Bombay High Court
Customs GeneralversusJ M Baxi And Co
- Decided
- Disposal
- DISMISSED
Holding
The appeal is dismissed as the questions raised fall within the exclusive jurisdiction of the Supreme Court under Section 130E of the Customs Act.
Summary
The Revenue (Commissioner of Customs) appealed a CESTAT order that had upheld the import of salvage equipment as "stores" for the salvage of the vessel MSC Chitra and had dismissed duty and penalty demands. The appeal raised four legal questions, notably whether the equipment qualified as stores under Section 88 and whether the vessels involved could be treated as extensions of the distressed vessel for duty exemption under Sections 86 and 88. The High Court examined the jurisdictional scope of Sections 130 and 130E of the Customs Act and concluded that questions A and C directly relate to the rate of customs duty, which are excluded from High Court jurisdiction and must be referred to the Supreme Court. Relying on the Supreme Court’s decision in Alupro Building Systems Pvt. Ltd. v. Commissioner of Central Excise, the Court held that the appeal lies beyond its jurisdiction. Consequently, the appeals were dismissed, and the Revenue was directed to approach the Supreme Court.
Issues considered
- Whether the High Court has jurisdiction to entertain the appeal under Section 130 of the Customs Act.
- Whether questions A and C relate to the determination of a question having a relation to the rate of customs duty, thereby falling under the exclusion of Section 130E.
Legislation cited
- Central Excise Act, 1944 — s. 35G, 35L
- Customs Act, 1962 — s. 111(n), 111(o), 112(a), 112(b), 114A, 114AA, 12, 130, 130E, 28, 86, 88
Subjects
- customs duty
- salvage operations
- stores exemption
- transshipment
- jurisdiction
- Section 130E
- High Court
- Supreme Court
- CESTAT
Judgment
2-CUAPP-36-2025 with 3-CUAPP-39-2025.doc
Commissioner of Customs Vs. J M Baxi & Co.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CUSTOMS APPEAL NO. 36 OF 2025
WITH
CUSTOMS APPEAL NO. 39 OF 2025
The Commissioner of Customs (General),
Air Cargo Complex ...Appellant
V/s.
J M Baxi & Co. & Ors. ...Respondents
_______________________________________
Ms. Shruti Vyas, with Ms. Niyati Mankad, for the Appellant in both matters.
Mr. Vipin Kumar Jain, with Mr. Kartik Dedhia & Mr. Rishabh Jain, i/b, TLC Legal
LLP, for the Respondents in both matters.
Mr. Avinash Punia, Assistant Commissioner of Customs, Mumbai.
_______________________________________
CORAM : B. P. COLABAWALLA AND
FARHAN P. DUBASH, JJ.
DATE : 28th AUGUST 2026
P. C.:
1. The above Appeals are filed by the Revenue under Section 130 of the
Customs Act, 1962 (“Customs Act”) challenging the Final Order No.
A/87479-87484/2024 dated 13th December 2024 passed by the Customs,
Excise and Service Tax Appellate Tribunal, Mumbai (CESTAT), in Customs
Appeal No. 86529 of 2016 and five other Appeals filed by the Respondents.
According to the Revenue, the impugned order of the CESTAT gives rise to
the following four substantial questions of law:-
A. Whether, in the facts and circumstances of the case and in law, the
AMOL Hon’ble CESTAT erred in holding that the salvage equipment
PREMNATH
JADHAV imported under transshipment permits was used as ‘stores’ under
Digitally signed by
AMOL PREMNATH
JADHAV
Date: 2026.09.03
18:03:36 +0530
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Commissioner of Customs Vs. J M Baxi & Co.
Section 88 of the Customs Act, 1962, despite evidence indicating that
the equipment was deployed on coastal vessels and not on the foreign-
going vessel MSC Chitra, and whether territorial destination is
irrelevant for the applicability of exemption under Section 88?
B. Whether, in the facts and circumstances of the case and in law, the
Hon’ble CESTAT erred in setting aside the demand of duty under
Section 28 read with Section 12, and the confiscation and penalty
orders under Sections 111(n), 111(o), 114A and 114AA of the Customs
Act, 1962, without proper evidence of compliance with statutory
transshipment procedures and without shifting the burden of proof
onto the importer to establish actual movement, usage, and accounting
of the goods?
C. Whether, in the facts and circumstances of the case and in law, the
Hon’ble CESTAT erred in treating the vessels involved in the salvage
operation as ‘extension’ of the distressed foreign-going vessel under
salvage law, thereby extending the benefit of duty exemption under
Sections 86 and 88 of the Customs Act, 1962, to goods used on
vessels other than MSC Chitra?
D. Whether in the facts and circumstances of the case, the Hon’ble
CESTAT erred in setting aside penalty imposed on the Respondent
No. 2 and Respondent No. 3 under Section 112(a), 112(b) and under
Section 114 AA of the Customs Act, 1962.
2. At the outset, as far as the questions ‘A’ and ‘C’ are concerned, the learned
Counsel appearing on behalf of the Respondents submitted that if the
aforesaid two questions are being pressed, then the present Appeals would
lie before the Hon’ble Supreme Court under the provisions of Section 130E
of the Customs Act, 1962. The learned Counsel further submitted that what
these questions project is whether the Respondent – Assessees are entitled to
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Commissioner of Customs Vs. J M Baxi & Co.
the exemption of the ‘stores’ imported for conducting salvage operations of
a ship called ‘MSC Chitra’ which had a collision with another vessel called
‘MV Khalija II’.
3. From the material on record we find that salvage operations were necessary
because, due to the aforesaid collision, the vessel MSC Chitra was listing
and a lot of its cargo was floating in the Bombay Harbour, some of which
had even sunk, thereby causing a blockage of the navigation channel of the
Bombay Harbour. In the Show Cause Notice issued to the Respondent –
Assessees, as well as in the order passed by the Commissioner, it was not in
dispute that what was imported by the Respondent – Assessees were
‘stores’. However, for the first time before the CESTAT, it was contended by
the Revenue that what was imported by the Respondent – Assessees could
not be termed as ‘stores’. It is in this light that the CESTAT also gave an
alternate finding that even assuming what was imported were not ‘ stores,
they were goods that were transshipped from the Bombay Airport Cargo
Complex or the Nhava Sheva Port to the Bombay Port for the purposes of
salvage operations.
4. Be that as it may, even before us today, it is conceded and accepted that
what was imported by the Respondent - Assessees were ‘ stores’ for the
purposes of salvaging MSC Chitra. It also transpires that the salvage
operations were unsuccessful despite all efforts and MSC Chitra was
therefore taken out to international waters and thereafter sunk so that it does
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not cause any hindrance to navigation.
5. When one peruses the questions ‘A’ and ‘C’ as projected by the Revenue, we
are of the view that the same would squarely fall within Section 130E(b) of
the Customs Act. We say this because the issue raised before us would
certainly relate to the determination of a question having a relation to the
rate of duty of customs which comes exclusively under the jurisdiction of
the Hon’ble Supreme Court to decide. For the sake of convenience, Section
130E of the Customs Act is reproduced hereunder:
“130E. Appeal to Supreme Court
An appeal shall lie to the Supreme Court from–
(a) any judgment of the High Court delivered–
(i) in an appeal made under section 130; or
(ii) on a reference made under section 130 by the Appellate Tribunal before the 1 st
day of July, 2003;
(iii) on a reference made under section 130A, in any case which, on its own motion
or on an oral application made by or on behalf of the party aggrieved, immediately
after passing of the judgment, the High Court certifies to be a fit one for appeal to
the Supreme Court; or
(b) any order passed [before the establishment of the National Tax Tribunal] by
the Appellate Tribunal relating, among other things, to the determination of any
question having a relation to the rate of duty of customs or to the value of goods
for purposes of assessment.”
(emphasis supplied)
6. In fact, even Section 130 of the Customs Act, which deals with an appeal to
the High Court, categorically stipulates that an appeal shall lie to the High
Court from every order passed in Appeal by the Appellate Tribunal on or
after 1st July 2003, not being an order relating, among other things, to the
determination of any question having a relation to the rate of duty of
customs or to the value of goods for purposes of assessment, if the High
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Court is satisfied that the case involves a substantial question of law. For the
sake of convenience, Section 130 is reproduced hereunder :-
“130. Appeal to High Court
(1) An appeal shall lie to the High Court from every order passed in appeal by
the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order
relating among other things, to the determination of any question having a
relation to the rate of duty of customs or to the value of goods for purposes of
assessment), if the High Court is satisfied that the case involves a substantial
question of law.
(2) The Principal Commissioner of Customs or Commissioner of Customs or
the other party aggrieved by any order passed by the Appellate Tribunal may
file an appeal to the High Court and such appeal under this sub-section shall
be–
(a) filed within one hundred and eighty days from the date on which the
order appealed against is received by the Principal Commissioner of
Customs or Commissioner of Customs or the other party;
(b) accompanied by a free of two hundred rupees where such appeal is
filed by the other party;
(c) in the form of a memorandum of appeal precisely stating therein the
substantial question of law involved.
[2A) The High Court may admit an appeal after the expiry of the period of
one hundred and eighty days referred to in clause (a) of sub-section
(2), if it is satisfied that there was sufficient cause for not filing the
same within that period.]
(3) Where the High Court is satisfied that a substantial question of law is
involved in any case, it shall formulate that question.
(4) The appeal shall be heard only on the question so formulate, and the
respondents shall, at the hearing of the appeal, be allowed to argue
that the case does not involve such question.
PROVIDED that nothing in this sub-section shall be formulated to take away
or abridge the power of the Court to hear, for reasons to be recorded, the
appeal on any other substantial question of law not formulated by it, if it is
satisfied that the case involves such question.
(5) The High Court shall decide the question of law so formulated
and deliver such judgment thereon containing the grounds on which such
decision is founded and may award such cost as it deems fit.
(6) The High Court may determine any issue which–
(a) has not been determined by the Appellate Tribunal; or
(b) has been wrongly determined by the Appellate Tribunal, by reason of a
decision on such question of law as is referred to in sub-section (1).
(7) When an appeal has been filed before the High Court, it shall be heard
by a bench of not less than two Judges of the High Court, and shall be decided
in accordance with the opinion of such Judges or of the majority, if any, of
such Judges.
(8) Where there is no such majority, the Judges shall state the point of law
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Commissioner of Customs Vs. J M Baxi & Co.
upon which they differ and the case shall, then, be heard upon that point only
by one or more of the other Judges of the High Court and such point shall be
decided according to the opinion of the majority of the Judges who have heard
the case including those who first heard it.
(9) Save as otherwise provided in this Act, the provisions of the Code of
Civil Procedure, 1908, relating to appeals to the High Court, shall as far as
may be, apply in the case of appeals under this section.]”
(emphasis supplied)
7. When one reads these provisions, it is clear that the word ‘ any’ in the
aforesaid provisions gives the exclusion as regards jurisdiction, a wide
sweep, indicating that the question referred to therein is not limited to a
specific question concerning the rate of customs duty or the value of goods.
In other words, even peripheral questions touching a question pertaining to
rate or valuation can attract such exclusion. Further, the conscious use of the
phrase “among other things” also seeks to communicate that these are not
the only exclusions and are merely illustrative of a broader category
questions concerning the rate of duty and valuation.
8. Another good reason to hold the aforesaid is that the decision on such an
issue would not only have ramifications in personam but also in rem. The
consequences thereof would be applicable to all the Assessees who are
salvagers and are called upon to salvage vessels in India. The provision
therefore intends uniformity in determination of fiscal questions having
wide ramifications. In the view that we take, we are supported by a recent
decision of the Hon’ble Supreme Court in the case of Alupro Building
Systems Pvt. Ltd. Vs. Commissioner of Central Excise, Bangalore II [2026
SCC OnLine SC 986], the relevant portion of which reads thus:-
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“24. A plain yet careful reading of Section 35G leaves very little to
imagine. The word “any” in the aforesaid expression gives the exclusion
as regards the jurisdiction a wide sweep, indicating that the question
referred to therein is not limited to a specific question of rate of excise
duty or value of goods. In other words, even peripheral questions touching
a question pertaining to rate or valuation can attract such exclusion.
Further, the conscious use of the prefatory phrase “among other things”
also serves to communicate that these are not the only exclusions and are
merely illustrative of a broader category of rate of duty and valuation.
These words or phrases in the provision cannot be assumed to be
surplusage.
25. The expression “for purposes of assessment” also deserves some
attention. It qualifies and governs both the preceding limbs of the
exclusion i.e., the rate of excise duty and the value of goods. In other
words, the exclusion is not triggered by every question touching rate of
duty or value of goods in the abstract. The question must have a relation
to rate or value specifically in the context of assessment. It is not the mere
mention of rate or value in an order that triggers the exclusion but the fact
that the question goes to the root of the assessment itself.
26. The argument that the question of excisability is distinct from the
question of “rate of duty” deserves to be rejected at the threshold. The two
questions are not merely related, they are sequentially and logically
interdependent. An issue on excisability of goods would be intrinsically
connected with the “rate of the duty” for the “purpose of assessment”. The
decision on excisability of goods is a precursor to the determination of
any question having a relation to the rate of excise duty or to the value of
goods for the purpose of assessment. Afterall, the levy of excise duty
presupposes that the goods upon which such assessment is to be made, are
downstream consequences of determination of excisability. To hold
otherwise would be to sever what is inherently a continuous chain of
fiscal adjudication into fragments, which the legislature could never have
intended.
27. One another good reason to hold the aforesaid is that decision on
such an issue would not only have ramifications in personam but also in
rem. The consequences thereof would be applicable on all the assessees
dealing in the particular goods. The provision intends uniformity in the
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determination of fiscal questions having wide ramifications.
28. It is pertinent to note that the jurisdiction of the High Court under
Section 35G is not a matter of absolute right but is a creature of statute,
and therefore, the conditions precedent to the exercise of such jurisdiction
must be strictly construed. The legislature has expressed its intention by
employing clear and deliberate language in the bracketed portion of sub-
section (1) of Section 35G to exclude a category of orders from appellate
jurisdiction of the High Court.
29. Although the respondent has not addressed the submission
canvassed by the appellant on maintainability of the appeal as regards the
issue of jurisdiction, yet it could be argued that the question of excisability
is a pure question of law and therefore falls within the High Court’s
jurisdiction to decide a “substantial question of law” under Section 35G.
This argument although, at first glance, appears persuasive, yet does not
withstand scrutiny.
30. Jurisdiction cannot be assumed merely because the question is
framed as question of law, if the underlying subject matter of the order is
that the legislature has explicitly placed beyond the reach of the High
Court. In other words, the nature of the question, whether it is one of fact,
law, or mixed question of fact and law, is a separate inquiry from whether
the subject matter of the order falls within the exclusionary bracket. The
satisfaction of the High Court as to the existence of a substantial question
of law is a condition precedent to the exercise of jurisdiction but it has to
be within the four corners of bar imposed by the exclusion.”
(emphasis supplied)
9. We are mindful of the fact that the aforesaid decision is rendered in the
context of the Central Excise Act, 1944. However, we find that the language
of Section 35G and 35L of the Central Excise Act, 1944, which were being
considered by the Hon’ble Supreme Court, at least for our purposes, are
almost identical to the provisions of Section 130 and Section 130E of the
Customs Act. In other words, in our opinion, the ratio laid down by the
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Hon’ble Supreme Court in Alupro Building Systems Pvt. Ltd. (supra) would
apply with all force to the present case which is under the Customs Act. The
questions as framed, especially ‘A’ and ‘C’, in our view would have pan
India ramifications. Answering these questions would not only affect the
Assessees in the present case but would affect every salvager who imports
‘stores’ to carry out salvage operations in India.
10. We are therefore clearly of the view that questions ‘A’ and ‘C’ as raised,
would certainly be one which would relate to “ the determination of any
question having a relation to the rate of duty of customs ”. Once this is the
case, we find that this Court has no jurisdiction to entertain the above
Appeals as the same would lie directly before the Hon’ble Supreme Court
under Section 130E of the Customs Act.
11. In view of the foregoing discussion, the above Appeals are dismissed and
the Revenue is free to approach the Hon’ble Supreme Court to challenge the
order of the CESTAT dated 13th December 2024.
12. This order will be digitally signed by the Private Secretary/Personal
Assistant of this Court. All concerned will act on production by fax or email
of a digitally signed copy of this order.
( FARHAN P. DUBASH, J. ) (B. P. COLABAWALLA, J. )
Amol
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