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2026:BHC-O S:19684-DB CNR No : HCBM020159672025 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.

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CORAM : B. P. COLABAWALLA AND FARHAN P. DUBASH, JJ.

DATE : 28^th 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 13^th 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 Hon’ble CESTAT erred in holding that the salvage equipment AMOL PREMNATH imported under transshipment permits was used as ‘stores’ under JADHAV Digitally signed by AMOL PREMNATH JADHAV Date: 2026.09.03 18:03:36 +0530 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 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 ‘stor