Detecting cluttered and overlapping contraband items from baggage scans is one of the most challenging tasks, even for human experts. Recently, considerable literature has grown up around the theme of deep learning-based X-ray screening for localizing contraband data. However, the existing threat detection systems are still vulnerable to high occlusion, clutter, and concealment. Furthermore, they require exhaustive training routines on large-scale and well-annotated data in order to produce accurate results. To overcome the above-mentioned limitations, this paper presents a novel convolutional transformer system that recognizes different overlapping instances of prohibited objects in complex baggage X-ray scans via a distillation-driven incremental instance segmentation scheme. Furthermore, unlike its competitors, the proposed framework allows an incremental integration of new item instances while avoiding costly training routines. In addition to this, the proposed framework also outperforms state-of-the-art approaches by achieving a mean average precision score of 0.7896, 0.5974, and 0.7569 on publicly available GDXray, SIXray, and OPIXray datasets for detecting concealed and cluttered baggage threats. •This paper presents a novel incremental convolutional transformer model.•A β hyperparameter is introduced in the paper to control catastrophic forgetting.•A unique segmentation scheme is proposed to extract cluttered object instances.•The proposed system is thoroughly tested on three public X-ray datasets.