Even Peripheral Question On Customs Duty Rate Can Take CESTAT Appeal To Supreme Court: Bombay High Court

The Bombay High Court has held that even a peripheral question touching the rate of customs duty can fall outside the High Court's appellate jurisdiction. Such an appeal would lie directly before the Supreme Court under Section 130E of the Customs Act, 1962.

A Division Bench of Justice B.P. Colabawalla and Justice Farhan P. Dubash dismissed the Revenue's appeals against a CESTAT Mumbai order in favour of J M Baxi & Co. and others. The dispute concerned duty exemption on “stores” imported for salvage operations involving MSC Chitra.

The Court observed, “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.”

Section 130 provides for appeals to the High Court against CESTAT orders involving substantial questions of law. However, it excludes orders relating, among other things, to questions having a relation to the rate of customs duty or the value of goods for assessment.

The Court's ruling arose from a dispute over the exemption available for the “stores” imported for salvaging MSC Chitra.

The vessel had collided with MV Khalija II, after which cargo was floating in Bombay Harbour, with some of it having sunk and obstructing the navigation channel.

It was accepted before the High Court that the imported goods were “stores” for the purposes of salvaging MSC Chitra.

The jurisdictional controversy centred on Questions A and C raised by the Revenue.

Question A concerned whether the salvage equipment imported under transshipment permits qualified as “stores” under Section 88. It also questioned the exemption where the equipment was deployed on coastal vessels rather than on the foreign-going vessel MSC Chitra.

In substance, Revenue questioned whether the exemption could apply where the salvage equipment was deployed on coastal vessels rather than on MSC Chitra itself.

Question C concerned whether the vessels involved in the salvage operation could be treated as an “extension” of MSC Chitra. This was relevant to whether the Section 86 and Section 88 exemptions could extend to goods used on vessels other than MSC Chitra.

The High Court held that Questions A and C related to the determination of a question having a relation to the rate of customs duty. They therefore fell within Section 130E and outside the High Court's jurisdiction under Section 130.

The Court also noted that the questions had pan-India ramifications. Their determination could affect every salvager importing “stores” for salvage operations in India.

The Court held, “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.”

Accordingly, the Court dismissed the Revenue's appeals. It said the Revenue was free to approach the Supreme Court to challenge CESTAT's December 13, 2024, order.

For Revenue: Advocate Shruti Vyas with Niyati Mankad.

For Respondents: Advocates Vipin Kumar Jain with Kartik Dedhia and Rishabh Jain, instructed by TLC Legal LLP