CESTAT Sets Aside ₹51.8 Lakh Duty on CONCOR, Rules No Liability Without Proof of Pilferage

March 30, 2026 : The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a customs duty demand of ₹51.80 lakh along with penalties imposed on Container Corporation of India Ltd. (CONCOR), holding that liability under Section 45 of the Customs Act, 1962 cannot be imposed on a custodian in the absence of evidence showing pilferage of goods or tampering of container seals during its custody.

The decision was delivered in Container Corporation of India Ltd. v. Principal Commissioner of Customs, New Delhi (Customs Appeal No. 51767 of 2025) on March 30, 2026 by a Bench comprising Dr. Rachna Gupta (Member Judicial) and P.V. Subba Rao (Member Technical).

CONCOR, a public sector undertaking, operates Inland Container Depots (ICDs) and Container Freight Stations (CFS) and acts as a custodian of imported goods until they are cleared by customs authorities. The dispute arose when CONCOR submitted an inventory report seeking permission to dispose of five unclaimed containers. As reflected in the table on page 5 of the Tribunal’s order, these containers were reported to contain cement blocks. However, according to the Import General Manifest (IGM), the declared contents included aluminium ingots, zinc ingots, face masks and gloves.

Upon examination conducted by customs authorities in the presence of CONCOR representatives and independent witnesses, the containers were found to contain cement blocks. This discrepancy led the Department to allege that the original goods had been substituted or pilfered while the containers were under CONCOR’s custody, and consequently a duty demand of ₹51,80,776 along with penalties under Sections 112 and 117 of the Customs Act was confirmed.

The Tribunal, however, focused on whether there was any evidence to establish that such substitution or pilferage occurred during the period of custody. It examined the statutory framework under Section 45 and clarified that a custodian becomes liable only if imported goods are pilfered after unloading while in its custody. The Tribunal also explained the practical functioning of containerized cargo, noting that containers are handled on a “said to contain” basis, meaning neither the shipping line nor the custodian has knowledge of the actual contents unless opened by customs authorities.

On a detailed review of the record, including examination reports referred to on pages 6 and 12 of the order, the Tribunal found that all inspections consistently recorded the presence of cement blocks and were conducted in the presence of customs officials, CONCOR representatives and independent witnesses. Importantly, none of these reports indicated that the seals were broken, tampered with or replaced, and in some cases the seals were specifically recorded as intact.

In these circumstances, the Tribunal held that in the absence of any evidence of seal tampering or pilferage, it could not be concluded that the goods were substituted while in CONCOR’s custody. It further observed that there was no material to establish that the goods declared in the IGM were actually imported in the containers in the first place.

Holding that the essential condition for invoking Section 45(3) was not satisfied, the Tribunal set aside the duty demand as well as the penalties imposed on CONCOR and allowed the appeal with consequential relief.