17th May 2001 and 30th July 2002 be quashed and set aside. Relief is also sought against the notification dated 11th October 2000 whereby the Commissioner of Customs (Import) in exercise of powers conferred under section 45(1) of the Customs Act, 1962 (hereinafter referred to as "the Customs Act") had approved MbPT as a custodian of the area notified under section 8 of the Customs Act for statutory duties and responsibility prescribed under section 45(2) and 45(3) of the Customs Act. 3. The petitioners are a body corporate under the Section 5 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay responsible for the loss, destruction or deterioration of, or damage to, goods of which it has taken charge, unless notice of such loss or damage has been given within such period as may be prescribed by regulations made in this behalf from the date of taking charge of such goods by the Board under sub-section (2) of section 42." 5.The relevant provisions of the Customs Act may now be adverted to. Section 45 of the Customs Act reads thus : "45. Restrictions on custody and removal of imported goods. - (1) Save as otherwise provided in any law for the time being in force, all imported goods, unloaded in a customs area shall remain in the custody of such person as may be approved by the Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. (2) The person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the time being in force, - (a) shall keep a record of such goods and send a copy thereof to the proper officer; (b) shall not permit such goods to be removed from the customs ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme of the Act in the matter of payment of duty. Section 12 of the Customs Act is a charging section. Under Section 13, if any imported goods are pilfered after the unloading thereof and before the proper officer has made an order for clearance for home consumption or deposit in a warehouse, the importer shall not be liable to pay the duty leviable on such goods except where such goods are restored to the importer after pilferage. In other words, the imported goods pilfered in the circumstances set out above are not liable for payment of duty by the importer. Section 23 of the Customs Act confers power on the authorities set out therein to remit customs duty on goods which have been lost or destroyed at any time before clearance for home consumption or otherwise as a result of pilferage. It is therefore clear that the duty under Section 12 of the Customs Act is leviable on the goods. Customs duty is payable by an importer considering Section 17 of the Customs Act. Only in the situation covered by Section 13 of the Customs Act, customs duty is not payable and in the situation covered by Section 23 there is a power to remit the duty. Under Section 45(3) of the Customs Act, insof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute is a local body whereas the person approved will have the powers conferred under Sections 9 and 10 of the Customs Act. Was it the intention of the Legislature by introducing Section 45(3) of the Customs Act to fasten liability of duty on a local body like the Port Trust? The responsibility to pay for loss, destruction or deterioration of the goods while in possession of the Port Trust considering Section 43(1) of the Port Trust Act, is of the Port Trust. Considering Section 43(1) of the Port Trust Act, the responsibility for the loss, destruction and deterioration of the goods which are taken charge is that of a bailee under Sections 151, 152 and 161 of the Contract Act subject to what is set out therein. 13. Thus, considering the scheme of the Customs Act and the Port Trust Act, can the Port Trust, which is a body corporate under the Port Trust Act and a local body, be saddled with the liability of duty in respect of pilfered goods, for which in law it is liable to the importer as a bailee under Section 43 of the Port Trust Act. An importer, if the pilfered goods are recovered, has to pay the duty. In the case of a Port Trust, if the goods are pilfered, the Port T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed on the Port Trust. The issue, which is under consideration before us, was not under consideration before the learned Division Bench of the Madras High Court. 15.We are therefore of the opinion that under Section 45 of the Customs Act, the person referred to in sub-section (1) thereof can only be the person approved by the Commissioner of Customs. It excludes a body of persons who by virtue of a law for the time being in force is entrusted with the custody of goods by incorporation of law under another enactment, i.e. the Port Trust Act. We see no reason what mischief Parliament sought to undo by sub-section (3) of Section 45 of the Customs Act. At the highest, it has to be read in the context that pilferage may take place from a private warehouse or a customs warehouse run by a private party. The negligence on such private parties should not cause loss to the exchequer. No purpose would be served by one arm of the Government imposing a duty on another arm of the Government which is discharging statutory duties. The impugned orders are therefore without jurisdiction and liable to be struck down. 16. Once we hold that under Section 45(1) of the Customs Act the reco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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