Quick answer: In Union of India v. Board of Trustees of the Port of Bombay, decided on 25 August 2026, the Supreme Court (Nagarathna and Manmohan, JJ.) upheld a notification dated 11 October 2000 by which the Commissioner of Customs (Import), Mumbai, approved the Mumbai Port Trust as “custodian” of imported goods under Section 45(1) of the Customs Act, 1962. The Bombay High Court had quashed that notification as without jurisdiction, reasoning that a statutory port trust which already held custody of goods under the Major Port Trusts Act, 1963 could not also be “approved” as custodian under the Customs Act. The Supreme Court disagreed, holding that the non obstante clause in Section 45(3) — which fastens customs duty on pilfered goods to the approved custodian “notwithstanding anything contained in any law for the time being in force” — overrides the saving clause in Section 45(1) wherever the custody-conferring statute does not itself impose an equivalent liability to pay duty to the revenue. But because the actual demands in the case related to pilferage events between 1996 and 2000, all predating the notification, the department could not recover duty for them — the appellants’ own counsel conceded the point — so the ruling settles the law prospectively without disturbing the result on the ground.
Key Takeaways
- A saving clause and a non obstante clause do different work. Section 45(1) of the Customs Act opens with “save as otherwise provided in any law for the time being in force”; Section 45(3) opens with “notwithstanding anything contained in any law for the time being in force.” The Court held the two are not mirror images, and the non obstante clause in sub-section (3) can override the saving clause in sub-section (1) where the liabilities in question are of a different kind.
- Custody under another statute does not, by itself, block a Customs Act custodian notification. A port trust’s custody of goods under the Major Port Trusts Act, 1963 did not stop the Commissioner of Customs from also approving it as “custodian” under Section 45(1) of the Customs Act, because the two statutes create liabilities of a different source, nature and object.
- Bailee liability is not revenue liability. The port trust’s responsibility under Section 43 of the Major Port Trusts Act is a conditional, compensatory bailee’s liability to the owner of the goods under Sections 151, 152 and 161 of the Indian Contract Act, 1872 — not a liability to pay customs duty to the Government, and it lapses if the statutory pre-conditions (a receipt under Section 42(2), a timely notice of loss) are not met.
- Pilferage is treated differently from loss or destruction. The Court read Section 13 (duty on pilfered goods) as governing pilferage specifically, distinct from Section 23 (remission on goods lost or destroyed), and held that only the pilferage-specific liability under Section 45(3) triggers the non obstante override.
- The liability is prospective only. Duty under Section 45(3) can be fastened on a custodian only from the date it is validly approved under Section 45(1). Demands for pilferage that occurred before the notification could not be sustained, and the department did not press that part of its appeal.
- The revenue lacuna the Court identified. Because Section 13 of the Customs Act absolves the importer of duty on pilfered goods, if no custodian is validly approved and made liable under Section 45(3), duty on pilfered goods would simply go uncollected — a gap Parliament closed by inserting sub-section (3) with effect from 26 May 1995.
1. Introduction
Every port, airport, inland container depot and container freight station in India generates a steady, low-visibility stream of pilferage — cargo that goes missing between unloading and customs clearance. The Customs Act, 1962 answers who owes duty on goods that vanish before clearance: Section 13 absolves the importer, and Section 45 fixes the liability on whoever has been approved as “custodian” of the goods in the customs area. What Section 45 does not answer cleanly is what happens when that custodian is not an ordinary contractor, but a statutory body — a major port trust, an airport authority, a warehousing corporation — whose custody of the same goods flows independently from its own constituting Act.
That is the question the Supreme Court resolved on 25 August 2026 in Union of India v. Board of Trustees of the Port of Bombay. The Mumbai Port Trust had been approved as customs custodian by a notification issued in October 2000. The Bombay High Court struck that notification down nine years later, reasoning that a body which already held statutory custody under the Major Port Trusts Act, 1963 could not simultaneously be “approved” as a custodian for customs purposes. The Supreme Court reversed, restoring the Commissioner’s power to notify statutory custodians and fasten customs duty on them for pilferage occurring on their watch.
The judgment matters less for what it awards the revenue here — nothing, since the disputed pilferage predated the notification — than for the interpretive method it applies to a drafting pattern recurring across the Customs Act and beyond: a provision reading “save as otherwise provided in any law” sitting a few lines above a companion provision reading “notwithstanding anything contained in any law.” This article sets out the facts, the Court’s reasoning, and what it means for statutory custodians, importers and customs litigation going forward.
2. Case summary and background
2.1 The pilferage and the demands
The Board of Trustees of the Port of Bombay is a Major Port Trust constituted under the Major Port Trusts Act, 1963. Between 1996 and 2000, the Assistant Commissioner of Customs issued four separate show cause-cum-demand notices to the Port Trust — dated 18 June 1996, 2 April 1997, 28 April 1997 and 24 May 2000 — each relating to a distinct episode of pilferage of imported goods while they were in the Port Trust’s custody. Each notice called on the Port Trust to show cause why customs duty should not be recovered from it under Section 45(3) of the Customs Act. All four were adjudicated against the Port Trust, by orders-in-original dated 6 November 1997, 2 October 1997, 6 October 1997 and 17 May 2001, confirming the duty demanded.
2.2 The 2000 notification
In the midst of this run of notices, on 11 October 2000, the Commissioner of Customs (Import), New Custom House, Mumbai, issued a notification and a public notice under Sections 8 and 45(1) of the Customs Act. The notification declared specified areas of the Mumbai Docks — India Docks, Princess Docks and Victoria Docks — a “customs area,” and, exercising the power under Section 45(1), approved the Mumbai Port Trust as custodian of that area “in respect of all imported goods,” making it responsible for the statutory duties and responsibilities under Section 45(2) and 45(3) of the Customs Act. The notification recited that it consolidated a series of earlier notifications and public notices issued under the predecessor Sea Customs Act, 1878, some of which had themselves treated the Port Trust as custodian.
2.3 Appeals and the Bombay High Court’s ruling
The Port Trust appealed the four orders-in-original to the Commissioner of Customs (Appeals), who dismissed the appeals by a common order dated 30 July 2002, affirming the duty demands. The Port Trust then filed Writ Petition No. 1278 of 2003 in the Bombay High Court, challenging both the Commissioner (Appeals)’s common order and the validity of the October 2000 notification itself.
By order dated 28 July 2009, a Division Bench of the Bombay High Court allowed the writ petition. It held that recovery of duty on pilfered goods under Section 45 of the Customs Act is possible only from a person specifically “approved” by the Commissioner for that purpose under Section 45(1) — and not from a body of persons constituted under a separate statute and already entrusted by that statute with custody of the goods, such as the Mumbai Port Trust under the Major Port Trusts Act. On that reasoning, the High Court set aside all four confirmed duty demands and held the October 2000 notification itself to be without jurisdiction and ultra vires Section 45(1).
2.4 The appeal to the Supreme Court
The Union of India and other customs authorities appealed. Before the Supreme Court, appellants’ counsel fairly conceded that, because all four pilferage events and the associated show cause notices predated the October 2000 notification, no liability under Section 45(3) could in any event have attached to the Port Trust for want of a subsisting approval at the relevant time — so the appeal did not press for revival of the actual duty demands. That left a single, narrower question for decision: whether the Commissioner had jurisdiction under Section 45(1) to issue the October 2000 notification approving the Port Trust as custodian at all, given that the Port Trust’s custody of imported goods already flowed from the Major Port Trusts Act. The Supreme Court answered that question in the affirmative, set aside the High Court’s finding that the notification was ultra vires, but left undisturbed the High Court’s quashing of the four specific duty demands, since those predated the notification and the point was not pressed. The appeal was disposed of on those terms, with no order as to costs.
3. Legal analysis
3.1 The statutory text in play
Section 45 of the Customs Act governs the custody of goods between unloading and clearance. Sub-section (1) provides that, “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. Sub-section (2) imposes record-keeping and removal-control duties on “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” — language that expressly contemplates custodians whose custody arises otherwise than by Commissioner approval. Sub-section (3), inserted with effect from 26 May 1995, provides that “notwithstanding anything contained in any law for the time being in force,” if goods are pilfered while in the custody of “a person referred to in sub-section (1),” that person is liable to pay duty on the pilfered goods, calculated at the rate prevailing on the date the arrival or import manifest was delivered under Section 30. Separately, Section 13 provides that an importer is not liable for duty on goods pilfered before clearance, “except where such goods are restored to the importer after pilferage.”
The Port Trust’s argument turned on reading sub-sections (1) and (3) together as a single, coherent scheme confined to persons whose custody arises solely from Commissioner approval. Because its own custody arose independently under Sections 42 to 45 of the Major Port Trusts Act, it argued the saving clause in sub-section (1) precluded the Commissioner from approving it at all — the power to approve, on this reading, exists only as a residual mechanism for customs areas that no other statute already regulates.
3.2 A saving clause is not a non obstante clause
The Court’s starting point was a careful separation of the two clauses on ordinary interpretive principles. It invoked two well-established authorities on the construction of non obstante clauses: Aswini Kumar Ghosh v. Arabinda Bose, AIR 1952 SC 369, for the proposition that a non obstante clause “is to be understood as operating to set aside as no longer valid anything contained in relevant existing laws which is inconsistent with the new enactment,” after first ascertaining what the enacting part of the provision itself provides; and Dominion of India v. Shrinbai A. Irani, AIR 1954 SC 596, for the qualification that a non obstante clause need not be co-extensive with the operative part of the provision — where the substantive words of the enactment are otherwise clear, the clause is read “as clarifying the whole position,” inserted “by way of abundant caution,” rather than as itself cutting down or expanding the section’s scope.
Applying that framework, the Court drew a linguistic distinction between “any other law,” which it read as referring only to a law other than the one in which the clause itself appears, and “any law for the time being in force,” which it read as capable of including the enactment in which the words themselves occur. On that basis, it held that Section 45(1)’s saving clause operates to preclude a Commissioner’s approval only where some other law already fastens on the custodian a liability equivalent to the one Section 45(3) creates — that is, a liability to pay customs duty to the revenue on pilfered goods. Where no such equivalent liability exists elsewhere, the saving clause has nothing to save, and the Commissioner’s power to approve a custodian under Section 45(1), together with the consequences that follow under sub-sections (2) and (3), remains available.
3.3 Why the Major Port Trusts Act does not supply an equivalent liability
The Court then examined Sections 42 and 43 of the Major Port Trusts Act in detail. Section 42 empowers a Board of Trustees to take charge of goods at an owner’s request, issuing a receipt, and fixes the responsibility of the Board (or of any person it authorises to perform the same services) as that of a bailee under Sections 151, 152 and 161 of the Indian Contract Act, 1872. Section 43 makes that bailee liability conditional on two things: that a receipt under Section 42(2) was in fact issued, and that the claim is made within the period prescribed by regulations from the date the Board took charge of the goods. If either condition is unmet, no liability attaches to the Board at all, even for a loss caused by its own default.
The Court held this bailee liability is categorically different from the liability Section 45(3) creates. The Major Port Trusts Act liability is compensatory, owed to the private owner of the goods, and governed by ordinary bailment principles; it can be excluded by the absence of a receipt or a late claim, and says nothing about customs duty. Section 45(3), by contrast, is a statutory liability owed to the revenue, triggered simply by pilferage in an approved custodian’s custody. Because Section 13 separately absolves the importer, the Court reasoned that if the custodian’s revenue liability could be excluded merely because a different, conditional, private-law liability existed under its own statute, duty on pilfered goods would often go uncollected altogether — the lacuna Parliament closed by inserting sub-section (3), with a non obstante clause, in 1995.
3.4 Pilferage distinguished from loss or destruction
A further strand of the reasoning distinguishes pilferage from loss or destruction more generally. Section 23 of the Customs Act, dealing with remission of duty on goods lost, destroyed or abandoned before clearance, expressly operates “without prejudice to the provisions of Section 13” — signalling, in the Court’s reading, that pilferage is treated by the Customs Act as a distinct category from loss or destruction simpliciter. Ordinary loss or destruction of goods in a statutory custodian’s hands, the Court suggested, would fall to be governed by whatever liability regime the custodian’s own statute prescribes, with Section 45(1)’s saving clause operating in the custodian’s favour. But pilferage specifically is dealt with only by the Customs Act — through Sections 13 and 45(3) — so the saving clause has no work to do in a pilferage case, and the non obstante clause in sub-section (3) governs.
3.5 Issues decided, and what was left open
The Court’s operative holding has three components: the October 2000 notification is valid and the Bombay High Court’s contrary finding is set aside; the Commissioner had jurisdiction to issue it notwithstanding the Port Trust’s separate statutory custody under the Major Port Trusts Act; and, on the point the department did not ultimately win, the four duty demands actually in dispute could not be revived, since each predated the notification and no valid Section 45(1) approval was in force when the pilferage occurred — the Court left the High Court’s quashing of those specific demands undisturbed, as it was not pressed on appeal.
The judgment leaves open how the same reasoning applies to other statutory custodians governed by their own constituting Acts — airport operators, licensed container freight station and inland container depot operators, or state warehousing corporations. The reasoning is framed generally enough, turning on the source, nature and object of the competing liability rather than anything peculiar to major ports, that it should extend to those custodians too, but that extension was not before the Court and remains for another case.
3.6 Reasoned assessment
The Court’s method is orthodox: it declines to find any real conflict between the two statutes by insisting the two liabilities operate on different planes, one compensatory and inter partes, the other a statutory charge in favour of the revenue. That lets it honour both the saving clause and the non obstante clause as meaningful, rather than treating one as simply overridden by the other. The corollary is that the saving clause in Section 45(1) is left with a narrow field of operation for pilfered goods specifically — it saves a custodian from Section 45(1) approval only where the custodian’s own statute independently imposes a revenue-facing duty liability for pilferage, which the Court did not identify in any statute other than the Customs Act itself. That is a defensible, textually grounded outcome, but a custodian relying on its own constituting Act to resist a Section 45(1) notification will now need a materially stronger footing than “we already have custody under our own statute.”
4. Practical significance
For statutory and licensed custodians — major port trusts, airport cargo operators, and container freight station and inland container depot licensees — the ruling forecloses an argument that some may have relied on to resist Section 45(1) approval or to contest exposure under Section 45(3): that their custody, being independently conferred by a sectoral statute, places them outside the reach of a Commissioner’s customs notification. Once validly approved, a custodian bears customs duty on any goods pilfered from its custody, regardless of whatever conditional, compensatory liability regime its own constituting Act separately imposes towards the owner of the goods. Custodians should treat this duty exposure as a distinct risk line from their ordinary bailee liability to cargo owners — it is owed to the revenue, cannot be capped or excluded by the absence of a receipt or a late notice of loss in the way bailee liability can under statutes like the Major Port Trusts Act, and should be reflected in security arrangements, insurance and internal loss-control budgeting at ports, airports, CFSs and ICDs.
For importers, the practical effect is largely unchanged but worth restating clearly: Section 13 continues to absolve an importer of duty on goods pilfered before clearance, so an importer facing a duty demand traceable to pilferage in a customs area should resist the demand on that footing and direct the customs authorities to the approved custodian instead, rather than negotiate or settle a demand that properly belongs elsewhere.
For customs authorities, the judgment is a green light to notify statutory and licensed custodians under Section 45(1) without needing to first establish that no other law governs their custody — but the ruling equally underscores that liability under Section 45(3) runs only from the date of a valid approval. Authorities holding old, unresolved pilferage files against custodians who were not yet the subject of a Section 45(1) notification at the time of the pilferage should not expect this judgment to revive those demands; the appellants’ own concession in this very case confirms that such retrospective recovery is not available. Any department wishing to fix duty liability on a custodian going forward should ensure a current, unambiguous notification is in place, since the judgment makes plain that the notification — not the mere fact of custody — is the operative trigger for Section 45(3) liability.
For litigation strategy more broadly, the distinction the Court draws between pilferage and loss or destruction simpliciter is likely to become a live pleading point in future disputes over missing cargo: a custodian resisting a Section 45(3) demand has an incentive to characterise the disappearance of goods as loss or destruction rather than pilferage, since only pilferage was held to trigger the non obstante override; the department, conversely, will resist that recharacterisation. Parties on both sides should expect the evidentiary record on how and when goods went missing to matter more than it may previously have seemed to.
5. Conclusion
Union of India v. Board of Trustees of the Port of Bombay resolves, in the revenue’s favour, a jurisdictional question that had sat unsettled for the better part of two decades: a Commissioner of Customs may approve a statutory body as customs custodian under Section 45(1) even where that body’s custody of the same goods is independently conferred by its own constituting statute, because the non obstante clause in Section 45(3) is calibrated to reach precisely the gap that a merely compensatory, conditional bailee liability under a sectoral statute would otherwise leave open. At the same time, the judgment is a reminder that a favourable ruling on a point of law is not the same as a favourable result on the facts: the department secured the general proposition it wanted but recovered nothing in the case that produced it, because none of the demands in dispute survived the more basic requirement that Section 45(3) liability can only run from the date of a valid Section 45(1) approval. Statutory and licensed customs custodians going forward should treat a Section 45(1) notification, once issued, as fixing a real and distinct duty exposure for pilferage in their custody — one that neither their own constituting statute nor the absence of a formal receipt from the goods’ owner will dilute.
Authorities
Applied by the Court
| Authority | Citation | Proposition |
|---|---|---|
| Aswini Kumar Ghosh v. Arabinda Bose | AIR 1952 SC 369 | A non obstante clause operates to set aside inconsistent existing law, but only after the enacting part of the provision is construed on its own terms. |
| Dominion of India v. Shrinbai A. Irani | AIR 1954 SC 596 | A non obstante clause need not be co-extensive with the operative part of a provision; where the enactment’s words are otherwise clear, the clause clarifies rather than restricts. |
Legislation considered
| Statute | Provisions | Source |
|---|---|---|
| Customs Act, 1962 | Sections 2, 8, 12, 13, 23, 45, 47, 141, 160 | https://www.indiacode.nic.in/handle/123456789/1373 |
| Major Port Trusts Act, 1963 | Sections 2, 42, 43, 44, 45, 128 | https://www.indiacode.nic.in/handle/123456789/1367 |
| Indian Contract Act, 1872 | Sections 148, 151, 152, 161 | https://www.indiacode.nic.in/handle/123456789/2187 |
Judgment
Union of India & Others v. The Board of Trustees of the Port of Bombay, 2026 INSC 919, Civil Appeal No. 4477 of 2010, decided 25 August 2026 (Nagarathna and Manmohan, JJ.) — https://indiankanoon.org/doc/70804991/
FAQ
Does this judgment affect GST at all? No. Customs duty is levied under the Customs Act, 1962 and the Customs Tariff Act, 1975, entirely outside the CGST, SGST and IGST framework (import transactions separately attract IGST under the Customs Tariff Act’s valuation mechanism, but that is not what this case concerns). The reasoning here turns on the Customs Act’s own text and its interaction with the Major Port Trusts Act, and has no direct bearing on GST law.
Who now bears customs duty on goods stolen from a port or CFS before clearance? The person or body validly approved as “custodian” of the customs area under Section 45(1) of the Customs Act — not the importer, who is protected by Section 13, and not necessarily whoever would be liable as a bailee under the custodian’s own constituting statute, since that liability is conditional and compensatory rather than a duty owed to the revenue.
Can customs authorities use this judgment to reopen old pilferage demands against custodians approved only later? No. The Court expressly left undisturbed the quashing of the four demands in this very case because they predated the custodian’s approval; Section 45(3) liability runs only from the date a valid Section 45(1) notification is in force.
This article is not legal advice and does not create an attorney–client relationship. Readers should verify the certified copy of the judgment and any subsequent clarificatory orders before relying on it, and consult a qualified advocate on the facts of their matter.