HAZEL MERCANTILE LIMITED vs Kandla Customs

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Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad

REGIONAL BENCH- COURT NO. 01

Customs Appeal No. 10161 of 2026
[Arising out of Order in Original KND-CUSTM-000-COM-18-2025-26 dated 28/07/2025 passed
by Commissioner of Customs-Kandla]

HAZEL MERCANTILE LIMITED …..Appellant
Veritas House, 70 Mint Road,
Fort 482-400001, 27
VERSUS

COMMISSIONER OF CUSTOMS-KANDLA …..Respondent
Office of the Commissioner of Customs,
Near Balaji Temple, Kandla, Kachchh, Gujarat-370210

WITH

 Customs Appeal No. 10162 of 2026 (SREYAS CHOUDHARY)
 Customs Appeal No. 10163 of 2026 (SAURABH RAJPUT)
 Customs Appeal No. 10164 of 2026 (SATISH GAICHAR)
 Customs Appeal No. 10165 of 2026 (RAJARAM SHANBHAG)
 Customs Appeal No. 10166 of 2026 (NITIN KUMAR DIDWANIA)
 Customs Appeal No. 10167 of 2026 (Ashok Desai)
 Customs Appeal No. 10168 of 2026 (Minesh Shah)

(Arising out of OIO No. KND-CUSTM-000-COM-18-2025-26 dated 28.07.2025 passed by
Commissioner of Customs-Kandla)


APPEARANCE:
Shri Suyog Bhave, Advocate for the Appellant
Shri Jaspreet Singh Sukhija, Additional Commissioner (AR) for the Respondent

CORAM: HON'BLE SH. SOMESH ARORA, MEMBER ( JUDICIAL )
HON'BLE SH. A.K. JYOTISHI, MEMBER ( TECHNICAL )

Final Order No._10728-10735/2026_
DATE OF HEARING:05.08.2026
DATE OF DECISION: 07.09.2026


SOMESH ARORA


In the instant case, the dispute pertains to Naphtha which was stated
to be imported by the HAZEL MERCANTILE LIMITED (appellant) from Oman.
Other appellants have been subjected to penalty.
1. The Appellant is a limited company, inter alia, engaged. in the
business of import and export of various chemicals including Petro-
chemicals. The Appellant is also engaged in trading of Naphtha, whereby the

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Appellant imports Naphtha from outside India and makes local sales or
export of the same. The Appellant has also obtained the requisite License to
sell/trade Naphtha in the local market from the District Magistrate, Kachchh-
Bhuj.
1.2 In the normal course of business, the Appellant entered into a contract
no. HML/VPL/022/2021-REV1 dated 03.02.2021 with Verzone PTE Ltd.
("Verzone"), for the export of Naphtha. Pursuant to the above, Verzone
even made part payment of the consideration in advance. For the purpose of
procuring the Naphtha, the Appellant entered into a contract dated
11.01.2021, bearing no. AUR/HML/LN-04/2021(R) with Aureole Trading LLC,
UAE ("Aureole") for the supply of Naphtha at the price of AED 1930 with an
expected date of shipment of January-February 2021 as per the INCOTERMS
CFR-2010. The port of loading was any UAE/OMAN port and port of
discharge was any Indian Port.
1.3 As per the above contract, the Appellant opened the documentary
credit, i.e., Letter of Credit in favour of Aureole vide Letter of Credit no.
84670FLC0000421 dated 28.01.2021 and amended Letter of credit no.
84670/FLC0000421 through Punjab National Bank as well as Letter of Credit
No. 06070211M0000092 dated 17.02.2021 through State Bank of India. The
amendment was carried out to change in the quality of Naphtha to be
imported.
1.4 As per the contract, Aureole is stated to have shipped the cargo
through vessel MT Tuna from the port of loading Sohar, Oman to the port of
discharge Kandla, India, through Delta Shipping Trading LLC vide seven Bills
of lading, the details whereof are as under:-
(i) Bill of lading no. 01, quantity 3000 Metric tons of Naphtha. vide
commercial invoice no. ARL/HML/N0201/2021-22 dated 02.02.2021.
(ii) Bill of lading no. 02, quantity 3000 Metric tons of Naphtha vide
commercial invoice no. ARL/HML/N0202/2021-22 dated 02.02.2021.
(iii) Bill of lading no. 03, quantity 3000 Metric tons of Naphtha vide
commercial invoice no. ARL/HML/N0203/2021-22 dated 02.02.2021.
(iv) Bill of lading no. 04, quantity 3000 Metric tons of Naphtha vide
commercial invoice по. ARL/HML/N0204/2021-22 dated 02.02.2021.
(v) Bill of lading no. 05, quantity 3000 Metric tons of Naphtha vide
commercial invoice по. ARL/HML/N0205/2021-22 dated 02.02.2021.

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(vi) Bill of lading no. 06, quantity 3000 Metric tons of Naphtha vide
commercial invoice no ARL/HML/N0206/2021-22 dated 02.02.2021.
(vii) Bill of lading no. 07, quantity 2110.767 Metric tons of Naphtha vide
commercial invoice no. ARL/HML/N0207/2021-22 dated 02.02.2021.
1.5 Before exporting the goods, the goods were tested, and certificate of
quality was issued by MIS at Load Port vide Reference no.
OMN/0048496/SOH dated 02.02.2021. The Vessel MT Tuna arrived at
Kandla Port on 06.02.2021. The Appellant had appointed M/s Hemjyot
Agency having CB/CHA no. AAAFH2124ECH002 as a Customs Broker for the
custom clearance of the said cargo.
1.6 M/s. Hemjyot Agency, had filed 7 Bills of Entry for warehousing of the
imported Naphtha. The cargo was stored in the Liquid Storage Tank Terminal
of M/s Friends Salt Works and Allied Industries, Kandla ("FSWAI")
Testing of the imported goods
2. Pending clearance of the said cargo for warehousing, it appears that
the officers of Custom House, Kandla drew samples from the imported goods
and one of the samples drawn was sent to CRCL, Kandla, for the purpose of
testing. Thereafter, the Appellant came to know that, customs officers had
obtained test report no. 2659863 dated 06.02.2021 of the Chemical
Examiner, Central Revenues Customs Laboratory, Kandla ("CRCL Kandla") in
which it was allegedly observed that the imported goods were mixture of
hydrocarbon having following constituents:
(i) Density at 15-degree C : 0.6474 CC.
(ii) Initial Boiling Point : 40-degree C.
(iii) 10% distill V/V : 42-degree C.
(iv) 50% distil V/V : 52-degree C.
(v) 90% distill V/V :119-degree C.
(vi) Flashpoint below 25-degree C.
2.1 The test report by CRCL Kandla did not specify the sample to be
Natural Gasoline Liquid ("NGL") or Naphtha and did not specify the testing
method under which the sample of the said cargo was tested. That vide
letters dated 16.02.2021 and 17.02.2021, the Ld. Deputy Commissioner,
Customs requested the Ld. Joint Director CRCL, Kandla to confirm whether
the goods are full range Naphtha or otherwise.

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2.2 It further appears that in response to the above, the Ld. Joint Director
CRCL, Kandla replied vide letter dated 19.02.2021 stating that based on the
Analytical, of the Chemist on the sample under reference and available
Technical literature on chemistry, the sample under reference is Natural
Gasoline Liquid. Simultaneously, at the request of the Appellant, a test of
the imported goods was conducted by TUV India Pvt Ltd, for which sample
was drawn on 09.02.2021. The samples were drawn and collected by the
TUV India Pvt. Ltd. from the sample of the same cargo from which the
customs officers had collected the sample for the testing. The Test Report by
TUV India Pvt. Ltd. was handed over to the Appellant on 20.02.2021. Vide
(a) Test Report No. TUV/PCG/JAM2021/33(r-1) (b) Test Report No.
TUV/PCG/JAM2021/33(r-1), (c) Test Report no. TUV/PCG/JAM2021/34(r-1)
and (d) Test Report no. TUV/PCG/JAM2021/34(r-2), it was explicitly certified
the imported goods to be Naphtha and not NGL. The report further
concluded that, on the basis of the Carbon C1, C2, C3, C4, C5, C6, C7, C8,
C9, C10, C11, C12, if it is a Natural Gasoline Liquid in that case Carbon
chain will be totally different.
3. Vide letter dated 16.02.2021, placing reliance on the above test
report, the Appellant requested for re-export of the said goods stored in the
Liquid Storage Tank Terminal of FSWAI. As stated above, the imported
goods were meant for export to Verzone, which had paid part of the
purchase. Simultaneously, vide letter dated 16.02.2021 (to be read as
22.02.2021), the Appellant requested the customs officers for the re-testing
of the goods stored in the Liquid Storage Tank Terminal of FSWAI. The letter
also specified that the goods were meant for export. However, no reply was
stated to be received by the appellant in response to the above letters.
However, no reply was received in response to the above letters.
4. A Summons dated 25.02.2021 was issued by the Additional Director,
Directorate of Revenue Intelligence, Ahmedabad ("DRI") to the Appellant
under section 108 of the Act. Further, on 25.02.2021, the officers of the
DRI visited the Appellant office at Mumbai and conducted search
proceedings. During the course of the search proceedings, the mobile
phones of the directors and certain employees of the Appellant were also
seized under Panchnama dated 25.02.2021. Simultaneously, the mobile
phones of the Appellant's CHA, M/s Hemjyot Agency, were also seized under
a separate Panchnama dated 25.02.2021.

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5. Further, the officers of the DRI also seized the goods stored in the
Liquid Storage Tank Terminal of FSWAI, vide Seizure Memo and Panchnama
dated 26.02.2021.
The purported reasons for seizure of goods as stated in paragraph no. 2 of
the seizure memo dated 26.02.2021, read thus:
"Whereas, from the subject goods imported in Vessel MT TUNA,
representative samples were drawn and send by Customs House, Kandla to
the Custom House Laboratory, Kandla for testing. After necessary testing, the
Chemical Examiner, Custom House Laboratory, Kandla have opined that the
sample under reference is Natural Gasoline Liquid. Thus, it appears that the
imported goods have been mis-declared and mis-classified as Naphtha under
CTH 27101229 by the importer in the aforementioned 07 bills of Entry
pending for out of charge at goods registration level at Proper officer of Dock
examine filed by the importer at Custom House, Kandla instead of declaring
correct description thereof as 'Natural Gasoline Liquid classifiable under CTH
No 27101290."


5.1 Vide letter dated 28.02.2021, the Appellant replied to the seizure
memo dated 26.02.2021 issued by the Sr. Intelligence Officer, DRI and,
inter alia, requested to permit the Appellant to officially draw samples under
its supervision of the goods under the above referred bill of entries by
following due procedure and further requested to re-test the samples drawn
by at least 3 different laboratories recognized by the authorities and also
permit the Appellant to obtain report from 3 laboratories of the Appellant's
choice, which are duly accredited.
6. During the course of the investigation proceedings, the statement of
following persons was recorded under Section 108 of the Act:
(i) Shri Satish Gaichor, Associate General Manager-Logistics of the Appellant,
on 25.02.2021 and 17.02.2022;
(ii) Shri Nitin Kumar Didwania, Managing Director of the Appellant, on
12.04.2021;
(iii) Shri Bharat J. Goswami, Terminal Manager of M/s FSWAI, on
23.12.2021;
(iv) Shri Pramod Dharamshi Soneta, Partner of Customs Broker firm, M/s
Hemjyot Agency, on 21.12.2021
(v) Shri Illa Giri Visweswarrao, Manager of Samudra Marine Services Pvt.
Ltd., on 22.01.2022.
First Special Civil Application before the Hon'ble Gujarat High Court

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7. Thereafter, the Appellant filed Special Civil Application No. 4803 of
2021 before the Hon'ble Gujarat High Court challenging the legality and
validity of the purported seizure of imported cargo. After filing the Special
Civil Application No. 4803 of 2021, the Ld. Additional Director, DRI, vide his
letter dated 12.03.2021 responded to the Appellant's letter dated
28.02.2021. Vide order dated 05.04.2021, the Hon'ble Gujarat High Court
was pleased to permit the retesting of the samples from the imported cargo
and directed that equal numbers of samples be provided to the Appellant as
also retained by the The text the different laboratories for retesting. The text
of Hon‘ble Gujarat High Court is reproduced below:

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Re-testing and further investigation proceedings
8. In compliance with the order of the Hon'ble Gujarat High Court, on
06.04.2021, the Appellant requested the department for re-testing of the
subject goods and the said letter was acknowledged on 07.04.2021. In the
said letter, the Appellant had mentioned that the fresh samples be tested as
per the parameters prescribed in the said letter to avoid any dispute in
future about the methods adopted by the Testing Laboratory for the testing
of the fresh samples. Vide Panchnama dated 09.04.2021, five sealed
samples bearing nos. S1 to S5 were drawn in the presence of the DRI and
the customs officers. The samples marked as S1 and S2 were taken over by
the DRI officers; the samples marked as S3 was taken over by the customs
officer; and the samples marked as S4 and S5 were handed over to the
Appellant. Subsequently, the Ld. Additional Director, DRI issued summons
dated 07.04.2021 to Mr. Nitin Didwania, the Appellant's Director with a
direction to appear before him on 12.04.2021 and also to provide all the
documents in respect of the subject goods and also to tender his statement.
9. The Additional Director, DRI issued another letter dated 08.04.2021 to
Mr. Nitin Didwania with a direction to appear before him on 12.04.2021 for
the enquiry and informing that the fresh samples are scheduled to be drawn
on 09.04.2021. On 12.04.2021, Mr. Nitin Didwania visited the office of the
Ld. Additional Director, DRI on 12.04.2021 and his statement was recorded
by the officers of the Ld. Additional Director, DRI and Mr. Nitin Didwania
submitted all the relevant documents pertaining to the subject goods and as
requisitioned by the officers of the Ld. Additional Director, DRI.
10. Vide letter dated 15.04.2021, the Appellant formally requested the
Additional Director, DRI to clarify the basis and rationale for the selection of
testing parameters adopted during the re-testing of the subject goods, as
per DRI Memo No. DRI/AZU/GRU/HAZEL/INT-06/2021 dated 25.02.2021.
11. As the Applicant, despite a lapse of considerable period of time, no
response was received from the DRI addressing the specific query regarding
the applicability of the 23 parameters open specifications for Naphtha, which
are internationally recognized and routinely relied upon in technical
assessments and commercial transactions. It is submitted that these open
specifications covering critical parameters such as distillation range, PNA
profiling, Sulphur content, Olefin content, and other parameters would have
sufficed to resolve the ambiguity surrounding the classification and re-
testing of the subject goods. It is submitted by the appellant that the lack of

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a reasoned reply from the DRI constitutes a procedural lapse and
undermines the transparency and fairness expected in technical
adjudication.
12. In absence of any response to the above letter, on 16.04.2021, the
Appellant submitted the sealed sample no. 4 for the re-testing to Geo Chem
Laboratories Pvt. Ltd. ("Geo Chem") and mentioned the parameters and
method to be adopted for the re-testing of the sealed sample no.
Simultaneously on 16.04.2021, the Appellant also submitted the sealed
sample no. 5 for the re-testing to the Indian Institute of Petroleum,
Dehradun ("IIP"), vide letter dated 16.04.2021, and mentioned the
parameters and method to be adopted for the re-testing of the sealed
sample Pursuant to the fresh testing carried out by Geo Chem, vide its
Report dated 11.05.2021, Geo Chem certified that the sample "CONFORMS
TO OSN SPECIFICATIONS OF NAPHTHA WITH RESPECT TO THE TESTS
CARRIED OUT". In other words, it was categorically stated that the sample,
as provided by the customs authorities, drawn from the imported goods, was
confirmed by Geo Chem to be Naphtha.
13. Similarly, IIP, Dehradun also issued its test report on 18.05.2021 vide
Ref No. ASD417:2021 through email. The report states and confirms that
the said sample was of Naphtha as per analysis of all the parameters. After
obtaining the Test Report from the IIP, Dehradun and Geo Chem, Mumbai,
the Appellant submitted them to the Respondent vide letter dated
19.05.2021. In the meantime, without responding to the letter dated
15.04.2021, vide Test Memo dated 15.04.2021, the DRI forwarded a sample
to Central Revenues Customs Laboratory, Delhi ("CRCL Delhi") with seven
specific queries.
14. Vide its Test Report dated 28.05.2021, CRCL Delhi concluded that the
sample has a low boiling point liquid extracted from natural gas and that it is
NGL. The details of the tested parameters are summarized below:
Sr. No.
Parameter
Analysis



1. Acidity NIL
2. Flash Point (abel) in "C Less than 25
3. Ash (% by wt.) Nil
4. Density at 15°C (gm/ml) 0.6499
5. API gravity 86.12
6. Water content Nil
7. Reactive sulphur Sweet
8. Distillation
Initial boiling point
Temperature at 5% recovery
Temperature at 10% recovery
Temperature at 50% recovery
35
39
40
47.5
78

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Temperature at 90% recovery
112
Final Boiling Point


9. % Evaporated at 60°C 80
10. % Evaporated at 135°C Complete (100%)
11. Total C5 Hydrocarbons 65.89
12. Total C6 Hydrocarbons 20.20
13. Total Aromatics 01.96
14. Total Olefins 05.245


15. As per the appellant, CRCL, Delhi conducted the test only on five (5)
parameters whereas CRCL, Kandla tested only two (2) parameters.
However, as per the appellant neither CRCL, Delhi nor CRCL, Kandla
provided any details of the test methodology, used for conducting these
tests. Pertinently, IIP, Dehradun conducted the test comprehensively
covering all the parameters set by IS 17794:2022 for petroleum product
classification, as per the claim of the appellant.
Proceedings pertaining to provisional release and re-export
16 In the meanwhile, vide letter dated 15.04.2021, the Appellant
requested the department to release the subject goods on provisional basis.
Subsequently, vide letter dated 04.05.2021, marked as "Reminder-2", the
Appellant requested for release of the subject goods on provisional basis. In
response to the above, vide letter dated 12.05.2021, the Appellant was
informed by the Ld. Additional Director, DRI to contact the Respondent for
provisional release, who is the competent Authority for deciding the
application for provisional release and for further action in the subject
matter. Consequently, vide the Appellent's letter dated 12.05.2021, the
Appellant requested the Ld. Principal Commissioner to release the subject
goods on provisional basis. Subsequently, vide letter dated 14.05.2021, the
Appellant, once again, requested the Ld. Principal Commissioner to release
the subject goods after obtaining the report from the Geo Chem for the
sealed sample no. 4.
17 As per the Appellant, Vide letter dated 27.05.2021, the Appellant
informed the Central Board of Indirect Taxes and Customs, Delhi ("CBIC")
regarding the illegality carried out by the customs authorities in the above
matter with all the documents including test reports. Vide email dated
27.05.2021, the Appellant reminded the Ld. Additional Director, DRI to
permit re-export of the subject goods. Vide email dated 27.05.2021, the Ld.
Additional Director, DRI stated that he has already informed through his

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letter dated 12.05.2021 to approach Chief Commissioner Customs, Kandla,
as he has the jurisdiction over the subject matter.
18 In view of the failure on the part of the customs authorities, inter alia,
in considering the Appellant's repeated requests to permit re-export of the
subject goods, the Appellant filed Special Civil Application No. 7840 of 2021,
before the Hon'ble Gujarat High Court, challenging, inter alia, the legality
and validity of seizure of goods.
19 Vide its order dated 24.08.2021, the Hon'ble High Court directed the
Chief Commissioner of Customs, Kandla, to take a decision on the
Appellant's application for provisional release of the subject goods within
four weeks.

20 A Special Leave Petition No. 15718 of 2021 filed against the order
dated 24.08.2021 came to be dismissed, vide order dated 08.10.2021 with
the observation that the customs authorities will comply with the directions
of the Hon'ble High Court contained in order dated 24.08.2021 and the
Appellant would fully co-operate in this regard. Vide its communication dated
27.10.2021, the decision of the Respondent to reject the Appellant's request
for provisional release for re-export of the subject goods was communicated
to the Appellant by the Assistant Commissioner of Customs. Being aggrieved
by the decision of the Respondent rejecting the request for provisional
release for re-export, the Appellant preferred an appeal to this Tribunal, with
an application for early hearing of the appeal. Vide its Final Order dated
03.12.2021, this Tribunal allowed the Appellant's appeal by directing the
Respondent to permit provisional release and export of the goods on the
Appellant's executing a bond of the total value of the goods and granted
liberty to approach the customs authorities for waiver certificate for the
demurrage charges, which will be considered in accordance with law in the
facts and circumstance of the case. The Appellant preferred an application
before this Tribunal under Rule 41 of the CESTAT (Procedure) Rules, 1982
praying for implementation of its earlier Final Order dated 03.12.2021. Vide
its Order dated 06.01.2022, this Tribunal was allowed the Appellant's
application and directed the customs authorities to implement its order with
immediate effect and report the compliance on 11.01.2022. In compliance
with the orders of this Hon'ble Tribunal, the office of the Respondent, vide its
letter dated 10.01.2022 informed the Appellant that cargo is allowed
clearance for export.

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21 Subsequently, on 19.01.2022, the Proper Officer also made Let Export
Order for export of the said cargo and the vessel was asked to be made
ready to load the cargo which was always meant for export. The office of the
Respondent also prepared a panchnama to assess the quantity to be
exported. It is pertinent to note that there was loss of 1014.379 MT since
the goods were seized for almost one year. On 19.01.2022, the Vessel
arrived at the Port for loading of the Naphtha meant for re-export. However,
on 25.01.2022, the DRI informed FSWAI that cargo be kept on hold for
export.
22. The Ld. Additional Director, DRI filed Special Civil Application No. 1715
of 2022 before the Hon'ble Gujarat High Court against the Final Order dated
03.12.2021 passed by this Tribunal. Vide its order dated 27.01.2022, the
Hon'ble Gujarat High Court was pleased to permit export of the cargo
subject to the Appellant providing bank guarantee of Rs. 15 crores. The
entirety of the remaining consignment, after accounting for the loss due to
prolonged seizurej was exported under & different Shipping Bills 15 after
furnishing the bank guarantee of Rs. 15 crores, vide letter dated
29.01.2022.
23 Subsequently, vide order dated 21.04.2022, the Hon'ble High Court
was pleased to dispose of the above SCA filed with a direction to reduce the
bank guarantee to Rs. 8 crores. In the meantime, the Hon'ble Supreme
Court was pleased to dispose of Civil Appeal No. 7780 of 2021 filed by the
Appellant, vide its order dated 04.01.2022, with a direction to the
Respondent to decide the waiver application as directed by this Hon'ble
Tribunal within a period of 10 days from the date of the order. Pursuant to
the above, Show Cause Notice F. No. GEN/ADJ/ADC/510/2023-Adjn dated
28.03.2023 was issued. The said show cause notice directed the Appellant to
show cause to the Hon'ble Additional Commissioner of Customs, Kandla, as
to why:
(i) The description and classification of the imported goods, declared as
Naphtha under CTH 2710 1229, covered under seven bills of entry should
not be rejected and the said goods should not be described as NGL and re-
classified under CTH 2710 1290;
(ii) The assessable value of the imported goods declared as Rs.
79,63,76,540 in the impugned seven bills of entry should not be rejected
and the same should not be considered according to the market value, i.e.,
approximately Rs. 278,95,19,113;

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(iii) The imported goods should not be held liable for confiscation under
Section 111(d), 111(m), 111(p) and 111(0) of the Customs Act, 1962
("Act");
(iv) Penalty should not be imposed on the Appellant under Sections 112(a),
112(b), 114AA and 117 of the Act;
(v) The amount of applicable re-test fees payable by the Appellant in terms
of Section 145 of the Act should not be recovered from the Appellant; and
(vi) The bank guarantee furnished by the Appellant should not be encashed
towards the above liabilities, i.e., fine and/or penalties.
24 Being aggrieved by the captioned show cause notice, the Appellant
preferred Special Civil Application No. 10224 of 2023 before the Hon'ble
Gujarat High Court challenging the legality and validity thereof. Vide its
Order dated 18.01.2024, the Hon'ble High Court was pleased to direct that
the captioned show cause notice be adjudicated by the Respondent-
Commissioner. Vide letter dated 23.02.2024, the Appellant requested the
Respondent to provide copies of the records pertaining to the test reports
issued by CRCL Kandla and CRCL New Delhi as well as an opportunity to
cross-examine the persons on whose statement reliance was sought to be
placed in the show cause notice. Appellant's letter dated 23.02.2024.
Subsequently, in absence of any response to the above request, keeping its
rights and contentions open, the Appellant filed a detailed reply to the show
cause notice vide its letter dated 10.04.2024
25 Further, vide letter dated 16.12.2024, the Appellant filed additional
submissions, specifically relying on the judgment of this Hon'ble Tribunal in
Reliance Industries Ltd. v. Commissioner of Customs, Ahmedabad [2024
(10) TMI 1555-CESTAT Ahmedabad), wherein it is held that NGL is a subset
of the broader genus of chemicals known as Naphtha. Based on the same, it
was submitted that even assuming without admitting that the imported
goods are NGL, the same are only a kind of Naphtha and are correctly
classified under CTI 2710 1229. Thereafter, on 22.04.2025, a personal
hearing was granted, which was attended by the authorized representatives
of the Appellant, who reiterated the submissions made in the detailed reply
and the additional submissions and requested that the show cause notice be
dropped. Without granting any cross-examination, vide the Order-in-Original
No. KND-CUSTM-000-COM-18-2025-26 dated 28.07.2025. Aggrieved by the
order present appeal has been preferred by the appellant.

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GROUNDS
26. NGL is a sub-specie/kind of Naphtha and thus, the imported goods are
correctly classified as Naphtha In any event and assuming without admitting
that the imported goods were NGL and not Naphtha, NGL is a sub-
specie/kind of Naphtha and thus, the imported goods are correctly classified
as Naphtha under CTH 2710 1229. It is pertinent to note that this Hon'ble
Tribunal, in Reliance Industries Ltd. v. Commissioner of Customs,
Ahmedabad [2024 (10) TMI 1555-CESTAT Ahmedabad], has held that NGL is
a subset of the broader genus of chemicals known as Naphtha.
26.1 In the said case though the advance authorization was granted for
Naphtha, and the goods imported were found to be NGL, the same was
permitted as NGL was a type of Naphtha. The relevant extract of the said
judgment is reproduced below:

“4. We have carefully considered the submission made by both sides
and perused the records. We find that the issue to be decided in the
present case is that-
(i) whether, even if the imported goods considered as Natural
Gasoline Liquid (NGL) as claimed by the revenue, the same falls
under the broad description of Naphtha and consequently the
clearance of goods under advance authorization which mentioned the
imported goods as "Naphtha" is correct and legal or otherwise.
(ii) Whether the goods imported by the appellant is "Naphtha"
classifiable under tariff item no. 27101290 of the Custom Tariff Act,
1975 or Natural Gasoline Liquid (NGL) classified under Tariff Item No
27101220 of Custom Tariff Act, 1975
4.1 We find that the appellant have declared the imported goods in
the bills of entry as Naphtha under Tariff Item No. 27101290. The
goods were cleared under advance authorization. The sample copy of
the advance authorization is scanned below: page 73-75, 76-77 of
common paper book.
4.2 From the above import authorization in the list of import item
Naphtha is mentioned under ITC 27101290, though we do not agree
that imported goods is not Naphtha but NGL, the appellant
vehemently argued that even the NGL is also Naphtha therefore,
since the Naphtha is allowed to be imported, the imported goods is
allowable under the same advance authorization. The appellant have
vehemently argued that assuming without admitting the goods in
question were NGL still the benefit of exemption under advance
authorization was admissible to the appellant and NGL is also a type
of Naphtha. Since broad description given in the advance
authorization, we are of the view that even though the type of
Naphtha is different but the same is clearly covered under the
advance authorization and hence irrespective of the department's
contention that the goods is NGL but the NGL is also a type of
Naphtha, the same is covered by the advance authorization.
Accordingly, the clearance of goods under Advance Authorization
cannot be questioned.

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4.5 From the above it is evident that naphtha is a genus and NGL is a
species. Accordingly, advance authorization specifically covered and
allow import of naphtha. It is clear that all species including NGL,
would be covered under the genus of Naphtha, and will also
automatically get covered by the Advance Authorizations in the
present case. In view of this assuming without admitting that the
goods in question imported were NGL the same shall have no
revenue implication as the said import of Naphtha squarely covered
by advance authorization in question. As such there was neither any
infirmity in the import of the goods in question nor in the exemption
claimed by the appellant under the advance authorization scheme
read with governing notification 18/2015-CUS dated 01.04.2015 (as
amended) therefore, even if the contention of the revenue is that the
goods imported in NGL is correct then also the clearance of goods
under advance authorisation cannot be said to be incorrect or illegal.
On this basis itself the entire demand is liable to be set aside.
4.6 Without prejudice to the above, we also find that the NGL is a
type of Naphtha which is evident from the legislative changes made
under the Finance Act, 2019 with Notification No. 89/2019-Cus (N.T)
10.12.2029 to heading 2710 of the Customs Tariff Act, 1975 whereby
the 8 digits tariff items under 6 digits sub heading 271012 which
covers light oils and preparations were substituted. As per this
substitution, the specific tariff item 27101220 which covered NGL was
deleted and three new tariff items 27101221 (Light Naphtha),
27101222 (Heavy Naphtha) and 27101223 (Full Rich Naphtha) were
inserted to cover Naphtha. An interpretation of this substitution
indicates that the same was brought in effect (a) to end the dispute
on classification of Naphtha and NGL (b) to specifically covered all
types of Naphtha including NGL. It is for this reason because the
specific entry of NGL was deleted as the same goods have rendered
the tariff items 27101221, 27101222 and 27101223 otiose.
Therefore, we do not find any infirmity in either the import of goods
in question or in the exemption claimed by the appellant under
advance authorization.
(emphasis supplied)

26.2 An Appeal was filed against the Reliance Industries Judgement by the
Ld. Commissioner of Customs, Ahmedabad wherein the Hon'ble Supreme
Court vide its Order dated 09.04.2025 (in Civil Appeal Nos. 5133-5137 of
2025- Commissioner of Customs, Ahmedabad Vs. M/s. Reliance Industries
Ltd.) was pleased to dismiss the Appeal stating that 'there was no good
reason to interfere with the said Order of CESTAT, Ahmedabad'. Therefore,
the said order is final and reversed by the Hon'ble Apex Court.
26.3 From the above, it is clear that NGL is a sub-specie of the larger genus
Naphtha. It is submitted that the Respondent has erred in brushing aside
and not following the above judgment in the case of Reliance Industries
(supra) on the ground that the same pertained to eligibility under Advance
Authorization and that this Hon'ble Tribunal held that even if the
classification dispute remains, the benefit of Advance Authorization is
allowed. The said case also recognized Natural Gasoline and Naphtha as

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distinct products classified by its origin and properties. It is submitted that
the Respondent has erred in relying on paragraph 4.7 of the above judgment
in isolation without considering the discussion and findings of this Hon'ble
Tribunal in the earlier paragraphs. However, prior to the aforesaid discussion
in paragraph 4.7, in paragraph 4.6, this Hon'ble Tribunal has also examined
the legislative changes brought into the CTH 2710 vide the Finance Act,
2019, whereby tariff items 2710 1221, 2710 1222 and 2710 1223 were
introduced specifically covering Naphtha. In this regard, this Hon'ble Tribunal
has categorically held that the said tariff items, i.e., 2710 1221, 2710 1222
and 2710 1229, would include all kinds of Naphtha, especially including NGL.
26.4 Thus, even assuming without admitting that the imported goods are
NGL, it is submitted that the same are only a kind of Naphtha and are
correctly classified under CTI 2710 1229. The imported goods are Naphtha
and not NGL, as is evident from the test reports and the contracts for import
and re-export It is submitted that the imported goods are Naphtha and not
NGL and the Appellant has correctly declared the same as Naphtha in the
subject Bills of Entry. It is submitted that undisputedly, Naphtha and NGL
are two different products having distinct chemical composition. It is
submitted that in the present case, four independent agencies have provided
detailed test reports certifying that the imported goods satisfy the chemical
composition and other parameters attributable to Naphtha.
26.5 Further, both the contract for importing goods and the contract for
exporting goods covers transactions of Naphtha only. Adhering to all the
applicable laws and after opening valid letter of credits through proper
banking channels, the Appellant re-exported the subject imported goods
which were always meant for re-export. The imported goods have also been
re-exported and accepted by the Appellant's customer as 'Naphtha'. No
complaints have been received by the Appellant's customer that the said
product is not Naphtha.
Test Reports issued by four independent agencies certifying that the imported
goods are Naphtha
26.6 It is submitted that four independent agencies have certified that the
imported goods are Naphtha. At the first instance, even before the goods
were exported to India, the imported goods were tested and vide test report
/certificate dated 02.02.2021, it was certified that the imported goods are
Naphtha.

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26.7 From a bare perusal of the said test report dated 02.02.2021, it is
manifest that the said certification is based on testing of several parameters.
Further, the said test report is prepared at the load port itself, i.e., at Sohar,
Oman.
26.8 It is submitted that the Respondent has erred in brushing aside the
said report by stating that there is sufficient evidence to indicate that the
load port for the imported goods is not Sohar, Oman as indicated in the said
report. It is submitted that the load port for the imported goods is Sohar,
Oman and the allegation that the said load port is any other place is merely
based on conjecture and surmises. Further, it is submitted that samples of
the imported goods were also tested by TUV India Pvt. Ltd. and vide test
reports dated 20.02.2021, it is certified that the imported goods are
Naphtha. The said samples were drawn from the storage facility of FSWAI on
09.02.2021. It is pertinent to note that TUV India Pvt. Ltd. gave the test
reports dated 20.02.2021 after conducting the test on all the standard
parameters, as detailed therein, and it is on the basis of these parameters
that the imported goods are certified to be Naphtha. It is submitted that the
Respondent has erred in brushing aside the said test report on the ground
that no permission was obtained from the customs authorities for drawing
the said samples from the customs warehouse operated by FSWAI.
27. In any event, pursuant to the Order dated 05.04.2021 passed by the
Hon'ble Gujarat High Court in SCA No. 4803 of 2021, the Appellant was
provided with two fresh samples and were permitted to get them tested by
two independent agencies. Consequently, vide test report dated 11.05.2021
issued by Geo Chem and test report dated 18.05.2021 issued by IIP,
Dehradun, it is once again certified that the said samples, admittedly drawn
from the imported goods, are samples of Naphtha. The relevant extracts of
conclusions from both the test reports have been reproduced below:

Test Report dated 11.05.2021 issued by Geo Chem
REMARKS: CONFORMS TO OSN SPECIFICATIONS OF NAPHTHA WITH
RESPECT TO THE TESTS CARRIED OUT.
Test Report dated 18.05.2021 issued by IIP, Dehradun
3.1.3 Conclusion:
Based on the above observations/results, this sealed naphtha sample (Marked
as $5 with Seal No. 715255, Location: MT Tuna) falls under the light naphtha
range.

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27.1 From the above, it is clear that both the agencies have independently
analyzed the samples and based testing against several parameters have
concluded that the samples are Naphtha. It is submitted that the said test
reports have sought to be ignored by the department basis the allegation
that the Appellant had influenced / attempted influence both the said
agencies by stating in the Appellant's letters to them that the samples being
handed over are Naphtha samples and that the Appellant communicated to
the agencies that the customs authorities had reservations on the quality. It
is submitted that the above allegation regarding influencing or attempting to
influence is factually baseless, erroneous and misconceived. Vide letters
dated 16.04.2021, the Appellant had forwarded the samples to both the
independent agencies. Irrespective of the subject or the context disclosed in
the said letters, the Appellant's direct and concise request/ query to the said
agencies has been reproduced below:
We request you to analyse the same and certify that the goods confirm to Naphtha
or otherwise and oblige.
27.2 From the above, it is clear that the request made before both the
agencies was to analyse and certify whether the samples are Naphtha or
some other product. It is reiterated that in response to the above query and
based on a detailed multi-parameter testing, both the independent agencies
have concluded that the samples are Naphtha.
28. Further, it is submitted that both the agencies are independent and in
no manner related to us. More particularly, neither the Appellant nor any of
its employees / directors have any influence or control over the decision-
making or day-to-day operations of either of the agencies. IIP, Dehradun
operates directly under the umbrella of the Council of Scientific and
Industrial Research ("CSIR"). The CSIR-IIP, Dehradun is in turn managed
and controlled by Ministry of Science and Technology, Government of India.
The President of the CSIR is the Hon'ble Prime Minister of India. Further, IIP,
Dehradun is accredited with ISO 9001: 2015 certificate and having the
advance technology of testing and better infrastructure. IIP plays a vital and
integral role in both national and international scientific and technological
advancement and holds consultative meetings on R&D with NITI Aayog.
Similarly, Geo Chem, founded in 1964, is an independent inspection and
testing company. It is one of the largest and reputable inspection and
testing organizations in India. It is renowned as cargo inspectors and
surveyors and have proven their expertise in Inspection, Survey and Testing
of diverse export, import and locally traded cargos and commodities.

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28.1 Thus, it is submitted that both the agencies are independent, without
the Appellant's influence and experts in the field of testing and analysis. In
any event, it is submitted that the Respondent has erred in observing that
the Appellant did not consult the department prior to forwarding the samples
to the two laboratories. In this regard, it is pertinent to note that prior to
sending the samples to the two independent laboratories on 16.04.2021,
vide its letter dated 15.04.2021, the Appellant had first approached the DRI
giving details of the parameters on which the Appellant proposed that
testing should be carried out. However, without responding to the above
letter, vide Test Memo dated 15.04.2021, the DRI forwarded a sample to
CRCL Delhi requesting them to test the same on certain identified
parameters.
28.2 It is submitted that as per the directions of the department, the
Appellant submitted the sealed samples marked as S4 and S5 (handed over
to the Appellant vide panchnama dated 09.04.2021 in the presence of the
DRI and the customs officers) to the two independent laboratories for testing
the parameters vide its letters dated 15.04.2021. It is submitted that since
April 2021, till the issuance of the show cause notice in March 2023, even
after receipt of the Appellant's letter dated 15.04.2021 as well as the test
reports of both the independent laboratories, the department did not raise
any objections regarding the tested parameters. It is submitted that the
Respondent has erred in holding that the two reports cannot be accepted
since they appear to be different and contradictory to each other. It is
submitted that the said finding is factually incorrect inasmuch as both the
reports conclude that the samples are Naphtha. It is submitted that merely
because the report issued by Geo Chem does not mention the quality of
Naphtha (Light, Heavy or Full Range) and has tested limited parameters as
compared to IIP, that by itself does not make the two test reports in
contradiction of each other.
28.3 Further, it is submitted that the Respondent has erred in holding that
the test reports by IIP, Dehradun and Geo Chem cannot be relied upon since
neither is categorically denying that the goods are not NGL. It is submitted
that by concluding that the samples are Naphtha, the corollary of such
conclusion is that the samples are not NGL and thus, no separate testing or
analysis or conclusion is required to deny that the goods are NGL.
29. In view of the above, it is submitted that the four test reports issued
by four independent agencies categorically conclude that the imported goods
are Naphtha and thus, the imported goods cannot be assessed as NGL.

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Test Reports issued by Customa Authorities are cryptic and based on incomplete parameters
29.1 In any event, the test reports issued by the CRCL, Kandla and CRCL,
Delhi concluding that the imported goods are NGL cannot be relied upon
inasmuch as the same are cryptic and based on incomplete parameters.
Further, the said test reports did not deny that the goods are not Naphtha. It
is pertinent to note that during the course of the investigation, under
Panchnama dated 09.04.2021, five samples were drawn by the DRI officers
from the imported goods for the purpose of testing them. It is pertinent to
note that the said Panchnama does not refer to the sampling method used in
selection of the samples. Vide the test report dated 15.02.2021, the CRCL
Kandla stated that the sample is composed of mixture of hydrocarbons and
further referred to certain parameters which were tested. However, the said
report did not provide any details of the test methodology used in forming
the conclusions stated therein. In order to obtain further clarification as to
whether the imported goods is Naphtha or otherwise, further letters dated
16.02.2021 and 17.02.2021 were addressed by the office of this Hon'ble
Commissioner to the CRCL Kandla.
29.2 Subsequently, vide letter dated 19.02.2021, the CRCL Kandla stated
thus:
"In this regard it is to inform you that, based on the Analytical of the Chemist
on the sample under reference and available Technical literatures on
chemistry, the sample under reference is Natural Gasoline Liquid."

29.3 It is submitted that the above test report is clearly cryptic inasmuch as
the same purportedly draws the conclusion that the sample is NGL by merely
referring to the alleged analysis by the chemist and "available technical
literatures on chemistry". The test report does not refer to any test
methodology, tested parameters or the analysis. In any event, it is
submitted that the Appellant has not been provided with the details of the
purported analysis of the chemist or copies of the alleged technical literature
on chemistry referred to in the report. Apart from the above, vide test memo
dated 15.04.2021, a sample of the imported goods was also sent to CRCL
Delhi for the purpose of retesting. Vide the test report dated 28.05.2021, the
CRCL Delni has concluded that the sample is a low boiling liquid extracted
from natural gas and that it is NGL. The said test report refers to 14
parameters claimed to be tested. However, the said test report also does not
provide any details of the test methodology used.

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29.4 From a perusal of the captioned test report dated 15.02.2021 issued
by CRCL Kandla and test report dated 28.05.2021 issued by CRCL Delhi, it is
pertinent to note that neither report gives details of the test methodology
used. Also, CRCL Delhi as well as CRCL Kandla failed to test other standard
specifications for measurement of Naphtha as prescribed by the BIS, like,
Reid Vapor Pressure, Distillation, Paraffin (N-Paraffin & Iso Paraffin), Olefins,
Naphthene etc. Further, the captioned letter dated 19.02.2021 summarily
concludes that the sample is NGL by referring to certain alleged technical
literature. However, neither the alleged unknown technical literature has
been referred to or reproduced in the said letter nor has a copy been
provided to the Appellant.
29.5 Further, it is clear that the sampling method as well is not known or
referred to in the Panchnama dated 09.04.2021 under which the samples
were drawn. In Fomento Resources Pvt. Ltd. v. Commissioner of Cus.,
Vijayawada [2019 (370) ELT 1381 (Tri.- Hyd.)], the Hon'ble Tribunal has
held that where the Chemical Examiner's test report is extremely cryptic,
inasmuch as the same does not indicate as to how the sample was tested
and what parameters were tested, the said test report cannot be relied
upon.
29.6 Further, in light of the above pitfalls in the testing and the test reports,
vide the Appellant's letter dated 23.02.2024, the Appellant had requested
this Hon'ble Commissioner to provide all records pertaining to the sampling
and the two test reports. However, no response has been received to this
date. In PLG Impex v. Commissioner of Customs, Jodhpur [2022 (382) ELT
353 (Tri.- Del.)], the Hon'ble Tribunal has held that a test report which is
provided to the importer after the last date of personal hearing and does not
mention details of the test methodology adopted cannot be relied upon.
29.7 Thus, it is submitted that without providing the relevant documents
pertaining to the sampling and test reports, the above test reports cannot be
relied upon in the present case. In any event, it is submitted that the said
test reports are based on limited parameters. It is submitted that the test
report dated 08.02.2021 issued by the CRCL, Kandla has drawn to the said
conclusion based on mainly the appearance and few other parameters such
as the boiling point, flash point and the distillation results. It is submitted
that the said report issued by CRCL, Kandla does not contain any details
regarding the chemical composition or the other tests applied by the four
independent agencies as mentioned above. Similarly, the test report dated
28.05.2021 issued by the CRCL, Delhi has drawn conclusions based on

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testing of limited number of parameters as opposed to the detailed tests
carried out by the independent agencies.
30. In this regard, it is pertinent to note that the Bureau of Indian
Standards ("BIS") has notified the standards for Naphtha, namely, IS
17794:2022 in March 2022. Hereto annexed and marked as Exhibit "HHH" is
the copy of the BIS issued IS 17794:2022. The IIP, Dehradun's test report is
comprehensive, covering all parameters set by IS 17794:2022 for petroleum
product classification. The CRCL, Kandla and CRCL, Delhi are incomplete,
relying only on two (2) and five (5) parameters, insufficient for
distinguishing complex hydrocarbons such as Naphtha and Natural Gasoline.
Even the report by CRCL Delhi if considered vis-à-vis the notified standards
for Naphtha by BIS, the subject goods are proved to be Naphtha, and not
NGL. It is submitted that the imported goods fully satisfy the said standards
notified for Naphtha.
31. From a bare perusal of the said standards, it is clear that the BIS
requires 13 parameters to be tested for Naphtha. However, both CRCL,
Kandla and CRCL, New Delhi have tested only two and five parameters,
respectively, in respect of the imported goods, as in detailed below:
Sr. No.
BIS Standards
Testing Parameter
CRCL Kandla
CRCL Delhi




1 Appearance - -
2 Density @ 15°C - -
3 Colour Saybolt - -
4 Reid Vapour Pressure
- -
(RVP)
5 Sulphur -
6 Distillation: I.B.P. Tested Tested
7 90% Recovered Tested Tested
8 Distillation: F.B.P. - Tested
9 Recovery - -
10 Total Paraffins - -
11 Olefins - Tested
12 Naphthenes - -
13 Aromatics - Tested

On comparison of the BIS standards and the reports issued by CRCL Kandla
and CRCL New Delhi, it is clear that both the authorities have not tested vital
parameters covered by the said standards before concluding that the
samples are NGL.
32 As against the above, the two independent agencies, namely, Geo
Chem and IIP, Dehradun, have tested all the parameters mentioned in the
BIS standards as detailed below:

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Sr. No.
BIS Standards
Testing Parameter
Geo Chem IIP, Dehradun



1 Appearance - -
2 Density @ 15°C Tested Tested
3 Colour Saybolt Tested Tested
4 Reid Vapour Pressure (RVP) Tested Tested
5 Sulphur Tested Tested
6 Distillation: I.B.P. Tested Tested
7 90% Recovered Tested Tested
8 Distillation: F.B.P. Tested Tested
9 Recovery Tested Tested
10 Total Paraffins Tested Tested
11 Olefins Tested Tested
12 Naphthenes Tested Tested
13 IIP, Dehradun Tested Tested

A bare reading of the above comparisons would indicate that the Imported
goods have been declared by the CRCL as NGL based on insufficient testing.
32.1 Thus, it is submitted that the Respondent has erred in holding that the
test report of CRCL Delhi is more comprehensive to ascertain whether the
imported goods are Naphtha or NGL. In any event, it is submitted that the
Respondent has erred in holding that the imported goods were having
characteristics of NGL and not Naphtha based on the C5-C6 carbon numbers
in the report issued by IIP. Further, it is submitted that the Respondent has
erred in placing reliance on the definition of NGL as per the US Energy
Information Administration and Hess Corporation's Safety Data Sheet of
Natural Gasoline, to hold that NGL consists of hydrocarbons with carbon
numbers predominantly in the range C5 to C8. It is submitted that the said
finding is incorrect inasmuch as NGL actually falls in the range of C2 to C5. It
is submitted that even Naphtha has carbon numbers predominantly in the
range of C5 to C10. In this regard, reliance is placed on the following stating
that Naphtha has carbon numbers in the range of C5 to C10:

(i) Definition of Solvent Naphtha (Petroleum) as published by the
United States of America Environmental Protection Agency in the
Substance Registry Services:
A complex combination of hydrocarbons obtained from the distillation of crude oil or
natural gasoline. It consists predominantly of saturated hydrocarbons having carbon
numbers predominantly in the range of C5 through C10 and boiling in the range of
approximately 35.degree.C to 160. degree. C (95.degree. F to 320.degree.F).
(ii) Definition of Naphtha as published by Safe Work Australia in the
Hazardous Chemical Information System:

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A complex combination of hydrocarbons obtained from the distillation of crude oil or
natural gasoline. It consists predominantly of saturated hydrocarbons having carbon
numbers predominantly in the range of C5 through C10 and boiling in the range of
approximately 350 to 1600 (95F to 320F)
(iii) "Catalytic Co-Processing of delayed coker naphtha with VGO
streams", Oil and Gas Technical Journal, 2nd Edition, published in May
2023 by the Centre for High Technology, Ministry of Petroleum &
Natural Gas, Government of India (Pg. 76):
In this context, catalytic cracking and hydrocracking units perform relevant
roles in the upgradation of intermediate oils whereas cokers and visbreakers
intensify heavier oils and residue. Amongst the aforementioned upgraded
streams, thermally cracked naphthas consideration as they consist of
complex mixtures of low-require special quality components in the C5- C12
range. Coker naphtha in particular is characterized with high sulphur
concentration and low octane rating. Upgrading such low-quality stream
entails selective hydrogenation. However, with the increasing quantum of
heavy oil and residue, many refineries end up with a surplus of thermally
cracked naphtha which negatively affects the profitability.
32.2 From the above, it is clear that the carbon numbers for Naphtha are
predominantly in the range of C5 to C10. Thus, the test results reported by
IIP evidencing that the hydrocarbons for the tested samples were
predominantly in C5-C6 range further proves the fact that the imported
goods were Naphtha.
32.3 In view of the above, it is submitted that the test reports issued by the
CRCL, Kandla and CRCL, New Delhi cannot be relied upon, and the imported
goods cannot be considered to be NGL
Contract for Import, Contract for Export and Re-export
32.4 It is submitted that both the contracts for import and export as well as
the relevant invoices pertaining to the subject goods describe the subject
goods as Naphtha. As stated above, the Appellant had entered into a
Contract dated 03.02.2021 with Verzone, Singapore for supply of Naphtha.
For fulfillment of the said export order, the Appellant entered into another
Contract dated 11.01.2021/ 27.01.2021 with Aureole for procurement of the
Naphtha. Thus, it is submitted that the imported goods were always meant
for re-export. The Appellant imported Naphtha and were obligated to import
Naphtha for the purpose of fulfillment of the Appellant's obligations of supply
of Naphtha to Verzone, Singapore. It is submitted that till date no complaint
or communication is received from Verzone, Singapore that the goods
received by them were not Naphtha. It is pertinent to note that both the
import and export invoices mention the products as Naphtha.
33. Undisputedly, pursuant to the permission for re-export granted to the
Appellant, the Appellant have exported the Naphtha to Verzone vide eight

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Shipping Bills. It is submitted that in absence of any complaint or
communication from Verzone regarding the product exported not being
Naphtha, the impugned order holding that the imported goods are not
Naphtha is liable to be set aside. In any event, the negative inferences
drawn based on the Whatsapp chats referring to a change in the HSN are
incorrect. The said change in HSN was pertaining to CTH of Light Naphtha as
against Full Range Naphtha. The said change was in no manner related to
the import of any NGL.
33.1 Further, it is submitted that the Respondent has erred in drawing a
negative inference by placing reliance on certain Whatsapp chats indicating
insistence to mention the product name as 'Naphtha' in all documents. It is
submitted that the requirement to mention the correct name of the product,
i.e., Naphtha, was valid since the imported goods were Naphtha and to avoid
any misdeclaration. Without prejudice to the above, it is submitted that the
Respondent has erred in placing reliance on the statement of Mr. Satish
Gaichor and Whatsapp chats regarding discussion on availability and supply
of Gasoline and Gasoil. It is submitted that the said discussion pertained to a
separate potential transaction of Gasoline which has nothing to do with the
impugned import of Naphtha. Appositely, Gasoline, Gasoil and NGL are
different products altogether. It is pertinent to note that ultimately no
Gasoline or Gasoil was supplied by the Appellant to any buyer and that the
said fact is affirmed by the director of the Appellant in his statement In any
event, it is submitted that the department has not brought on record any
evidence suggesting that the said discussion pertained to the impugned
imports.
Application of Most Akin Test
33.2 It is submitted that the Respondent has erred in applying the 'most
akin' test and holding that the imported goods are most akin to NGL and
therefore should be described and classified as NGL It is submitted that even
applying the most akin test, the imported goods are Naphtha and thus most
akin and closely resemble Naphtha. It is submitted that the Respondent has
erred in holding that Geo Chem and IIP only focused on Naphtha parameters
whereas CRCL Delhi tested for both Naphtha and NGL. It is submitted that
both Geo Chem and IIP carried out comprehensive testing on a
comprehensive list of parameters leading to the categorical conclusion that
the samples were of Naphtha.

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33.3 On the contrary, as stated above, CRCL Delhi omitted several of the
standard parameters as notified by BIS, especially, Distillation Range, PNA
profiling, and Sulphur content, thus, their conclusion lacks the rigor required
under BIS norms. Overlapping parameters like density or flash point alone
cannot establish dual testing for both NGL and Naphtha. These are not
exclusive indicators and must be interpreted in conjunction with the full suite
of tests. Hence, it cannot be concluded that CRCL Delhi has tested for both
NGL and Naphtha. It is pertinent to note that similar to CRCL Delhi, both IIP
and Gen Chem have also tested several parameters which are applicable for
both NGL and Naphtha and have concluded that the samples are Naphtha.
33.4 It is pertinent to note that while comparing CRCL Delhi, IIP, and Geo
Chem, it may appear that they have all tested parameters that may be
applicable to both NGL and Naphtha, however, the critical distinction lies in
the depth and specificity of the testing. Geo Chem and IIP conducted
comprehensive testing aligned with BIS and ASTM standards, including
parameters that are diagnostic of Naphtha. In contrast, CRCL Delhi's testing
was limited to overlapping parameters, which, while relevant are, insufficient
to conclusively determine the nature of the sample. Therefore, the
conclusion drawn by Geo Chem and IIP that the sample is Naphtha is not
only reasonable but also technically substantiated. Thus, it is submitted that
the Respondent has erred in relying solely on the test report issue by CRCL
Delhi and brushing aside the test reports issued by IIP and Geochem to hold
that the samples are most akin to NGL and not Naphtha.
33.5 In view of the above, it is submitted that the imported goods are
Naphtha and not NGL.
There is no misdeclaration as regards the port of loading or shipper in the subject
Bills of Entry.
34. It is submitted that there is no misdeclaration as regards the port of
loading or shipper in the subject Bills of Entry. It is submitted that the
Appellant filed the Bills of Entry based on the documents received from the
supplier, Aureole. Further, along with the Bills of Entry, the Appellant have
also submitted the Bills of Lading issued by Delta Shipping as well as the
Commercial Invoices issued by Aureole. It is a common industrial trade
practice in petrochemical trading to use a back-to-back letter of credit (LC)
as a trade finance instrument where an intermediary uses a primary LC from
a buyer to back a secondary LC issued to their supplier, allowing the trader
to fund the purchase from the supplier without upfront capital. The process
involves the intermediary securing a master LC from the end-buyer, then

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using it as collateral to open a back-to-back LC for the supplier of the
petrochemicals. Once the supplier ships the products and presents compliant
documents (e.g., BL, invoice, packing list, COO), their bank pays them, and
these documents are then passed to the intermediary's bank to trigger
payment from the master LC.
34.1 From a bare perusal of the Bills of Lading, it is manifest that the port
of loading for the imported goods was Sohar, Oman and not Iraq as is
alleged in the show cause notice under reply. It is submitted that the
reliance placed on the purported Whatsapp chats by the Respondent to hold
that port of loading was actually Iraq is erroneous. Further, it is submitted
that the Respondent has erred in placing reliance on the purported
Certificate of Origin, Commercial invoices, Bill of Lading and Delivery Order,
all dated 24.01.2021, allegedly showing the port of loading as Iraq.
34.2 From a bare perusal of the said Bill of Lading, it is evident that the said
documents pertain to a different shipment, which has nothing to do with the
transactions hereunder, that was loaded in Iraq and was meant for delivery
in the United Arab Emirates. No mention whatsoever is made, in any of the
said relied upon documents, regarding delivery or unloading at Kandla,
India. Thus, it is submitted that the said documents, pertaining to some
other shipment, are not relevant and cannot be relied upon to allege that the
port of loading / country of origin is Iraq. Further, undisputedly, no
monetary benefit has accrued to the Appellant due to the alleged change in
the port of loading / country of origin and the shipper. In any event and
even assuming without admitting that the port of loading/ country of origin
of the imported goods is Iraq, it is submitted that the Appellant has not
applied for any preferential tariff treatment or any other benefit based on
the country of origin. In any event, it is submitted that the supplier, Aureole,
bought the loaded cargo/goods through Delta Shipping. The same is evident
from the fact that even in the other export documents, relied upon by the
Respondent, Aureole was mentioned as the Notify Party. In that case, there
is no mala fide intention in mentioning the name of Aureole as the name of
shipper / supplier.
34.3 In view of the above, it is submitted that there is no misdeclaration in
of either the port of loading/ country of origin or the shipper.
The assessable value of the imported goods is correct and cannot be rejected
based on an ad-hoc value.

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35. It is submitted that the assessable value of the imported goods is
correctly disclosed based on platts publication and, in any event, the same
cannot be rejected based on an ad-hoc value. In view of the submissions
made above, it is amply clear that the imported goods are correctly
disclosed as Naphtha and cannot be considered as NGL. It is submitted that
the valuation adopted by the Appellant in respect of the imported Naphtha is
correct and, admittedly no allegation is made regarding the correctness of
the said valuation.

35.1 The case of the department pertaining to the change in valuation flows
from the allegation that the imported goods are NGL and not Naphtha. Even
assuming without admitting that the imported goods are NGL and not
Naphtha, it is submitted that the valuation adopted in the show cause notice
under reply based on the prices purported to be taken from the website
"globalpetrolprices.com" is arbitrary and unreasonable. It is noteworthy that
the prices on the website, "globalpetrolprices.com", are averages of the
prices collected (without having assessed the local market conditions) from
different parts of the world and also, not real-time, thus, are unreliable
having inconsistencies/inaccuracies and due to fluctuating market conditions
and reporting lags (i.e., there is a delay between when the prices are
collected and when they are published online).
35.2 It is submitted that the ad-hoc reliance placed on the prices displayed
on the said website, without any detailed examination of the product and the
applicability of such prices to the imported goods is erroneous and vitiated in
law. In Union of India v. Garware Nylons Ltd. [1996 (87) ELT 12 (SC), the
Hon'ble Supreme Court was pleased to hold thus:
15. In our view, the conclusion reached by the High Court is fully in accord with
the decisions of this Court and the same is justified in law. The burden of proof
is on the taxing authorities to show that the particular case or item in question,
is taxable in the manner claimed by them. Mare assertion in that regard is of
no avail. It has been held by this Court that there should be material to enter
appropriate finding in that regard and the material may be either oral or
documentary.

35.3 In the present case, the Respondent has failed to discharge the
burden of proof. Classifying the goods as NGL; rejecting the BIS-compliant
test reports from Geo Chem and IIP; and placing the reliance on speculative
digital communications and third-party website's unverified prices all lack
the evidentiary rigor mandated by law. The Show Cause Notice proceeded on
assumptions and selective reliance, without placing on record any cogent

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material documentary or technical that would justify the conclusions drawn.
As held in Garware Nylons, such an approach is legally unsustainable and
must be set aside. It is submitted that by relying upon the prices displayed
on the said website without due examination of the same, the department
has failed to discharge the burden of proof. In any event, from a bare
perusal of the screenshot of the said website annexed as an RUD to the
show cause notice under reply, it is clear that the said gasoline price
pertains to High Octane - 95 Gasoline.
35.4 It may please be noted that NGL servea raw materials for various
products, including LPG, synthetic rubber, solvents, and importantly, as
blending components to create gasoline whereas High Octane-95 Gasoline is
a high-performance, specific type of motor fuel designed for a higher
Research Octane Number (RON) (95 RON) offering better engine
performance, fuel economy, and cleaner combustion. Therefore, both the
products, High Octane-95 Gasoline and NOL. are completely different
products, thus, considering prices of High Octane-95 Gasoline instead of NGL
is totally flawed and vitiated in law. It is submitted that even assuming
without admitting that the imported goods are NGL, the revaluation ought to
have been done by considering prices of NGL and not the price of High
Octane Gasoline. 95
35.5 In the present case, the show cause notice is completely silent on the
octane level of the imported goods. No investigation and no examination
have been made of this aspect. Even assuming without admitting that the
imported goods are NGL, it is respectfully submitted that the goods are
chemically and commercially closer to Naphtha than to high-octane Gasoline.
Naphtha is a low-octane petrochemical feedstock, typically used in the
production of plastics, solvents, and reformulated fuels. In contrast, 95
Octane Gasoline is a highly refined automotive fuel, enriched with additives
and designed for internal combustion engines.
35.6 The reliance on retail-grade 95 Octane Gasoline prices, such as those
published on globalpetrolprices.com, is misplaced and misleading. These
prices reflect consumer-grade fuel sold at petrol stations, Inclusive of excise
duties, blending costs, and retail margins. Naphtha, by contrast, is traded as
a bulk industrial commodity, with pricing governed by FOB contracts,
feedstock benchmarks, and refinery gate values. Therefore, even if the
classification were to lean toward NGL, the valuation must be based on
comparable low-octane petrochemical grades, not on high-octane retail
fuels. Using inflated gasoline benchmarks distorts the customs valuation and

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violates the principles laid down under Section 14 of the Customs Act, 1962
and the Customs Valuation Rules, 2007, which mandate valuation based on
transaction value or comparable commercial substitutes. Thus, it is
submitted that the said high octane prices cannot be relied upon for the
correct valuation of the imported goods. It is respectfully submitted that the
reliance placed on high-octane gasoline prices such as those for 95 Octane
retail-grade fuel - is immaterial and improper for the purpose of valuing the
imported goods. The imported product, even if assumed to be NGL, is
chemically and commercially distinct from high-octane gasoline, which is a
refined automotive fuel subject to retail taxation, blending costs, and
distribution margins. In contrast, NGL and Naphtha are bulk petrochemical
feedstocks, traded on industrial terms and priced based on FOB contracts
and refinery gate benchmarks. Valuation under Section 14 of the Customs
Act, 1962 and the Customs Valuation (Determination of Value of Imported
Goods) Rules, 2007 mandates that the value must reflect the transaction
value or, where unavailable, be derived from comparable commercial
substitutes not unrelated consumer-grade products.
35.7 Thus, it is submitted that the said high octane prices cannot be relied
upon for the correct valuation of the imported goods. Further, it is pertinent
to note that the department has sought to adopt the price of NGL as on
01.02.2021 as applicable in India. It is submitted that the subject goods
having been imported from as alleged), the prices Oman (or in any case
from Iran/Iraq applicable in the country of origin / port of loading must be
applied for determining the value of the imported goods.
35.8 In view of the above, it is submitted that the assessable value of the
imported goods is correctly disclosed and, in any event, the same cannot be
rejected based on an ad-hoc value sought adopted by the Respondent. It is
submitted that the Respondent has erred in not considering the above
submissions and recording any findings in respect thereof.
In any event, the value of the imported goods cannot be re-determined by
substitution of the declared value with an ad-hoc value without the sequential
application of Rules.
36. Without prejudice to the above, it is submitted that in the present case,
the value cannot be directly re-determined without due application of Rule
12 of the Customs Valuation (Determination of Value of Imported Goods)
Rules, 2007 ("Valuation Rules").

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36.1 From a perusal of the show cause notice and the impugned order, it is
clear that the department proposed to reject the declared value of the
imported goods and thereafter directly re-determine based on prices of
gasoline appearing on 'globalpetrolprices.com'. It is settled law that once the
declared value has been rejected under the provisions of Rule 12 of the
Valuation Rules, the re-determination can only be done sequentially under
Rule 4 to Rule 9 of the Valuation Rules, and not under Rule 3(1) of the
Valuation Rules. The provision for sequential application of Rules 4 to 9,
pursuant to rejection of value under Rule 12, is enshrined under Rule
12(2)(i) of the Valuation Rules itself.
36.2 Further, reliance is placed on the following judgments:
(1) Century Metal Recycling Pvt. Ltd. v. Union of India, 2019 (367) ELT
3 (SC)
(ii) Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai, 2000
(122) ELT 321 (SC)
(iii) Innobiz Electronics Pvt. Ltd. v. Commissioner of Customs,
Tuticorin, 2017 (352) ELT 82 (Tri.- Chennai)
(iv) PNP Polytex Pvt. Ltd. v. Commissioner of Cus., Nhava Sheva, 2015
(318) ELT 649 (Tri.- Mumbai)

36.3 In the present case, it appears that the Respondent has rejected the
declared value purportedly under Rule 12 of the Valuation Rules. However,
thereafter, the Respondent has re-determined the value by directly, without
any discussion on the sequential application of Rules 4 to 9 of the Valuation
Rules. In any event, it is submitted that the proper office cannot substitute
the transaction value of the imports but can only re-determine the
assessable value through the sequential application of the valuation rules.
36.4 In M/s Universal Offset v. Commissioner of Customs (Export), New
Delhi [2024 (9) TMI 71 CESTAT NEW DELHI], this Hon'ble Tribunal has held
thus:
16. The FOB value is the value which the buyer agrees to pay to the seller as a
consideration for the goods without including the past of transportation and
transit insurance. C&F, on the other hand includes the FOB value the cost of
transportation up to the port of destination. CIF includes the FOB value the cost
of transportation the cost of transit insurance up to the port of destination.
International trade is done, among others, in all three forms. It is for the
buyers and the sellers to decide in what form the price will be sold, the
currency in which it is to be paid and the value for the goods. This transaction
value (either in FOB or CIF or C&F) is a product of negotiation between the
buyer and the seller. It is the consideration which the buyer pays to the seller
for the goods. This transaction value cannot be altered by anyone who is a
stranger to the contract including the customs officers. What the officers can

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determine under the Customs Valuation Rules is whether to accept the
transaction value as the value under the Customs Act to assess duty or to
reject it and determine the value following some other method prescribed in
the Valuation Rules. In other words, what the officer decides is the assessable
value of the goods under the Customs Act. In the normal course, the
transaction value is the assessable value. However, there are exceptions under
section 14 read with the Valuation Rules. The Valuation Rules indicate
conditions under which the proper officer can doubt the transaction value and
reject it. If the transaction value is rejected as the assessable value, then it has
to be determined under any of the other methods provided in the Valuation
Rules.
17. What needs to be noted is the customs officer does not and cannot alter
the transaction value, but can only reject the transaction value and re-
determine the assessable value through some other methods. An illustration
will make the distinction clear. "A", living in U.K., sells his luxury car to "B" in
India for GBP 1,000/-. The Customs Officer, finding this value too low and not
reflecting the true value of the car, rejects this transaction value and re-
determines the value of the car as GBP 10,000/-. Duty has to be paid as per
the re-determined assessable value of GBP 10,000/-. However, the transaction
value continues to be GBP 1,000/- and will not change. Therefore "B" has to
remit only GBP 1,000/- to "A" as consideration for the car as agreed to
between them. However, he will have to pay duty on the value determined, by
the proper officer ie. on GBP 10,000/-. This distinction is significant and applies
in almost every case of import and export. Besides the mutual obligations
between the buyer and the seller, the foreign exchange remittances or, as the
case may be, the obligation to receive remittance of foreign exchange under
the Foreign Exchange Management Act depends on the transaction value. In
this case, for instance, the transaction value agreed to between the buyer and
the seller is equivalent to Rs. 1,45,21,020/-in U.S.D. If the goods are exported,
Universal will have to receive a remittance of equivalent amount within the
stipulated time. Even if the customs officer re-determines the value as Rs.
2,75,400/- even if such re-determination is upheld in appeals, the obligation of
the overseas buyer to remit an amount equivalent to Rs. 1,45,21,020/- does
not reduce. It is a product of negotiation between the buyer and the seller. The
responsibility of the exporter to get remittance of this amount under FEMA also
does not get diminished because the officer re-determines a different value as
the assessable value.



36.5 Thus, it is submitted that even in the present case, the Respondent it
cannot substitute the transaction value of the imported goods with the prices
of gasoline appearing on a website. In view of the above, it is submitted that
the impugned order, to the extent it re-determines the value of the imported
goods, iş liable to be quashed and set aside on this ground itself. The
statements of the various persons cannot be relied upon since the procedure
prescribed under Section 1388 of the Act has not been followed and no
cross-examination has been permitted
36.6 It is further submitted that the statements of various persons cannot
be relied upon without following the mandatory procedure prescribed under
Section 138B of the Act. Section 138B stipulates that a statement made by a
person before a Customs officer shall be relevant for the purpose of proving
the truth of the facts which it contains only when the person who made the
statement is examined as a witness and the statement is admitted in

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evidence. Further, Section 138B(2) states that the above procedure shall
apply to all proceedings under the Act.
37. In the present case, the show cause notice and the impugned order
refers to and relies upon the statements of various persons. However, it is
pertinent to note that the said statements have been recorded under Section
108 of the Act. Accordingly, it is submitted that if reliance is sought to be
placed on the said statements, Section 138B of the Act mandates that the
relevant persons must be examined as a witness. In the present case,
however, none of the above persons have been examined as a witness, nor
is there any finding recorded as to why the statements should be admitted in
evidence, prior to placing reliance on the statements. The strict compliance
of the procedure prescribed in Section 138B of the Act (and the identical
Section 9D of the Central Excise Act, 1944) to adjudication proceedings has
also been judicially recognized and no statements can be relied upon in case
of failure to comply with Section 138B. Some of the judicial precedents are
referred to herein below:
(i) Ambika International v. Union of India, 2018 (361) ELT 90 (P&H)
(ii) Hi Tech Abrasives Ltd. v. Commissioner of C. Ex. & Cus., Raipur,
2018 (362) ELT 961 (Chattisgarh)
(iii) Meenakshi Food Products (P) Ltd. v. CCE & ST, Ahmedabad-II,
2019 (370) ELT 1330 (Tri. Ahmd.)
(iv) Commissioner of Central Excise, Delhi-I v. Kuber Tobacco India
Ltd., 2016 (338) ELT 113 (Tri.- Del.)
37.1 In any event, it is submitted that the statements cannot be relied upon
the without providing to the Appellant an opportunity to cross-examine the
relevant person.
In Commissioner of Central Excise, Meerut-I v. Parmarth Iron Pvt. Ltd.
[2010 (260) ELT 514 (All.)], the Hon'ble Allahabad High Court has held thus:
16. We, therefore, have no hesitation in holding, that there is no requirement
in the Act or Rules, nor do the principles of natural justice and fair play
require that the witnesses whose statements were recorded and relied upon
to issue the show cause notice, are liable to be examined at that stage. If the
Revenue choose not to examine any witnesses in adjudication, their
statements cannot be considered as evidence. However, if the Revenue
choose to rely on the statements, then in that event, the persons whose
statements are relied upon have to be made available for cross-examination
for the evidence or statement to be considered.

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37.2 In view of the above, it is submitted that the heavy reliance placed on
the statements by the Respondent is violative of Section 1388 of the Act.
38. From a bare perusal of the impugned order, it is manifest that the
allegations made against the Appellant are primarily based on the said
erroneous reliance on the statements and thus, it is submitted that the
impugned order is liable to be set aside.
In any event, the imported Naphtha is not liable for confiscation under Section 111
of the Act.
39. It is submitted that the imported goods are not liable for confiscation
under Sections 111(d) or 111(m) or 111(0) or 111(p) of the Act. The
relevant extract of Section 111 of the Act has been reproduced below:
SECTION 111. Confiscation of improperly imported goods, etc.-
The following goods brought from a place outside India shall be liable to
confiscation:-
(d) any goods which are imported or attempted to be imported or are
brought within the Indian customs waters for the purpose of being
imported, contrary to any prohibition imposed by or under this Act or
any other law for the time being in force;
(m) any goods which do not correspond in respect of value or in any
other particular with the entry made under this Act or in the case of
baggage with the declaration made under section 77 in respect thereof,
or in the case of goods under transshipment, with the declaration for
transshipment referred to in the proviso to sub-section (1) of section
54;
(o) any goods exempted, subject to any condition, from duty or any
prohibition in respect of the import thereof under this Act or any other
law for the time being in force, in respect of which the condition is not
observed unless the non-observance of the condition was sanctioned by
the proper officer,
(p) any notified goods in relation to which any provisions of Chapter IVA
or of any rule made under this Act for carrying out the purposes of that
Chapter have been contravened.

39.1 It is submitted that the imported goods are not prohibited under the
Act or under any other law for the time being in force and thus, are not
liable to be confiscated under Section 111(d) of the Act.
39.2 In view of the above submissions, it is amply clear that the imported
goods are Naphtha and not NGL. It is submitted that the import of Naphtha
is not prohibited under the Act or under any other lave for the time being in
force. It is submitted that the allegations pertaining to violations of the FTP
and the Petroleum Rules, 1976 are incorrect inasmuch as the referred
provisions of the two laws are applicable only to NGL and not to the
imported goods, being Naphtha. It is further submitted that there is no
misdeclaration as envisaged under Section 111(m) of the Act.

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39.3 Undisputedly, the Notice has not mis-declared the value of the
imported Naphtha in any of the documents submitted by it for the import.
The Appellant acted in good faith, relying on scientific reports and technical
literature. That there is no evidence of willful misdeclaration or intent to
evade duty. It is an undisputed fact that the penal consequences require
mens rea or negligence, which is absent in the present case. The case of the
department pertaining to change in valuation are based on the allegation
that the imported goods are NGL and not Naphtha.
39.4 In view of the above submissions, it is clear that the imported goods
are Naphtha and not NOL, and thus, it is submitted that no misdeclaration is
made in respect of the value of the imported goods. It is further submitted
that the Appellant has not mis-declared any other particulars in the Bills of
Entry.
39.5 As stated above, the Appellant has disclosed the correct particulars
with regard to the shipper as well as the country of origin / port of loading.
In any event, it is reiterated that the Appellant has not availed any benefit
under the Act or the FTP based on the country of origin of the imported
goods and thus, the goods are not liable for confiscation under Section
111(m) of the Act. In this regard, reliance is placed on the following
judgments:
(i) Agarwal Industrial Corporation Ltd. v. Commr. Of Cus., Mangalore, 2020
(373) ELT 280 (Tri.- Bang.)
(ii) Vijay Kumar Gandhi v. Commissioner of Cus., Visakhapatnam, 2003
(159) ELT 835 (Tri.- Bang.)
(iii) Jagmohan Jindal v. Collector of Customs, 1991 (55) ELT 122 (Tribunal)
39.6 Further, it is submitted that all the relevant particulars, including the
shipper and country of origin / port of loading, have been disclosed by the
Appellant in the Bills of Entry based on the documents shared with the
Appellant by the supplier. In any event, it is submitted that no condition,
either for exemption or prohibition, has been violated by the Appellant in the
present case as envisaged under Section 111(o) of the Act.
39.7 Undisputedly, no exemption has been claimed by the Appellant in the
present case and thus, no such condition is applicable to the imported
goods. Further, it is submitted that the imported goods, being Naphtha, are
not prohibited for import as well and not subject to any conditions for
import. It is submitted that the allegation that the imported goods are NGL

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and in terms of the FTP, only IOC can import the same, is completely
incorrect. In any event, it is submitted that the subject goods are not
illegally imported and thus, no confiscation can be made in terms of Section
111(p) of the Act. It is submitted that the imported goods are correctly
described and valued and appropriate customs duty has been discharged on
import of the same. Further, it is pertinent to note that this Hon'ble Tribunal
was pleased to permit re-export of the same. In view of the above, it is
submitted that the imported goods are not liable for confiscation under
Sections 111 of the Act.
In any event, no penalty can be imposed on the Noticee under Section 112 of the
Act
40. In any event, it is submitted that no penalty can be imposed under
Section 112(a) or 112(b) of the Act. Section 112(a) of the Act provides for
imposition of penalty on any person who does or omits to do any act in
relation to any goods, rendering the goods liable for confiscation under
Section 111 of the Act. Section 112(b) of the Act provides for imposition of
penalty on any person who acquires possession of or is in any way
concerned with goods that are liable for confiscation under Section 111 of
the Act.
40.1 In the present case, in view of the submissions made above, it is clear
that the imported goods are not liable for confiscation under Section 111 of
the Act. Thus, the question of imposition of penalty under Section 112(a) or
112(b) of the Act does not arise.
In any event, no penalty can be imposed on the Appellant under Section 114AA of the Act
41. In any event, it is submitted that no penalty can be imposed on the
Appellant under Section 114AA of the Act. Section 114AA of the Act reads
thus:
SECTION 114AA. Penalty for use of false and incorrect material.
If a person knowingly or intentionally makes, signs or uses, or causes to be
made, signed or used, any declaration, statement or document which is false
or incorrect in any material particular, in the transaction of any business for
the purposes of this Act, shall be liable to a penalty not exceeding five times
the value of goods.

41.1 It is submitted that the Appellant has not knowingly or intentionally
made, signed or used any declaration, statement or document which is false
or incorrect.

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41.2 From the above submissions, it is manifest that the imported goods
are Naphtha and are correctly valued. Further, the appropriate amount of
customs duty has been correctly discharged by the Appellant at the time of
import.
41.3 It is submitted that the case of the department regarding
misdeclaration of material particulars in the Bills of Entry and other
documents for the purpose of illegal import are baseless and completely
incorrect. In any event, it is a settled position in law that no penalty can be
imposed where there is no demand. (Coolade Beverages Limited (2004) 172
ELT 451 (All.)). It is submitted that the erroneous and misconceived
conclusion was drawn by the department on the basis of the incomplete
tests of the imported goods which were conducted only for a few parameters
as against the specifically prescribed parameters and without fully
appreciating and considering the statements made and documents
submitted by the Appellant. Reliance is placed on the judgement dated
28.03.2025 in the matter of Gastrade International vs. Commissioner of
Customs, Kandla [2025 INSC 411]. The relevant paragraphs of the said
judgement are reproduced herein below:
Paragraph 86. For the reasons discussed above, as the results of the test are
inconclusive, so being the opinion of the expert, we are unable to agree with
the conclusion of the High Court. Under the circumstances, the option before
this Court is, either to send the imported product again for further tests and
obtain the expert opinion at least to the effect that the imported product is
'most akin' to HSD even if it does not fulfil all the parameters under IS
1460:2005 or give a benefit of doubt to the appellants and close the
proceedings against the appellants by quashing the impugned orders, since
the Page 74 of 76 Revenue/Customs Authority cannot take action against the
appellants based on inconclusive evidence.
Paragraph 87. As far as the first option is concerned, as noted above, though
the questioned product was sent for laboratory test in three premier
laboratories, these laboratories did not give conclusive finding that the
product is indeed HSD and the expert also could not give a definitive opinion.
Further after such a long passage of time we are doubtful whether the oil in
question would still retain many of the characteristics and properties which
were present at the time of import for an effective testing as aforesaid.
Hence, we do not consider it appropriate to direct further testing of the
imported product/oil at this point of time and such a retest may be rendered a
futile exercise. In our opinion, in the facts and circumstances, it would be
more appropriate to give the benefit of doubt to the appellants because of the
inconclusive evidence, rather than directing for a fresh testing and seeking
fresh expert opinion, as a one-time measure.

42. In further support of the Appellant's submission that penalty under
Section 114AA is unwarranted, reference may be made to the constitutional
principle laid down in Union of India v. Garware Nylons Ltd. (1996 (87) ELT
12 (SC)), which held that the burden of proof lies on the Revenue to

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establish misdeclaration with substantive material mere assertion is
insufficient.
42.1 In the present case, the Department has failed to produce any credible
evidence documentary or technical to establish intentional misdeclaration or
falsity in material particulars. Reliance on speculative WhatsApp chats and
unrelated pricing website falls short of the evidentiary rigor required under
the law. Accordingly, the invocation of Section 114AA is not only
procedurally flawed but constitutionally unsound.
42.2 In view of the above comparative analysis and judicial precedents, the
invocation of Section 114AA in the present case is factually unfounded and
legally untenable. The Appellant has acted in good faith, relying on credible
technical reports and discharging duty as per declared classification. The
Department has failed to establish any deliberate misstatement or material
falsity, nor has it produced admissible evidence to support its claim.
Accordingly, the imposition of penalty under Section 114AA is liable to be set
aside.
In any event, no penalty can be imposed on the Appellant under Section 117 of the
Act
43. In any event, it is submitted that no penalty can be imposed on the
Appellant under Section 117 of the Act. Section 117 of the Act reads as
follows:
SECTION 117. Penalties for contravention, etc., not expressly mentioned.
Any person who contravenes any provision of this Act or abets any such contravention or
who fails to comply with any provision of this Act with which it was his duty to comply,
where no express penalty is elsewhere provided for such contravention or failure, shall be
liable to a penalty not exceeding four lakh rupees.
44. It is submitted that the Respondent has erred in holding that the
Appellant has committed acts of non-cooperation and omission in furnishing
data and records as summoned under Section 108 of the Act. It is submitted
that the Appellant has co-operated with the customs authorities during the
course of the investigation and furnished all the relevant information.
44.1 Thus, it is submitted that no penalty can be imposed on the Appellant
under Section 117 of the Act. In any event, all the summons/notices issued
by the investigating officers have been appropriately responded to and thus,
no criminal offence has been committed by the Appellant or
directors/employees its. In any event, it is submitted that all the
summons/notices issued by the investigating officers have been

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appropriately responded to and thus, no criminal offence has been
committed by the Appellant or its directors/employees.
44.2 It is submitted that Mr. Saurabh Rajput a person summoned is
no longer in the service of the Appellant. Further, the Appellant has not
received any Summons/Notice from the Court and/or the Complainant till
date in the above criminal complaints purported to have been filed. In any
event, it is submitted that the above Directors/Officers have appeared before
the investigating officers in response to the summons issued. The Appellant
and its Directors/Officers have co-operated during the course of the
investigation. The response from the respective Director/Officer was sent in
reply to the summons.
44.3 From the foregoing facts, it is a crystal clear that the said
Directors/Officers have not committed any offence as alleged in the subject
SCN or otherwise. The Appellant craves leave to produce, refer and rely on
the above notices and responses at the time of hearing-
In any event, the imposition of fine in lieu of confiscation is ex-facie
untenable in law.
45. Without prejudice and in any event, the imposition of fine in lieu of
confiscation is ex-facie without jurisdiction and without the authority of law
having regard to admitted fact that the goods are not available for
confiscation. It is a settled position in law that when the goods are not
available for confiscation, no fine can be imposed for redemption thereof. In
this regard, reliance is placed on the judgment of the Hon'ble Bombay High
Court in Commissioner of Customs (Import), Mumbai v.Finesse Creation Ine.
[2009 (248) ELT 122 (Bom.ll. wherein the Hon'ble Bombay High Court was
pleased to hold thus:
5. In our opinion, the concept of redemption fine arises in the event that goods
are available and are to be redeemed. If the goods are not available, there is
no question of redemption of the goods. Under Section 125 a power is
conferred on the Customs Authorities in case import of goods becoming
prohibited on account of breach of the provisions of the Act, rules or
notification, to order confiscation of the goods with a discretion in the
authorities on passing the order of confiscation, to release the goods on
payment of redemption fine. Such an order can only be passed if the goods are
available, for redemption. The question of confiscating the goods would not
arise if there are no goods available for confiscation nor consequently
redemption. Once goods cannot be redeemed no fine can be imposed. The fine
is in the nature of computation to the state for the wrong done by the
importer/exporter.

45.1 The above judgment has been affirmed by the Hon'ble Supreme Court
as reported at 2010 (255) ELT A120 (SC).

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45.2 Further, the Hon'ble Bombay High Court in Commissioner of Customs
(Import) Mumbai Versus Air India Ltd [2009 (8) TMI 115 BOMBAY HIGH
COURT), has held as thus:
5.... the concept of redemption fine arises in the event the goods are available
and are to be redeemed. If the goods are not available, there is no question of
redemption of the goods. Under Section 125 a power is conferred on the
Customs Authorities in case import of goods becoming prohibited on account of
breach of the provisions of the Act, rules or notification, to order confiscation of
the goods with a discretion in the authorities on passing the order of
confiscation, to release the goods on payment of redemption fine. Such an
order can only be passed if the goods are available, for redemption. The
question of confiscating the goods would not arise if there are no goods
available for confiscation nor consequently redemption. Once goods cannot be
redeemed no fine can be imposed. The fine is in the nature of computation to
the state for the wrong done by the importer/exporter.

45.3 In the present case as well, the imported goods have already been
cleared for re-export and are not available for confiscation. Further, as
submitted above, even otherwise, in the present case, the imported goods
are not liable for confiscation under Section 111 of the Act. Thus, it is
submitted that no redemption fine can be imposed on the Appellant under
Section 125 of the Act.
Other Submissions
46. It is submitted that in the present case, the investigation appears to
have been carried out in a haphazard manner inasmuch as during the course
of the investigation, initially it was alleged that the Imported goods are
Gasoline whereas subsequently it is being alleged that the imported goods
are Natural Gasoline Liquid. It is submitted that Gasoline and Natural
Gasoline are different products having different chemical composition and
characteristics. Further, it is submitted that the assessable value of the
imported goods which was mentioned in the seizure memo dated
26.02.2021 and which claimed to be considered as per the market value has
no correlation with the imported goods and appear to have been entered in
an ad hoc and arbitrary manner.
46.1 In any event, it is submitted that there is an inordinate and
unexplained delay in the issuance of the captioned show cause notice and
that is illegal as being violative of the provisions the Customs Act. From a
perusal of the records, it is clear that the investigation in respect of the
imported goods, including the re-testing directed by the Hon'ble Gujarat
High Court, was completed around May 2021 itself. However, the captioned
show cause notice is issued on 28.03.2023, after a lapse of almost two

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years, without any reasonable cause and that makes the show cause notice
liable to be dismissed on this count itself.
Department submissions:
47. The department in contra submitted its own factual narrative on
various grounds for rebuttal. The findings in the impugned order reiterated:
47.1 M/s. HML had imported 20110.77 MT goods in vessel MT Tuna
declaring the same as Naphtha vide 07 Bills of Entry all dated 06.02.2021 filed at
Customs House, Kandla. They had not specified the category of Naphtha (Light,
Heavy or Full Range) in the Bills of Entry but declared the classification of the
same under CTH No. 27101229 which is linked with Full Range Naphtha. This
anomaly in the description of subject goods was also noticed in the contract with
so called supplier M/s. Aureole Trading LLC, Oman and Letter of Credit gathered
during investigation as M/s. HML mentioned description of goods as Light Naphtha
[CTH No. 27101221] also. However, on testing of samples drawn at KANDLA, the
Custom House Laboratory Kandla vide Test Report dated 15.02.2021 read with
clarification dated 19.02.2021 has opined that the subject goods were Natural
Gasoline Liquid. Accordingly, the subject goods imported by M/s. HML per MT
Tuna were seized under Customs Act, 1962 on 26.02.2021. M/s. HML challenged
the seizure as well as the Test Report and clarification of the Custom House
Laboratory Kandla before Hon"ble Gujarat High Court. On orders of Hon"ble
Gujarat Court dated 05.04.2021, fresh samples from the subject goods were
drawn and sent for re-testing at CRCL, New Delhi. The CRCL New Delhi vide re-
test report dated 28.05.2021 opined that the subject goods were Natural Gasoline
Liquid. Thus, it appears that the subject goods were mis-declared and mis-
classified with respect to description of goods as the same being NGL was
classifiable under CTH No. 27101290 of Customs Tariff and import of goods
classifiable under CTH No. 27101290 including NGL was restricted to STEs only as
per Condition 5 of import policy for Ch. 27.The Whatsapp Chat conversations and
other evidences gathered during investigation also indicate that M/s. HML used to
manipulate the nature/specifications of goods by way of blending/mixing/altering
the description and classification /HS Code in the documents are also manipulated
fraudulently by specifically insisting to mention the product as „Naphtha" in all
documents.
47.2 The country of origin of subject goods was declared by M/s. HML as
Oman and port of loading was declared as Sohar, Oman. However, from the
Whatsapp Chat conversations and other evidences gathered during
investigation such as Certificate of Origin dated 24.01.2021, Commercial

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Invoice no. TN-100081-21 dated 24.01.2021 etc., it appears that the vessel
MT Tuna did not even berth at Sohar, Oman and the country of origin of
subject goods was Iraq. From the Bill of Lading No. TN-100019-21 dated
24.01.2021, Certificate of Origin dated 24.01.2021, Cargo Manifest dated
24.01.2021, Commercial Invoice no. TN-100081-21 dated 24.01.2021 and
Delivery Order No. 2021-007732 dated 28.01.2021 etc and whatsapp chat
conversations retrieved during investigation, it appears that the port of
loading was Basrah, Iraq. Shri Nitin Kumar Didwania, Managing Director of
M/s. HML also admitted the mis-declaration of Country of Origin in his
statement dated 12.04.2021.It further appears that in order to avoid the
country of origin/route of journey and other violations of statutory
provisions, the vessel MT Tuna came to India after deliberately switching off
the Automatic Identification System (AIS).
47.3 The shipper/supplier of subject goods has been declared as M/s. Delta
Shipping & Trading LLC, Sohar, Omanin the corresponding Bills of Lading and
M/s. Aureole Trading LLC, UAE in the Bills of Entry filed with Customs Authorities
at Kandla. However, investigation revealed that both the said names of
shipper/supplier are concocted and mentioned in the documents during hatching
of conspiracy as apparent from the Whatsapp Chat conversations held among the
key persons of M/s. HML and their other associates. In the Whatsapp Chat
conversations, it was discussed either to use Iraqi documents for clearance of
goods from Customs Kandla or to use name of M/s. Aureole Trading LLC, UAE in
the import documents. M/s. HML never disclosed such Iraqi documents with
Customs, Kandla and the investigating officers of DRI. However, certain
documents such as Bill of Lading No. TN- 100019-21 dated 24.01.2021,
Certificate of Origin dated 24.01.2021, Cargo Manifest dated 24.01.2021,
Commercial Invoice no. TN-100081-21 dated 24.01.2021 and Delivery Order No.
2021-007732 dated 28.01.2021 etc retrieved from the mobile phone of Shri Nitin
Kumar Didwania, Managing Director of M/s. HML and Shri Satish Gaichor,
indicate that M/s. HML imported subject goods from Iraq per vessel MT Tuna
using name of M/s. Delta Shipping & Trading LLC, Sohar, Oman and M/s. Aureole
Trading LLC, UAE. The Whatsapp Chat conversations retrieved during
investigation also indicate that M/s. HML in connivance of other associates used
to blend/alter/manipulate the nature/specifications of subject goods. Finally, the
goods arrived at Kandla and discharged from the vessel MT Tuna were Natural
Gasoline Liquid. Thus, it appears that M/s. HML have mis-declared the name of
shipper/supplier in the Bills of Entry filed by them at CH, Kandla for clearance of
subject goods.

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47.4 The received quantity of subject goods provided by Shri Bharat Goswami,
Terminal Manager, FSWAI in Litres is 31183563 Litres (RUD No. 52). Considering
the market rate of Gasoline at Rs. 88.92 per litre as on 01.02.2021 as per website
globalpetrolprces.com , the market value of received quantity 19990.541 MT i.e.
31183563 Litres (out of declared qty. 20110.77 MT) subject goods is calculated as
approximately Rs. 278,95,19,113/-(RUD No. 53). Whereas,M/s. HML has declared
the assessable value in the Bills of Entry as Rs. 79,63,76,540/- only which is much
lesser even after further value additions on account of customs duty, other taxes
and other expenses.
47.5 From above, it appears that the subject goods imported by M/s. HML per
vessel MT Tuna were mis-declared with respect to description, value, country of
origin, port of loading, shipper/supplier details etc. and illegally imported by way of
fraud, collusion, willful mis-statement and suppression of facts. The facts and major
evidences collected so far in this regard, are tabulated here:

Material
Particulars
Declared with Customs in
the Bs/E and supporting
documents
As per investigation Evidences in support
of outcome of
investigation
Description Naphtha (No specific category
Lighter Heavy or Full Range,
declared)
NGL Test Report dated
15.02.2021 read with
clarification dated
19.02.2021 of Customs
House Laboratory,
Kandla, Re-Test Report
dated 28.05.2021 pf
CRCL, New Delhi and
Whatsapp Chat
conversations indicating
the manipulation in the
nature of goods. The
statement of Shri Nitin
Kumar Didwania in which
he deposed that the
subject goods imported
by them seemed to be
extracted from Natural
Gas.
CTH 27101229 (i.e. for Full Range
Naphtha)
27101290 Customs Tariff
Value Rs. 79,63,76,540/- (declared
assessable value)
Rs. 278,95,19,113/-
(approximate market
value)
Website
Globalpetrolpriecs.com
Country origin of Oman Iraq Certificate of Origin dated
24.01.2021, Commercial
Invoice no. TN.100081-
21 dated24.01.2024,
statement of Shri Nitin
Kumar Didwania,
Port of Loading Sohar Basrah Bill of LadingNo.TN-
100019-21 dated
24.01.2021,Cargo
Manifest dated
24.01.2021,Commercial
Invoice no. TN100081-

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21 dated 24.01.2021
Shipper/cons
Ignor
Aureole Trading LLC (as per
Bs/E) Delta (as per Bs/E)
Jabal A1-Aswad company Bill of Lading No. TN-
100019-21 dated
24.01.2021
Manifest datd
24.01.2021, Certificate of
Origin dated 24.01.2021,
Commercial Invoice no .
TN-100081-21 dated
24.01.2021

As narrated in foregoing paras, M/s. HML re-exported the subject goods
on furnishing Bank Guarantee of Rs. 15 Crore (reduced amount Rs. 8 Crore)
in terms of Order dated 27.01.2022 of Honlible Gujarat High Court.
NATURE /DESCRIPION OF SUBJECT GOODS: -
48. Whereas, the subject import goods imported by M/s. HML have
been reported to be NGL by Customs House Laboratory, Kandla and
CRCL, New Delhi. NGL is defined as: -
48.1 From above discussed definitions of NGL, it transpires that
NGL/Natural Gas Liquid (NGL) is extracted from Natural Gas by
processing such as absorption, condensation, adsorption, cooling etc
48.2 As per U.S. Energy Information Administration (EIA), Natural
gasoline and Natural Gas Liquid (NGL) are defined as under: -
"Natural gasoline: A term used in the gas processing industry to refer to a
mixture of liquid hydrocarbons (mostly pentanes and heavier hydrocarbons)
extracted from natural g. It includes isopentane."
48.3 As per Hess Corporation's Safety Data Sheet of Natural Gasoline,
Natural Gasoline is a complex mixture of petroleum hydrocarbons separated
as a liquid from natural gas and/or natural gas liquids from which methane,
ethane, propane, butane, and possibly pentane have been extracted. It
consists of hydrocarbons with carbon numbers predominantly in the range
C to C . It is a liquid at atmospheric temperature and pressure. NGL was
5 8
defined in Supplementary Notes of Ch. 27 of ITC (HS), that the subject
products were covered under the definition of NGL that "NGL is a low-
boiling liquid petroleum product extracted from Natural Gas.
48.4 In the instant case, on being specifically asked in the statement
dated 12.04.2021 of Shri Nitin Kumar Didwania, Managing Director of M/s.
HML, he stated that the subject goods imported by them declaring as
Naphtha were seems to be extracted from Natural Gas. The re-test report

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dated 28.05.2021 of CRCL, New Delhi suggests that the sample is mainly
composed of lighter mineral hydrocarbon oil more than 70% by weight and
conclusion of the re-test report reads as "The sample is a low boiling liquid
extracted from natural gas. It is „NGL"."
48.5 From the above definations and as specially elaborated suplementry note
of Chapter-27, test results of Customs House Laboratory, Kandla vide Test Report
dated 15.02.2021 read with clarification dated 19.02.2021 and conclusive
observations of chemical examiners of CRCL, New Delhi conveyed vide re-Test
Reports dated 28.05.2021 for the goods imported per vessel MT Tuna, it is
revealed that the subject product was a mixture of hydrocarbon, a low boiling
petroleum product and was extracted from Natural Gas. Thus, it appears that the
subject product imported by M/s. HML per vessels MT Tuna by declaring the
same as Naphtha was nothing but NGL (NGL).
48.6 The 04 Test Reports relied upon by M/s. HML in their support appear
to be not reliable and maintainable on the following grounds:-
(1) Test Report/Certificate of Quality of M/s. Muscut International
Shipping & Logistics LLP (MIS) said to be the load port report:- There
appear sufficient evidences which indicate that the port of loading declared by
M/s. HML i.e. Sohar, Oman is not correct. Similarly, the
shipper/supplier/consignee declared by M/s. HML as M/s. Aureole Trading LLC is
also merely on papers and were not the actual supplier/shipper/consigner. In
such a circumstances, when supplier/shipper/consigner are not correct, the so
called load port report of M/s. MIS lost its genuineness and the same cannot be
relied upon as a valid document.
(2) Test Report of M/s. TUV India Pvt. Ltd.:- As narrated in foregoing para
13 that M/s. HML relied on a Test Report of M/s. TUV India Pvt. Ltd. claiming
that the report was pertaining to samples drawn by their surveyor M/s. TUV
India Pvt. Ltd. and that the Test Report indicated the subject goods as Naphtha.
Whereas, the Test Report was not authentic and not relating to the subject
goods as no permission from Customs authorities was admittedly taken by M/s.
HML or M/s. TUV India Pvt. Ltd. for drawing of samples from the warehoused
goods. Thus, there appeared no evidential value for the Test Report of M/s. TUV
India Pvt. Ltd. referred by M/s. HML in support of their claim.
(3) Test Report of M/s. Geochem Laboratories Pvt. Ltd. :- M/s. HML vide
letter dated 16.04.2021 said to have sent the samples of subject goods to M/s.
Geo-Chem Laboratories Pvt. Ltd. and specified the subject of this request letter
dated 16.04.2021 as "testing of Naphtha samples" . They had influenced the

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laboratory by making wrong and vague submissions stating that "The goods
were declared as Naphtha and meant for manufacturer of Poly-Olefins and the
product is high paraffinic Naphthabut the Department has reservations on the
quality and wishes to revenfy the same. We request you to analyse the same
and certify that the goods confirm to Naphtha or otherwise and oblige". Thus, it
appears that M/s. HML had not only attempted to get biased report in their
favour but also,they suppressed the actual contention of Department and also
mis-represented the facts by stating that the Department has reservations on
the quality of Naphtha. Accordingly the test report based on such query
/requests cannot be relied upon and considered as evidence.
(4) Test Report of IIP, Dehradun:- As it appears from the similar request
letter dated 16.04.2021 of M/s. HML addressed to IIP Dehradun in which also
the importer had attempted to influence the laboratory by way of making wrong
and vague representation and succeeded to get biased report as apparent from
the termology used by IIP Dehradun about the testing as illustrated below:-
Project Title: - Studies on Sealed Naphtha Samples
Report No.: ASD 417:2021: Sealed sample of Naphtha (Marked as S5 with
Seal No. 715255), Location: MT Tuna with letter having subject "Testing of
sealed samples of naphtha dated 16.04.2021 Naphtha".
Introduction: Studies on Sealed Naphtha Samples from M/s. Hazel
Mercantile Limited, Mumbai
Standard Test Methods:Naphtha samples (Marked as S5 with Seal No.
715255, Location MT Tuna was analysed in our laboratory... )
Results: Naphtha Sample (Marked as S5 with Seal No. 715255
Location: MT Tuna) Report
Conclusion: "Based on the above observations/results, this sealed naphtha
sample (Marked as S5 with Seal No. 715255, Location MT Tuna) falls under
the light naphtha range."
49. As it narrated in foregoing paras that the the conclusions of said two
reports of M/s. Geo Chem Laboratories Pvt. Ltd. and IIP Dehradun were not
in conformity to each other and these reports were not based on the factual
parameters/queries to be tested from the NGL aspect based on the
misleading facts provided by M/s. HML and accordingly the same appear to
be non-maintainable.48.8. The subject goods imported by M/s. HML vide
aforesaid 07 Bills of Entry were not Naphtha as it was specifically asked
vide Test Memos No. 17/08/02/2021 dated 08.02.2021 and another Test
Memo bearing no. 44/2021 dated 15.04.2021 to Customs House
Laboratory, Kandla and CRCL, New Delhi respectively, as to whether the

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subject goods were "Naphtha", or otherwise? But after necessary testing
both the said laboratories did not confirm the subject goods as Naphtha.
Further, Shri Nitin Kumar Didwania in his statement dated 12.04.2021
indicated that the subject goods appeared to be extracted from Natural
Gas, which is indicating the subject goods were not Naphtha but the same
are NGL.
CLASSIFICATION OF SUBJECT IMPORT GOODS: -
50. In Order to decide the appropriate classification of subject goods, the
factual developments related to the statutory classification of various grades
of Naphtha vis-à-vis NGL in brief is herein below:
50.1 Vide Notification No. 36/2015-20, dtd. 17.01.2017, the Central
Government notified the ITC (HS) Classification of relevant period, under
Section 5 of the Foreign Trade (Development and Regulation) Act, 1992,
prescribing therein the scheme of classification of goods as well as the
provisions relating to Import/Export of each of such items. In terms of
said ITC (HS) Classification, 2017, the following are the relevant entries
under Chapter 27 of Schedule I pertaining to the Import Policy:

Exim Code Item Description Policy Policy conditions
2710 Petroleum Oils and

Oils obtained from
Bituminous minerals
(Other than Crude)
and preparations
not elsewhere
specified or
included, containing
y weight 70% or
more of petroleum
oils or of oils
obtained from
bituminous minerls.
These oils being the
basis constituents of
the prep;
271012 Light oils and

Predations:
Motor Spirit
27101211
State Trading
Import as per
to
Enterprises
Policy
27101219
conditions(5)

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27101220 NGL (NGL) State Trading
Import as per
Enterprise
Policy
conditions(5)
27101290 Other State Trading
Import as per
Enterprise
Policy
conditions(5)

50.2 From the above provisions of ITC (HS) Classification, it is apparent that
there was no specific entry for goods described as "Naphtha" of different grades.
There were no entries for the different grades of solvents, Aviation Gasoline etc.
Thus, Naphtha was then classifiable under other category i.e. 27101290. The
goods described as "NGL" as per the supplementary Note (b) provided in Chapter
27 of the ITC (HS), was falling at Exim Code 27101220, which was restricted for
import by the Policy as well as Policy condition provided against the said Exim
Code. As per the Policy, the item NGL falling under Exim Code 27101220 could be
imported by STEs and as per the Policy condition (5) prescribed in Chapter 27,
the import of said item is allowed through IOC subject to para 2.20 of the FTP,
except for the companies, who have been granted rights for marketing of
transportation fuels in terms of Ministry of P&G"s Resolution No. P-
23015/1/2001-MKT, dtd.08.03.2002 including HPCL, BPCL & IBP, who have been
marketing transportation fuels before the date.
50.3 Vide Notification No. 41/2015-2020, dtd.05.12.2017, the Central
Government had notified the revised Foreign Trade Policy 2015-20 under the
provisions of Section 5 of the Foreign Trade (Development and Regulation)
Act, 1992, which came into effect from 05.12.2017.
(a) In terms of Para 2.01 of the revised Foreign Trade Policy 2015-20, all
imports should be free, unless regulated by way of "prohibition", "restriction" or
"exclusive trading through State Trading Enterprises (STEs), as laid down in the
ITC (HS) Classification.
(b) It was clearly stipulated in Para 2.01 of the FTP 2015-20 that there are
some items, which are free for import/export, but subject to conditions
stipulated in other Acts or in law for the time being in force.
(c ) In Para 2.02 of the FTP 2015-20, it was clarified that the ITC (HS) is aligned
at 6-digit level with the international Harmonized System goods Nomenclature
maintained by World Customs Organization. However, it was further clarified in
said Para 2.02 of the FTP 2015-20that India maintains national Harmonized
System of goods at 8-digit level.

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(d) It was also prescribed vide Para 2.02 of the FTP 2015-20that the
import/export policy for all goods are indicated against each item in ITC
(HS).
(e) As provided vide Para 2.20 of the FTP 2015-20, any goods, import or export
of which is governed through exclusive or special privilege granted to STEs may
be imported or exported by the concerned STEs, as per the conditions specified in
the ITC (HS). Although it was also provided in Para 2.20 of the FTP 2015-20 that
the DGFT, may, grant an authorisation to any other person to import or export
any of the goods notified for exclusive trading through STEs.
50.4 Later on, w.e.f. 01.01.2020, the following changes were introduced in
respect of the entries available in Chapter 27 of the Customs Tariff:
271012 - Light Oils and Preparations
-- Naphtha
27101221 --- Light Naphtha
27101222 --- Heavy Naphtha
27101229 --- Full Range Naphtha
-- Solvent 60/80, solvent 50/120 and solvent
145/205 (petroleum hydrocarbon solvents) as
specified under standard IS 1745:
27101231 to
---
27101239
-- Motor gasoline confirming to standard IS 2796,
IS 17021 or IS 17076:
27101241 to
---
27101249
17101250 -- Aviation Gasoline conforming to standard IS
1604
27101290 -- Other


50.5 Thus, pursuant to the above changes, the specific entries were provided
for the goods of the categories of Naphtha, Solvent, Motor Gasoline and Aviation
Gasoline, which were earlier classified under residuary entry of "Others", whereas

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the entry of NGL earlier available vide CTH No. 27101220 was removed and
accordingly the NGL seemingly became classifiable under the residuary entry of
27101290.
50.6 The Central Government vide Notification No. 38/2015-20,
dtd.01.01.2020 issued under Section 5 of the Foreign Trade (Development and
Regulation) Act, 1992 read with Para 2.01 of the FTP 2015-20, introduced
following changes in respect of the entries available in Chapter 27 of the ITC
(HS): -
Exim Code Item Description Policy Policy conditons
271012 Light Oils and

Preparations
Naphtha
2710122
1
Light Naptha State trading Enter
Import as per Policy
prises
conditions (5) of
Chapter 27
2710122
2
Heavy Naptha State Trading
Import as per Policy
Enterprises
condition (5) of
Chapter 27
2710122
9
Full Range Naphtha State Trading Enter
Import as per Policy
prises
condition (5) of
Chapter 27
Solvent 60/80,
Solvent 50/120 and

solvent 145/205
(petroleum
hydrocarbon
solvents) as specified
under standard IS
1745:
2710123
1 to

State Trading Enter
Import as per Policy
prises
condition (5) of
Chapter 27
2710123
9
Motor gasoline

confirming to
standard IS 2796, IS
17021 or IS 17076
2710124
1 to
State trading
Import as per Policy
Enterprises
condition (5) of
2710124
9
Chapter 27
2710125
0
Aviation Gasoline
State trading
Import as per Policy
conforming to
standard IS 1604
Enterprises
condition (5) of
Chapter 27
2710129
0
Other State trading
Import as per Policy
Enterprises
condition (5) of
Chapter 27

50.7 In light of the above, it appears that Naphtha, by virtue of Policy condition
(1) of the Chapter 27, became importable through STEs. Further, the
commodities, which were falling under residuary entry of "Others" category were
became classifiable with the specific entries provided.
50.8 Later on, vide Notification No. 51/2015-20, dtd.18.03.2020,
issued under Section 3 of the Foreign Trade (Development and Regulation)

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Act, 1992 read with Para 1.02 and 2.01 of the FTP 2015-20, the Import
Policy for three categories of Naphtha and other items were amended. The
product Naphtha, which was earlier importable by the STEs only was made
freely importable. Apparently, there was no such change of Policy provided
for NGL falling under Exim Code 27101290.
50.9 Vide Notification No. 60/2015-20, dtd.31.03.2021 issued
under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read
with Para 1.02 of the FTP 2015-20, the Central Government extended the validity of
said FTP 2015-20 from 31.03.2021 to 30.09.2021.
50.10 It would be pertinent to mention here that even prior to the date
of deletion of said entry of CTH 27101220, the import of NGL was continuously
being allowed through State Trading Enterprises only as per Condition No. 5 of
Import Policy for Ch. 27. Further, from the evidences gathered during the
investigation, it seems that Shri Nitin Kumar Didwania, Managing Director of M/s.
HML and other key persons involved in the import of goods, hatched the conspiracy
of illegal import and were well aware about the actual nature of goods being
imported by M/s. HML. It further appears that the subject goods being described as
NGL being light mineral hydrocarbon oil having low boiling point and extracted from
Natural Gas as confirmed in the test reports, the same is appropriately classifiable
under „Others" category with Tariff Heading of CTH 27101290 in the existing tariff
and ITC (HS) Classification. However, during the course of investigation and vide
their submissions made before Hon'ble Gujarat High Court, M/s. HML
challenged the classification of subject goods under CTH 27101290. In this
regard, the following further submissions are pertinent to be added here.
50.11 The entries prescribed under sub-heading 271012 („Light Oils and
preparations") of Customs Tariff at the time of import of subject goods are as
under: -
2710 1221----------------------------------------------------Light naphtha
2710 1222 --------------------------------------- Heavy naphtha
2710 1229 --------------------------------------- Full range naphtha
2710 1231 -------------------------------------- Solvent 60/80,
2710 1232 -------------------------------------- Solvent 50/120
2710 1239 -------------------------------------- Solvent 145/205
2710 1241 ---------------------------------------Motor gasoline conforming to standard
IS 2796

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2710 1242 ----------------------------------------- E 20 fuel conforming to standard IS
17021
2710 1249 --------------------------------------- M15 fuel conforming to standard IS
17076
2710 1250 ---------------------------------- Aviation gasoline conforming to
standard IS 1604
2710 1290 --------------------------------- Other
50.12. In the instant case, after receipt of Test Report dated 15.02.2021 read
with clarification dated 19.02.2021 from the Customs Laboratory, Kandla (which
were further supported with Re-Test Report of CRCL, New Delhi), there is no
alternative to find matching category of specifically described goods, as provided
within the general sub-heading of 271012, hence the classification of goods as
various grades of Naphtha under the heading of 271012 as provided vide CTH
No./HS Code 27101221, 27101222, 27101229 is not available for the instant
goods. The goods were also not specified in the said Test Reports as Solvents,
Motor Gasoline or Aviation Gasoline also, so as to classify the same under
CTH/HS Code 27101231, 27101232, 27101239, 27101241, 27101242,
27101249 or 27101250. In that case, for the goods falling under heading
271012 has been left with only option of getting classification under the
residuary entry of "Others" under CTH/HS Code 27101290.
50.13 Thus, it appears that the subject goods NGL are appropriately
classifiable under CTH No. 27101290 of Customs Tariff.
50.14 Therefore, it seems that the goods imported by M/s. HML by declaring
the same as Naphtha (under CTH No. 27101229 i.e. for Full Range Naphtha) are
actually NGL and the same was appropriately classifiable under Customs Tariff
Heading 27101290 of Customs Tariff. The classification of subject goods adopted
by M/s. HML under the said CTH 27101229 is thus required to be rejected and
the same are required to be re-classified under its appropriate CTH 27101290.
51. Whereas on the facts and evidences discussed above and keeping in
view the related statutory provisions of Customs Act, 1962 and other
regulations, it appears that M/s. HML have suppressed the actual transaction
values and have declared lower value of the above-mentioned import
consignment. The assessable value declared by M/s. HML is not in
inconsonance with the current market price of similar goods being sold in
the Indian market. Since no data of the import of Natural Gasoline Liquidis
noticed, the prevailing rates of similar Goods (Gasoline)are considered for

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ascertaining the approximate market value of the subject goods on the
basis of rates of Gasoline available on website globalpetrolprces.com . The
received quantity of subject goods provided by Shri Bharat Goswami,
Terminal Manager, FSWAI in Litres is 31183563 Litres. Considering the
market rate of Gasoline at Rs. 88.92 per litre as on 01.02.2021 as per
website globalpetrolprces.com , the market value of received quantity
19990.541 MT i.e. 31183563 Litres (out of declared qty. 20110.77 MT)
subject goods is calculated as approximately Rs. 278,95,19,113/-.
Whereas, M/s. HML has declared the assessable value in the Bills of Entry
as Rs. 79,63,76,540/- only which is much lesser even after further value
additions on account of customs duty, other taxes and other expenses.
52. In view of the above a SCN dated 28.03.2023 was issued to M/s. Hazel
Mercantile and others.
SUMMARY OF FINDINGS/OBSERVATIONS OF HON'BLE COURT-
53. In this case, the petitioner (Hazel Mercantile Ltd.) challenged the
seizure of the imported consignment initially declared as Naphtha but
sought to be classified by Customs authorities as Natural Gasoline Liquid
(NGL). The petitioner relied on test reports from Geo Chem Laboratories
and the Indian Institute of Petroleum, both suggesting the product was
Naphtha or within its range. However, the Customs' CRCL (Central
Revenue Control Laboratory), an accredited government laboratory,
conducted a retest and conclusively opined in its report dated 28.05.2021
that the consignment was Natural Gasoline Liquid (NGL).
54. The Hon'ble High Court noted that the petitioner had independently
sent samples for retesting to private labs (Geo Chem and IIPM) without
consulting the statutory authorities, and had also suggested a detailed list of
66 testing parameters, later reduced to 49 and from Affidavit-in-Reply of
the respondents, the Court found that no parameters were suggested by the
importer for test of goods as NGL; and noted that CRCL unequivocally found
the goods to be NGL. The petitioner sought judicial intervention under
Article 226 to weigh the validity of these reports and quash the seizure. The
Hon'ble High Court declined while holding that it cannot undertake a
comparative analysis of disputed scientific reports or interfere in technical
classification matters during the course of an investigation. The Court
emphasized that such determinations fall within the domain of statutory
authorities and cannot be preemptively adjudicated in writ jurisdiction.

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EVIDENCE AVAILABLE ON RECORD-
55. Proceeding further, I refer to the following evidences available on
record as referred in the
Show cause notice.
(i) Statements
(ii) Chats
(iii)Test Reports
DISCUSSION ON EVIDENCE FROM STATEMENTS REFERRED IN THE SCN-
56. Statement of Shri Satish Gaichor, Associate General Manager Logistics
of M/s. HML was recorded on 25.02.2021 (RUD No. 12) wherein he,
interalia, stated that-
56.1. their Managing Director Shri Nitin Kumar Didwania and Marketing team
consisting of Shri Minesh Shah, Director, Shri Saurabh Rajput, Shri Sreyas
Choudhary were looking after overall activities relating to placing of orders
to overseas suppliers , negotiation of rates, making payments etc.;
56.2. As regards one Whatsapp Chat dated 11.02.2021 between Shri
Satish Gaichor and Shri Nitin Kumar Didwania, Managing Director of M/s.
HML, he stated that vide this Chat, he had asked their Managing Director
regarding supply of Gasoline and Gasoil by M/s. HML as per requirement
(specifications) from the buyers; that their Managing Director asked him
for report/specifications. On being asked, Shri Satish Gaichor, stated that
it was not remembered to him whether any further development took
place in this regard and whether the said party had supplied them the
report/specifications of Gasoline and Gasoil. He added that the details of
concerned buyer and said attached specifications, were also not readily
remembered /available with him.
56.3 In the Whatsapp printouts taken by Shri Satish Gaichor from his
mobile phone, he told that some conversations were held by him with some
brokers namely Shri Shyam Tiwari, CAFS (Coal & Freight Services),
Ahmedabad, Shri Sreejith, Dubai, Nikhil of Braemer/La Mer, Shri Ranganatha
Reshamwala, Dubai etc and Shri Ashok Desai, Head of Department-Logistics
of M/s. HML; that he did not have complete address, email Id of any of these
brokers and assured to provide the same. He further stated that these

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brokers and Shri Ashok Desai had discussed with him through these
Whatsapp chat messages regarding supply of Gasoline and Gasoil and last
cargos etc. (RUA No. 2)
57. Shri Nitin Kumar Didwania, Managing Director, M/s. HML during his
statement, interalia, stated that-
57.1. when apprised that as per Bills of Lading bearing no. 01 to 07 all dated
02.02.2021, for import of 20110.77 MT subject goods in vessel MT Tuna, the
shipper was mentioned as M/s. Delta Shipping & Trading LLC, Sohar, Oman
whereas in the concerned commercial Invoice/Packing List, the shipper was
mentioned as M/s. Aureole Trading LLC, UAE. On being asked to explain, Shri
Nitin Kumar Didwania stated that their supplier for 20110.77 MT subject goods
in vessel MT Tuna was M/s. Aureole Trading LLC, UAE, accordingly in concerned
commercial Invoice/Packing List, the shipper was mentioned as M/s. Aureole
Trading LLC, UAE. He expressed that it was possible that M/s. Aureole Trading
LLC, UAE had arranged the said goods through M/s. Delta Shipping & Trading
LLC, Sohar, Oman, accordingly, the Bills of Lading were containing shipper
details as M/s. Delta Shipping & Trading LLC, Sohar, Oman.
57.2. when shown statement dated 25.02.2021 of Shri Satish Gaichor,
Associate General Manager-Logistics of M/s. HML and on being asked to
comment regarding correctness of facts stated by him, Shri Nitin Kumar
Didwania stated that the facts relating to him/M/s. HML mentioned in the
statement were true. As regards the Whatsapp Chat dated 11.02.2021 between
Shri Satish Gaichor and Shri Nitin Kumar Didwania regarding supply of Gasoline
and Gasoil by M/s. HML as per requirement (specifications) from the buyers, Shri
Nitin Kumar Didwania stated that there are several business activities Shri Satish
Gaichor was doing as he was looking after logistic work, and he (Shri Nitin
Kumar Didwania) had asked the report like parameters of Gasoline/Naphtha
which the buyers intended to buy/sell. On being further asked who were the
buyers requested for supply of Gasoline in that case and from whom/where
they/M/s. HML used to arrange Gasoline, Shri Nitin Kumar Didwania stated that
neither Shri Satish Gaichor had told him, nor he was aware who was the buyer
in that case; that they had not supplied Gasoline to any buyer.
57.3. On being asked how many consignments of Gasoline/NGL M/s. HML had
imported during last five years, Shri Nitin Kumar Didwania replied in negative
stating that they had not imported Gasoline/NGL during last five years. He also
denied to have supplied any consignment of Gasoline/NGL in transit through

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India and/or fully outside India during the last five years. Shri Nitin Kumar
Didwania was apprised that in his statement dated 25.02.2021, Shri Satish
Gaichor explained that some brokers namely Shri Shyam Tiwari, CAFS (Coal &
Freight Services), Ahmedabad, Shri Sreejith, Dubai, Nikhil of Braemer/La Mer,
Renganath of Reshamwala, Dubai etc and Shri Ashok Desai, Head of
Department-Logistics of M/s. HML had discussed with him regarding supply of
Gasoline and Gasoil and last cargos etc. through Whatsapp chat messages. On
being asked to provide the details of Gasoline imported/purchased/arranged by
M/s. HML from/through these brokers/persons during last five years, Shri Nitin
Kumar Didwania stated that they had not imported/purchased/arranged
Gasoline from/through these brokers/persons during last five years.
58. Statement of Shri Bharat J. Goswami, Terminal Manager of M/s.
FSWAI, Khar Rohar Road, Kandla, Kutch, wherein, he interalia, stated that-
58.1. he was working as Terminal Manager in M/s. FSWAI, Khar Rohar Road,
Kandla; that his firm was in the business of storage and warehousing as liquid
terminals and acting as public warehouse and their liquid terminal was declared
as landing place under Section 8(a) of Customs Act, 1962 and appointed as
"Public Bonded Warehouse" under Section 57 of Customs Act, 1962.
58.2. On being asked further, he stated that their firm started
storage/warehousing for consignments of M/s. HML before his joining in
FSWAI firm and he used to contact Shri Satish Gaichor of M/s. HML for
business activities. He further stated that the intimation of arrival of vessels
carrying import goods for M/s. HML with respect to three import consignments
imported in vessel MT Aston-I, MT Tuna and MT Arihant were given to them by
the said importer vide email dated 02.11.2021, 04.02.2021 and 19.02.2021
respectively; that the said importer declared the description of import goods in
those email as Naphtha (Light), Naphtha and Naphtha respectively. Shri Bharat J.
Goswami further stated that they allotted them (M/s. HML) the tanks prescribed
for Naphtha/Light Naphtha by the competent authority. He also provided Tank
wise quantity received in their terminal with respect to said three consignments as
under: -

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S
.
N
o
.
Name of
the
vessel
Goods
declared
By
importer
Quantity
declared
by
importer in
email
intimation
(MT)
Quantity
Actually
received
(MT)
Quantity
Actually
received
(Ltr)
Tanks
allotted
(4)
(1) (2) (3) (5) (6) (7)
1 MT
Aston-I
26801.637 26151.519 39788988 302,320,3
22,411,42
5,428,502,
504,509,5
12,527,52
9,537,539
Naphtha
(Light)
2 MT Tuna Naphtha 20110.77 19990.541 28972281.
6
324,425,5
10,527,52
9,530,536,
537,539
3 MT
Ariha
nt
Naphtha 9621.26 9704.504
13062665.
3
319,531,5
33,538

58.3. On being asked further, he stated that at the time of storage of goods
imported vide said three vessels by M/s. HML, there was no goods stored in the
Tanks mentioned above; that as on date no stock of goods imported in vessel
MT Aston-I was there and in case of other tanks mentioned above, no goods
other than the goods mentioned above were stored in comingled state. On
being further asked whether all the above-mentioned Tanks were
authorized/nominated by competent authority to store goods declared as
Naphtha (Heavy/Light/Full Range), Shri Bharat J. Goswami stated that all the
tanks mentioned above were authorized/nominated by Naphtha License issued
by District Magistrate, Kachchh-Bhuj. In this regard, he submitted copy of such
Naphtha License and (Petroleum and Explosive Safety Organization (PESO)
Licenses issued by Controller of Explosives, Vadodara to their firm, duly signed
by him.
58.4. During his statement, Shri Bharat J. Goswami was shown copy of
Naphtha License dated 13.11.2020 issued by District Magistrate, Kachchh-
Bhuj issued to M/s. HML and asked that in this License, their terminal"s Tank
No. 531, 533 and 536 were not mentioned/nominated/allowed to store goods
declared as Naphtha, whereas they had stored the subject goods in those
three tanks too. In reply to the same he stated that his firm received a
Naphtha License dated 13.11.2020 issued by District Magistrate, Kachchh-Bhuj
in which the Tank numbers were mentioned as „any available tank". He was
further asked how and from whom, another Naphtha License was received, he
stated that one Mr. Vinodbhai of M/s. HML working at Gandhidham Branch vide
email dated 23.12.2021 sent that License to his firm.

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58.5. On being asked, Shri Bharat J. Goswami stated that M/s. TUV India
Pvt. Ltd. were surveyors appointed by M/s. HML for said three import
consignments. He was further asked whether M/s. HML had informed him or
his firm about re-export of goods imported by them (M/s. HML) in vessel MT
Tuna and MT Arihant and stored at their terminal, he stated that no such
intimation of re-export was received by him/or his firm from M/s. HML; that
as regards the goods imported per vessel MT Aston-I and importer"s
request/intimation for re-export for major part, he stated that he would
check their record and assured to revert back within 02 days but he did not
revert back.
58.6. On being asked further why they had accepted the goods imported by M/s.
HML per said vessels which were other than that of mentioned in their Licenses
issued by competent authority, Shri Bharat Goswami stated that they had
accepted the goods on the basis of email received from the importer wherein
they had declared the subject goods as Naphtha (Heavy/ Light/Full Range)
instead of NGL/SBPS; that declaring the product as Naphtha (Heavy/ Light/Full
Range) in the relevant documents was not the decision of his firm/terminal. He
further added that in the documents provided by the importer and/or their
appointed Customs Broker as later stage also, those documents were also
containing product name as Naphtha (Full Range Naphtha)/Light Naphtha so
they were not aware about the actual nature/description of the subject goods.
58.7 On being asked whether his firm/terminal was authorized to
store/warehouse goods such as NGL (NGL) and Special Boiling Point Spirit
(SBPS) and if so what further cautions/arrangement were required to be
made for storing warehousing such goods in their terminal, he stated that he
was not aware about the same; that he would discuss with his management
and would revert within 02 days but no further response was received from
him.
59. Statement of Shri Pramod Dharamshi Soneta, Partner of Customs
Broker firm M/s. Hemjyot Agency, wherein, he interalia, stated that-
59.1. he was looking after the overall supervision and control on the
business activities of M/s Hemjyot Agency; that his firm was in the business
of Customs clearance of import and export consignments at Kandla, Mundra
and Nhava Sheva ports as Customs Broker having CHA License No. 11/0859
(PAN based Registration No. AAAFH2124ECH002). He stated that his firm
M/s. Hemjyot Agency started work of Customs clearance of consignments of
M/s. HML as Customs Broker for Kandla and Mundra port in the year 2000;

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that he used to contact Shri Nitin Kumar Didwania, Managing Director of
M/s. HML
59.2. On being asked, Shri Pramod Soneta stated that as a normal practice
with other importers, his firm used to send check lists to importer/exporter
before finalizing every Bill of Entry and Shipping Bill and only after receipt of
approval of the same from concerned importer/exporter, they filed the Bill of
Entry and Shipping Bill. He provided copy of the check list and approval
thereof from M/s. HML with respect to three import consignments pertaining
to M/s. HML imported in vessel MT Aston-I, MT Tuna and MT Arihant. He also
provided sample copy/printouts of email communications held with M/s. HML
in respect of said three import consignments.
59.3. On being asked being a Customs Broker why he had not suggested the
importer to file the Bill of Entry for goods importer per vessel MT Arihant within
the stipulated time period, Shri Pramod Soneta stated that he had repeatedly
requested Shri Nitin Kumar Didwania, Managing Director of M/s. HML to file the
Bill of Entry but he (Shri Nitin Kumar Didwania)had given directions not to file the
Bill of Entry until and unless he directed to do so; that on 30.03.2021, Shri Nitin
Kumar Didwania asked him (Shri Pramod Soneta) to send check list and
accordingly they (M/s. Hemjyot Agency) sent the same and on receipt of
approval from the said importer, the warehousing Bill of Entry was filed. On being
asked further to provide the reasons/reply /application made by M/s. HML in
connection to waiver of action under Section 48 of Customs Act, 1962, he stated
that he would check their record and provide the same within 03 days but he did
not provide.
59.4. On being asked why they had declared the subject goods imported by
M/s. HML per said vessels as Naphtha/Light Naphtha instead of NGL/SBPS, Shri
Pramod Soneta stated that while preparing the Check List for filing of Bill of
Entry and Shipping Bill (in the case of re-export), they followed the description
mentioned in the import documents provided by the said importer and also the
directions of the importer who had approved the check list for filing of Bills of
Entry and Shipping Bills as the case may be; that due to same declaring the
product as Naphtha/Light Naphtha in the import documents was not the
decision of his firm but it was decided by the importer.
59.5. On being asked who had decided classification of goods in respect of
import/re-export made by M/s. HML in relation to the goods imported per vessel
MT Aston-I, MT Tuna and MT Arihant, Shri Pramod Soneta stated that as per the
import documents and directions of the M/s. HML, classification was declared.

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Further, based on subsequent approval of importer for Check List for filing of Bills
of Entry/Shipping Bills, they declared the classification and filed those documents.
59.6. On being asked further about appropriate classification of goods NGL (NGL)
and Special Boiling Point Spirit (SBPS), Shri Pramod Soneta stated that both those
products were light oils and preparations (CTH 271012) and as on date there was
no specific entry for both those products in the Customs Tariff, hence the same
were appropriately classifiable under „others" category of CTH 271012 i.e.
27101290 as per Customs Tariff.
59.7. He was also shown documents said to had been received from Punjab
National Bank, Foreshore Road Branch, Mumbai regarding Letter of Credit bearing
no. 84670FLC0000421 dated 28.01.2021 opened by M/s. HML in favour of
Aureole Trading LLC (UAE) in respect of goods imported in vessel MT Tuna. After
perusal of the said documents he stated that he in the application form, Contract
dated 11.01.2021 with M/s. Aureole Trading LLC and other supporting documents,
the product to be imported was mentioned as „Light Naphtha" (HS Code
27101221) whereas in the Bills of Entry the same was mentioned as Naphtha (HS
Code 27101229) i.e. linked with for Full Range Naphtha; that as regards the
difference in the description of goods and CTH mentioned in the all LC documents
and Bills of Entry, he stated that he had not seen the LC and supporting
documents earlier, so he could not alert or suggest the importer about the same.
60. Statement of Shri IIla Giri Visweswarrao, Manager of M/s. Samudra
Marine Services Pvt. Ltd., wherein, he interalia, stated that-
60.1. M/s. Samudra Marine Services Pvt. Ltd. was engaged in the business
activities of clearance of import /export consignments acting as vessel agency
and Customs Broker; their Head Office is in Mumbai and branch offices are at
Sikka, Gandhidham, Pipavav and Budgebudge; that they do not have any
office/establishment outside India. On being asked, Shri IIla Giri Visweswarrao
stated that they did not have any fix principal shipping line , so they were not
working as agent of any shipping line on permanent basis and neither they had
entered into agreement with any shipping line. He added that they were getting
orders from different shipping lines/vessel owners to assist their vessel
operations at Kandla, Mundra and Mumbai sea ports. He explained the step by
step procedure to handle import of bulk liquid cargo.
60.2. They received nomination for this vessel MT Tuna from one M/s. Swiss
Carriers S.A., Nafsikas 24, Athens 16673, Voula vide email dated 03.02.2021.
He produced copy of some email conversations and documents. On being asked,
Shri IIla Giri Visweswarrao stated that he was not aware as to whether M/s.

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Swiss Carriers S.A. was the actual owner/charterer of the vessel MT Tuna as it
may be agent/broker of the owner/charterer. He assured to inquire in the matter
and to revert back within 02 days. He further stated that he was also not aware
who was the actual shipper/supplier/consigner party of the 20110.767 MT cargo
and who had booked the cargo in the said vessel and what documents were
provided initially to the vessel owner by the overseas shipper/supplier/consigner
party; that Mr. Cruz. Eduardo Sts. Ana was the Master of vessel MT Tuna at her
arrival at Kandla. As regards the load port of the cargo imported at Kandla per
vessel MT Tuna, Shri IIla Giri stated that as per the documents received by them
from M/s. Swiss Carriers S.A., the port of loading of the cargo imported at
Kandla per vessel MT Tuna was Sohar, Oman, however, he was not aware about
the actual port of loading. He assured to inquire in the matter and to revert back
within 02 days. On being asked whether the 20110.767 MT cargo imported at
Kandla port per vessel MT Tuna was loaded from Iraq or Iran, he stated that he
was not aware and assured to inquire in the matter and to revert back within 02
days but he did not do so.
60.3. On being asked, Shri IIla Giri Visweswarrao stated that he did not know
any members of such chat conversations except Shri Nitin Kumar Didwania and
he did not have any conversation with Shri Nitin Kumar Didwania; that he used
to communicate with Shri Satish Gaichor, AGM-Logistics for official dealing with
this importer. After going through the Chat conversations available in the
statement of Shri Nitin Kumar Didwania, Shri IIla Giri Visweswarrao stated that
the vessel MT Tuna was brought to Kandla switching off the AIS system but he
was not aware why the same was switched off; that he would inquire in the
matter and revert back within 02 days. He added that he also found that the
timings of vessel Tuna were concocted and manipulated and various other
material particulars of all three vessels including the HS Codes for the goods
imported per vessel MT Tuna, were manipulated and were false and fabricated;
that he found it apparent from these Whatsapp Chat conversations that the
vessel MT Tuna did not even berth at Sohar, Oman.
60.4. On being asked, Shri IIla Giri Visweswarrao stated that as an authorized
career, they were responsible for collecting the correct and complete details of
the cargo they were booking and after confirming correctness thereof also
required to declare the same on all declarations and customs papers with their
subscribing about correctness thereof; that in case any incorrect details are
found they are supposed to inform the Customs department about such
instances. He added that they are also required to advise their clients
including other counterpart offices at foreign port to comply with the statutory

63 | P a g e C / 1 0 1 6 1 - 1 0 1 6 8 / 2 0 2 6 -
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provisions Indian law demands from them; that they were also required to
keep proper record and track of movement all the cargo arrived at port and
were responsible for safety, security and delivery of the imported, exported or
coastal goods in their custody. He further deposed that in the instant case,
they had relied upon the Bills of Lading and other details received vide emails
from the owners/charterers/agents/brokers and filed IGM accordingly. On
being asked, he assured to provide copy of authorized career registration
details of his company and bond/security furnished by them in this regard,
within 02 days but he did not do so.
DISCUSSION ON EVIDENCE FROM CHATS AND OTHER EVIDENCE
RETRIEVED BY DRI-
61. I find that the Chat has been retrieved from the device of Shri Nitin
Kumar Didwania, the details and his explanation are as given below:-

Body /content of
Chat Details
Chat
Supplementary
Sr.
Question and /or
No.
Comments/explanat ion of Shri
Nitin Kumar Didwania
1
Start Time: 18-07-2020
Q:- Who created the said Whatsapp
989127401664
09:14:52 (UTC+0)
Group and please inform
@s.w
Last Activity: 25-02-2021
hatsapp.net
about the members of the said
08:04:38(UTC+0)
created group
group alongwith their whereabouts?
"Light Naphtha
Participants:
Ans:- This group was created by Ms.
989127025761@ s.whats
Saba
app .net Omid,
Of Trilliance PetrochemicalLtd., one of
the group representative of suppliers.
Other members /Participants of this
Whatsapp group are as follow: -
989123377852@s.
971501159789@ s.whats
app .net Alex Aby. Hif,
989123377852@ s.whats
app .net Ali. Trilliance,
wh atsapp.net
Ali Trilliance,
989127401664@ s.whats
[email protected] atsapp.net Omid
and 9890353 86365@s .wh
app .net Saba.trilliance.
Ali,
atsapp.net FJ are other representatives
of suppliers group. I am not awar
989035386365@ s.whats
about their full name and other
app .net FJ,
[email protected]
NitinDidwania
atsapp.net Alex Aby.
Hif, and me are
Representative of our
company.
System Message System
Message
Timestamp: 18-07-2020
09:14:52 (UTC+0)

64 | P a g e C / 1 0 1 6 1 - 1 0 1 6 8 / 2 0 2 6 -
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ops"
Source App: WhatsApp
2
For tuna, since AIS will
be off is it ok to do dox
of oman without
entering to sohar
anchorage?
Q:- When MT Tuna did not
reach Oman, why port oj
loading was mis-declared
as Sohar, Oman foi
subject goods imported in
vessel MT Tuna?
From: 98
[email protected]
I afraid vessel arrest
order is circulated in all
GCC countries

Ans: - The Bills of Entry were filed by us as
per the documents received from the
supplier. We have just placed orders for
supply oj Naphtha. No benefit oj
country of origin was
availed by us, and there is no revenue
implication and
hence there was no
malafide intention on ow part behind
this.
3 From: Nitin Didwania (owner)
Timestamp: 31-0
13 :58:43(UTC+0)
Source App: WhatsApp
Do we have Iraq doxs
for this
Q: - What did you manage
with Iraq documents?
Please provide such documents.
4 From: 98
[email protected]
yes we have
.net Saba.trilliance. Ali
Timestamp: 31-
01-2021 13:59:30(UTC+0)
Source App: WhatsApp
Ans: - I will ask the
suppliers to provide such Iraqi
documents if possible
and will revert back
accordingly within a week time.
5 From: 98
[email protected]

shall we come with iraq
dox to
.net Saba.trilliance. Ali Timestamp:
31-kandla?

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01-2021 14:01:58(UTC+0)
Source App: WhatsApp
6
From: Nitin Didwania (owner)
Timestamp: 31-0
16:01:21(UTC+0)
Source App: WhatsApp

Yes. We will manage
Q: - It shows all acts oj mis-
declaration were done with your
active consent and
7 From: Nitin Didwania (owner)
Timestamp: 01-02-2021
09:17:45(UTC+0)
Saba, my logistic says
that for
tuna, we cannot do
Iraq.
We need loadport on

Source App: WhatsApp bl to be either
khorfakkan, or sharjah.
I do not need other
docs like coo etc.
supervision. Why did you do so.
Please comment.
Ans: - The Bills of Entry were filed
by us as per the documents
received from the supplier. We have
just placed orders for supply oj
Naphtha. No benefit oj
country of origin was
availed by us, and there is no
revenue implication and hence there
was no malafide intention on
ow part behind this.
8 From: 98
[email protected]
And idont feel safe for
entering into port
limits of sohar
Q: - Why did you not provide the
documents to
Customs having correct
material particulars?
.net Saba.trilliance. Ali Timestamp:
01-entering
02-2021 11 :15 :21(UTC+0)
Source App: WhatsApp
Ans: - The Bills of Entry were filed
by us as per the documents
received from the supplier. We have
just placed orders for supply oj
Naphtha. No benefit oj
country of origin was
availed by us, and there is no
revenue implication and
hence there was no
malafide intention on ow
part behind this. The
import was legitimately
done and the purchase was under
LC from Indian bank.

9 From: Nitin Didwania (owner)
Timestamp: 01-0
11 :34:38(UTC+0)
Source App: WhatsApp
Ais is manageable, but
even in jndia they may
ask for last port
clearance.

10 From: Nitin Didwania (owner)
Timestamp: 01-0
11:35:33(UTC+0)
Source App: WhatsApp
Sts may be difficult
If
nothing else works out,
we will bring the cargo
to India with Iraq and I
will mange but that is
the last
option.
11 From: 98
[email protected]

We can still get sohar
dox.
.net Saba.trilliance. Ali
Timestamp: 01-
02-2021 11:53 :49(UTC+0)
Source App: WhatsApp
12 From:
Maybe we use last
[email protected]
as iraq pc?


.net Saba.trilliance. Ali Timestamp: 01-
clearance

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02-2021 11:54:10(UTC+0)
Source App: WhatsApp
13 From: Nitin Didwania
(owner)

Seems fine. This may
work. Pls go ahead

Timestamp: 01-0
11 :55:27(UTC+0)

Source App: WhatsApp

14 From:
[email protected]


.net Omid
Timestamp: 03 -0
05 :44:43(UTC+0)
Source App: WhatsApp

I'm preparing Sohar
docs. Will share them
with you once ready
15 From:
[email protected]
@971501159789 is it
possible to change the
name of the
shipper? The guy
provides these docs in
Sohar for us uses their
company and issues
docs usually and can
later support those
docs this way to be
safe
Q: - Who was the guy and his
company who used to
provide you the documents h av i ng
manipulated/ incorrect material
particulars?

.net Omid
Timestamp: 03-0
10:39:33(UTC+0)
Source App: WhatsApp
Ans: - I am not aware. I
will inquire with the sender of
this message
and will revert within a week
time.
16 From:
@989127025761 as
[email protected]
Q: - It appears that similar
malpractice of mis-declaration of
material particulars was being
done for subject goods imported in
vessels MT
we can use
Delta shipping and
trading LLC as the
Shipper.
.net Alex Aby. Hif Timestamp: 03-02-
discussed,
2021 10:50:35(UTC+0)
Source App: WhatsApp
We did the same last
time for Aston 1, which
went to india
17 From:
Also as discussed pls
[email protected]
Aston I, MT Tuna and MT Arihant?
Please comment What is the actual
role of Delta shipping and trading
LLC in the import made by
you/your company in said three
vessels viz. MT Aston I, MT Tuna
and MT Arihant?

.net Alex Aby. Hif Timestamp:
03-02-Delta team only to
change the
ask the Delta team only
to change the shipper
and balance all to
remain same as per the
DI provided
Ans:- As stated ablve, it is possible that
M/s. Aureole Trading LLC, UAE had
arranged the said goods through M/s.
Delta Shipping & Trading LLC, Sohar,
Oman, accordingly, the Bills of Lading are
containing shipper details as M/s. Delta
Shipping & Trading LLC Sohar, Oman
18 From:
Attachment: #
[email protected]

.net Alex Aby. Hif Timestamp:
04-02
Chats\WhatsApp_Nativ
e\attachments576\thu
mb-tuna BL_02 (3000
MT) -1.jpg
Body:
19
From:
[email protected]
Q: - What was actual /original HS
Code which was changed?
Ans: - The change was in the CTH
3. HS CODE CHANGED
IN ALL OBLS.
.net Alex Aby. Hif Timestamp:
04-02-

4. LC DETAILSADDEN IN
of light Naphtha and Full Range
6 & 7
Naphtha

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62. The Whatsapp group „Light Naphtha Ops", entire conspiracy of mis-
declaration and manipulation of documents is discussed among the key
persons including Shri Nitin Kumar Didwania, Managing Director of M/s.
HML and their overseas associates. The illustrative chat messages of
said Whatsapp group „Light Naphtha Ops" appear to be pertaining to
subject goods imported per vessel MT Tuna are tabulated hereunder: -
Chat details Body /Chat content
From:
Also pls find below documentary instructions for 20 KT Kharg
[email protected] Alex
vessel mt Tuna
Aby. Hif
Timestamp: 22-01-2021
07:09:13(UTC+0)
Source App: WhatsApp
From:
@989127025761 @989127401664
[email protected] Alex
pls share the docs for Tuna and the shipment docs
Aby. Hif
Timestamp: 27-01-2021
05:59:57(UTC+0)
Source App: WhatsApp
From:
Pls also share the load port quality report
[email protected] Alex
Aby. Hif
Timestamp: 27-01-2021
06:00:09(UTC+0)
Source App: WhatsApp
@989127025761 pls advise on the status of MT Tuna
From:
[email protected] Alex
Aby. Hif
Timestamp: 28-01-2021
05:20:34(UTC+0)
Source App: WhatsApp
Also the documentation for the same
From:
[email protected] Alex
Aby. Hif
Timestamp: 28-01-2021
05:20:45(UTC+0)
Source App: WhatsApp
From: Nitin Didwania (owner)
Omid, in the quality analysis, they have missed the
Timestamp: 28-01-2021
oxygenates, can you pls try o get the same.
06:36:07(UTC+0)
Source App: WhatsApp
From:
Hi Mr Nitin, they have recently operational issue in
[email protected]
Abadan and thats why cargo is on deep discount.
Saba.trilliance. Ali
I had not experience of their heavy cargo before.
Timestamp: 28-01-2021
07:25:33(UTC+0)
But their light cargo has like 1000 ppm oxy.
Better we test in India and see.
Source App: WhatsApp

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From: Nitin Didwania (owner)
Noted. Good. Only problem is that this cargo is high oxy, I
Timestamp: 29-01-2021
could have blended partial cargo as the oxy of kharg was
12:33:17(UTC+0)
high.
Source App: WhatsApp
From:
We need to do internal transfer documentation first
[email protected] Alex
Aby. Hif
Timestamp: 29-01-2021
12:39:45(UTC+0)
Source App: WhatsApp
From:
In the name of Aureole
[email protected] Alex
Aby. Hif
Timestamp: 29-01-2021
12:39:56(UTC+0)
Source App: WhatsApp
From: Nitin Didwania (owner)
Since the tuna is under problem, it is best that we take
Timestamp: 30-01-2021
possession of our material as early as possible.
07:36:07(UTC+0)
Source App: WhatsApp
From:
Hi @971501159789 has tuna been accepted
[email protected]
kamdla?
Saba.trilliance. Ali
Timestamp: 31-01-2021
04:47:29(UTC+0)
Source App: WhatsApp
From: Nitin Didwania (owner)
Tuna to kandla seems to be ok.
Timestamp: 31-01-2021
07: 59:01(UTC+0)
Source App: WhatsApp
From: Nitin Didwania (owner)
Let me know if finally we are planning for tuna to come
Timestamp: 31-01-2021
to India. We have sold some cargoes locally
And arihant is further delayed.
08:05:08(UTC+0)
Source App: WhatsApp
From: Nitin Didwania (owner)
Timestamp: 31-01-2021
08:05:41(UTC+0)
Source App: WhatsApp
Also, do not forget to pressurize kharg for rebate
because of off spec cargo to us.
From: Nitin Didwania (owner)
Timestamp: 31-01-2021
08:12:25(UTC+0)
Source App: WhatsApp
Since the delivery to jg summit and yncc is delayed.
................................. we will have to
sail out asap. Actually topping up is a practical and
cost effective mechanism but we will not be able
the justify delay and origin as well
From:
[email protected]
Saba.trilliance. Ali
Timestamp: 31-01-2021
09:15:40(UTC+0)
Source App: WhatsApp
Shall we keep ais off till kandla?
From: Nitin Didwania (owner)
Timestamp: 31-01-2021
09:47:00(UTC+0)
Source App: WhatsApp
Yes pls
From:
[email protected]
Saba.trilliance. Ali
Timestamp: 31-01-2021
13:50:57(UTC+0)
for tuna, since MS will be off. is it ok to do dox of
oman without entering to sohar anchorage?
i afraid vessel arrest order is

69 | P a g e C / 1 0 1 6 1 - 1 0 1 6 8 / 2 0 2 6 -
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Source App: WhatsApp circulated in all GCC countries
From: Nitin Didwania (owner)
Timestamp: 31-01-2021
13:58:43(UTC+0)
Source App: WhatsApp
Do we have Iraq doxs for this
From:
[email protected]
Saba.trilliance. Ali
Timestamp: 31-01-2021
13:59:30(UTC+0)
Source App: WhatsApp
yes we have
shall we come with iraq dox to
kandla?
From:
989127401664@s .whatsapp. net
Saba.trilliance. Ali

Timestamp: 31-01-2021
14:01:58(UTC+0)

Source App: WhatsApp
From: Nitin Didwania (owner)
Timestamp: 31-01-2021
16:01:21(UTC+0)
Source App: WhatsApp
Yes. w e w ill manage
From: Nitin Didwania (owner)
Timestamp: 01-02-2021
09:17:45(UTC+0)
Source App: WhatsApp
Saba, my logistic says that for tuna, we cannot
do Iraq. We need loadport on bl to be either
sohar, khorfakkan, or sharjah. I do not
need other docs like coo etc.
From:
[email protected]
Saba.trilliance. Ali
Timestamp: 01-02-2021
11:15:21(UTC+0)
Source App: WhatsApp
And idont feel safe for entering into port limits of
sohar
From: Nitin Didwania (owner)
Timestamp: 01-02-2021
11:34:38(UTC+0)
Source App: WhatsApp
Ais is manageable, but even in jndia they may ask
for last port
clearance.
From: Nitin Didwania (owner)
Timestamp: 01-02-2021
11:35:33(UTC+0)
Source App: WhatsApp
Sts may be difficult .......... try. If
nothing else works out, we will bring the cargo
to India with Iraq and I will mange but that is
the last option.
From:
[email protected]
Saba.trilliance. Ali
Timestamp: 01-02-2021
11:53:49(UTC+0)
Source App: WhatsApp
We can still get sohar dox.
Maybe we use last port clearance as iraq pc?
From:
[email protected]
Saba.trilliance. Ali
Timestamp: 01-02-2021
11:54:10(UTC+0)
Source App: WhatsApp
Seems fine. This may work. Pls go ahead
From: Nitin Didwania (owner)
Timestamp: 01-02-2021
11:55:27(UTC+0)
Source App: WhatsApp
From:
[email protected]
Also please let me know if you are OK with the
below timings for Tuna. NOR Sohar Jan 30th

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Omid
Timestamp: 03-02-2021
08:58:00(UTC+0)
Source App: WhatsApp
48 hours of loading
Completion of loading Feb 2nd early AM hours
From:
[email protected]
Alex Aby. Hif
Timestamp: 03-02-2021
09:32:40(UTC+0)
Source App: WhatsApp
@989127025761 pls find attached the draft BL
and DI for MT Tuna
From:
[email protected]
Omid
Timestamp: 03-02-2021
10:39:33(UTC+0)
Source App: WhatsApp
@971501159789 is it possible to change the
name of the shipper? The guy who provides
these docs in Sohar for us uses their company
and issues docs usually and can later support
those docs this way to be safe
From:
[email protected]
Alex Aby. Hif
Timestamp: 03-02-2021
10:50:35(UTC+0)
Source App: WhatsApp
@989127025761 as discussed we xan use Delta
shipping and trading LLC as the Shipper. We did
the same last time for Aston 1, which
went to india
From:
[email protected]
Alex Aby. Hif
Timestamp: 03-02-2021
10:51:18(UTC+0)
Source App: WhatsApp
Also as discussed, pls ask the Delta team only to
change the shipper and balance all to remain
same as per the DI provided
From: Nitin Didwania (owner)
Timestamp: 03-02-2021
14:22:52(UTC+0)
Source App: WhatsApp
Saba, is it possible to get a typical of the balance
light with the oxy
and olefin.
From:
[email protected]
Saba.trilliance. Ali
Timestamp: 04-02-2021
05:26:41(UTC+0)
Source App: WhatsApp
They are using the light nap for blending of
gasoline
From:
[email protected]
Omid
Timestamp: 04-02-2021
07 :31:40(UTC+0)
Source App: WhatsApp
Attachments:
#1:
chats \ WhatsApp_Native \ attachment
s576
\DRAFT DOCS.pdf
____

71 | P a g e C / 1 0 1 6 1 - 1 0 1 6 8 / 2 0 2 6 -
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From:
[email protected]
Omid
Timestamp: 04-02-2021
07:32:06(UTC+0)
Source App: WhatsApp
Attachments:
#1:
chats \ WhatsApp_Native \ attachment
s576
\TUNA BLS.pdf
____
From:
[email protected]
Alex Aby. Hif
Timestamp: 04-02-2021
10:25:03(UTC+0)
Source App: WhatsApp
3. HS CODE CHANGED IN ALL OBLS.

4. LC DETAILS ADDED IN 6 86 7
From:
[email protected]
Alex Aby. Hif
Timestamp: 04-02-2021
10:25:04(UTC+0)
Source App: WhatsApp
We will require 2 Certificates of origin
3. For BL#1,2,3,4,5
4. Certificate of Origin for BL#6 86 7
From:
[email protected]
Alex Aby. Hif
Timestamp: 04-02-2021
10:26:14(UTC+0)
Source App: WhatsApp
Dear Omid kindly ask delta to revise the OBL as
per above.
Also to issue 2 sets of Certificate of origin as per
BL nos

63 Further relevant documents were also recovered from the mobile phone
of Shri Nitin Kumar Didwania: -
(i) A document having title „Free Zone Bill of Entry", Hamriyah Free Zone
dated 28.01.2021 showing port of loading Basrah, Iraq, vessel name-Tuna,
Qty. 20110767 KG
(ii) one document having title supplier Analysis Report containing
Port/location-Basrah/Iraq and vessel Nave-MT Tuna
64. On the basis of above chats and documents discussed above that the
subject goods were loaded from Basrah Iraq and were originated in Iraq
whereas the same were mis-declared in the import documents submitted
with Kandla Customs as loaded from Sohar, Oman and originated from
Oman.
65. I find that the following relevant Whatsapp Chat conversations have
been retrieved from the mobile phone of Shri Satish Gaichor.

Chat No. 2139 with Shri Nitin Kumar Didwania: -
Sr.
No.
Chat Details Body

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From:
1
[email protected] HML
- NKD
Timestamp: 31-01-2021 7:21:34
AM(UTC+0)
Source App: WhatsApp
Body:
Hi @971501159789 has tuna been accepted
in kamdla?
From:
2
[email protected] SG
(owner)
Timestamp: 11-02-2021 7:28:23
AM(UTC+0)
Source App: WhatsApp
Body:
Do u have reliable supplier in uae for Gasoil
and Gasoline?
From:
3
[email protected] SG
(owner)
Timestamp: 11-02-2021 7:28:23
AM(UTC+0)
Source App: WhatsApp
Body:
Kindly confirm if they can supply the
Gasoil and Gasoline as per the attached
specification
From:
4
[email protected] SG
(owner)
Timestamp: 11-02-2021 7:28:23
Body:
Can hazel supply
AM(UTC+0)


Source App: WhatsApp

From:
5
[email protected] HML
- NKD
Timestamp: 11-02-2021 10:20:22
AM(UTC+0)
Source App: WhatsApp
Body:
Need report
From:
6
[email protected] HML
- NKD
Timestamp: 22-02-2021 6:16:10
AM(UTC+0)
Source App: WhatsApp
Attachments:
#1: chats
\WhatsApp Native \attachments2139
\ IMG-20210222-WA0009.jpg
(Content of Clarification dated 19.02.2021
given by Customs House Laboratory,
Kandla suggesting that the sample under
reference was Natural Gasoline Liquid)

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Chat No. 1789 with Shri Abby-Alex:-

Sr.
Chat Details Body
No.
From:

[email protected]
.net SG
(owner)
Timestamp: 30-01-2021 1:37:32
PM(UTC+0)
Source App: WhatsApp
Body:
VV IMP: 1. We need a full
survey of quality with the
oxygenates. Same has to be
done on priority and reports to
be shared on priority prior
vessel sailing to Kandla.
4. WATER CONTENT
ANALYSIS REPORT TO BE
SEPARATELY INFORMED
(NOT PART OF MAIN
REPORT).
5. All docs must mention
"NAPHTHA" as product
From:

[email protected] HME
-
Abby Alex
Timestamp: 02-02-2021 5:18:14
AM(UTC+0)
Source App: WhatsApp
Attachments:
#1: chats \WhatsApp Native \
attachments1789 \ BILL OF
(The sender sent Bill of Lading
for MT Tuna containing port of
loading as Basrah, Iraq)

From: [email protected]

HME - Abby Alex
Timestamp: 03-02-2021 8:58:41
AM(UTC+0)
Source App: WhatsApp
Body:
Also please let me know if you are
OK with the below
NOR Sohar Jan 30th 48 hours of
loading

Completion of loading Feb 2nd early
AM hours
From: [email protected]

(owner)
Timestamp: 04-02-20219:52:18
AM(UTC+0)
Source App: WhatsApp
Body:
3. HS CODE CHANGED IN ALL
OBLS.
4. LC DETAILS ADDED IN 6 & 7
From: [email protected]

(owner)
Timestamp: 04-02-20219:52:18
AM(UTC+0)
Source App: WhatsApp
Body:
We will require 2 certificates of
origin
3. For BL# 1,2,3 5
4. certificate of Origin for BL#6&7
From: 97150 [email protected]

app.net HME - Abby Alex
Timestamp: 04-02-2021 11:03:19
AM(UTC+0) Source App: WhatsApp
Body: @971501159789
As per your instruction, Tuna is
sailing towards the
discharge port with AIS turned off

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65.1 Following further relevant documents also recovered from the mobile
phone of Shri Satish Gaichor.
 Bill of Lading No. TN-100019-21 dated 24.01.2021
 Free Zone Bill of Entry dated 28.01.2021, Hamriyah Free Zone,
Sharjah, UAE (vessel MT Tuna, Bill of Lading No. TN-100019-21)
 Cargo Manifest dated 24.01.2021

Certificate of Origin dated 24.01.2021
 Commercial invoice no. TN-100081-21 dated 24.01.2021
 Delivery order no. 2021-007732 dated 28.01.2021
66. As per these documents recovered from the mobile phone of Shri
Satish Gaichor, the shipper/consignee was mentioned as M/s. Jabal Al-
Aswad Co., Notify address was mentioned as M/s. Aureole Trading (LLC),
Hamriyah Free Zone, Sharjah, UAE, vessel Name was MT Tuna, Qty. was
20110.767 MT, Port of Loading was Basrah (Iraq), Shipper"s description
of goods was „Naphtha" and the HS Code for the goods was mentioned
as 27075000.
67. From the above mentioned documents recovered from the mobile
phone of Shri Satish Gaichor, the name of shipper/consigner appeared as
M/s. Jabal Al-Aswad Co., Iraq for the 20110.767 MT goods being
transported in vessel MT Tuna. It is further observed that the subject
goods were loaded from Basrah, Iraq. This aspect is also corroborated
with the facts of Whatsapp Chat conversations held among key persons
who were discussing to get clearance of the cargo on the basis of some
Iraqi Document. In these documents, the description of goods was
mentioned as „Naphtha" but the HS Code for the same was mentioned as
27075000. It is pertinent to refer here that from the Chat conversations,
it is apparent that the key persons had specifically insisted the concerned
dealing hand to mention the product name as „Naphtha" in all
documents. In order to get the content of these documents explained,
Shri Satish Gaichor was issued Summons directing him to tender
statement to get explained the content of above-mentioned
conversations and other evidences /documents/images appeared
relevant in the ongoing investigation but he avoided to provide any
details/information/documents in this regard. This act of reluctance and
non-cooperation on his part clearly indicated the aspect of manipulation
of import documents.

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68. From the evidences /documents/images/Whatsapp chat conversations
retrieved from the mobile phone data of Shri Nitin Kumar Didwania and Shri
Satish Gaichor, it is clear that the subject goods were originated in Iraq and
were brought to India via Hamariyah, Sharjah, UAE in vessel MT Tuna. It
further appears that in order to suppress the actual material particulars such as
nature/description of subject goods, country of origin, shipper, port of loading
etc., the conspirators prepared documents showing the supplier/shipper as
M/s. Aureole Trading LLC, UAE in commercial invoice and M/s. Delta Shipping
LLC in the concerned Bills of Lading. As discussed above that the product name
as „Naphtha" was mentioned on being specifically insisted by the key persons
of M/s. HML. specifically The port of loading and country of origin were declared
as Sohar (Oman) and Oman respectively, whereas, it is apparent from the
Whatsapp Chat conversations retrieved from the mobile phone of Shri Nitin
Kumar Didwania, Managing Director of M/s. HML and other key persons that
the vessel MT Tuna even did not berth at Sohar, Oman.
69. It is further observed that M/s. Verasco FZE, Hamriyah Free Trade Zone,
UAE (previously known as Hazel International FZE), was having Tank storage
terminal and processing plant in Sharjah, UAE. In order to get explained the
matter and examine the role of M/s. Verasco FZE in manipulation of subject
goods with respect to its nature by blending/processing and manipulation of
documents with respect to their material particulars, Summons were issued to
M/s. Hazel International FZE/ M/s. Verasco FZE, but they did not respond.
69.1. Shri Satish Gaichor was also shown the data contained in his mobile
phone which was extracted under Panchnama dated 08.03.2021 to
11.03.2021. After seeing the data, he deposed that this data included the
data of his mobile phone which was surrendered by him during Statement
dated 25.02.2021. I explained the specific Whatsapp Chats and documents
recovered from his mobile phone as under:-
Chat No. 1789 with Shri Abby-Alex:-
Chat Details Body My comment/submissions
on the body/content of
chat
From:
91829 1990409@s .whats
app.net SG (owner)
Timestamp: 27-01-2021
12:49:27 PM(UTC+0) Source
App: WhatsApp
"Body:
have u passed on this
message for Arihant
"This was the
direction/inquiry of our MD
Shri Nitin Kumar Didwania
regarding goods imported
by us in vessel MT Arihant.

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From:
[email protected]
app.net SG (owner)
Timestamp: 27-01-2021
12:49:39 PM(UTC+0)
Source App: WhatsApp
Body:
also please advice what
is BL qty for Arihant

Mr. Alex Abby, our UAE
counter part informed that
they were arranging
documents showing Iraq
origin of subject goods and
then documents showing
Oman origin of goods were
for Kandla discharge. I am
not aware why the two
types of documents i.e.
Iraqi and Omani
documents were prepared.
Mr. Alex Abby or our MD
Shri Nitin Kumar Didwania
can explain about
From:
[email protected] s
app.net HME - Abby Alex
Timestamp: 27-01-2021
1:42:31 PM(UTC+0) Source
App: WhatsApp
Body:
We are arranging Iraq
does for her, will arrive
Sohar in 3 days then we
will arrange Omani does
for kandla discharge
From:
[email protected] s
app.net HME - Abby Alex
Timestamp: 27-01-2021
1:42:51 PM(UTC+0) Source
App: WhatsApp
t h e s a m e . B o d y :
Ab ove message for
A r ih an t d oes
From:
[email protected]
app.net SG (owner)
Timestamp: 30-01-2021
1:37:32 PM(UTC+0) Source
App: WhatsApp
This direction was from
Shri Nitin Kumar
Didwania, MD of M/s. HML
to analyze the
specifications/ parameters
of goods etc. in import
related documents. I just
Body:
W IMP: 1. We need a
full survey of quality
with the oxygenates.
Same has to be done on
priority and reports to be
shared on priority prior
vessel sailing to Kandla.
f orwarded the message
received from Shri Nitin
Kumar Didwania to
concerned persons
including Mr. Abby Alex.
Our MD Shri Nitin Kumar
Didwania can explain why
he specifically directed
that
all does must mention
"NAPHTHA" as
product.
4. WATER CONTENT
ANALYSIS REPORT TO
BE SEPARATELY
INFORMED (NOT
PART OF MAIN
REPORT).
5. All does must
mention "NAPHTHA" as
product

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From:
[email protected] s
app.net HME - Abby Alex
Timestamp: 02-02-2021
5:18:14 AM(UTC+0) Source
App: WhatsApp
Mr. Abby Alex sent Bill of
Lading and other related
documents pertaining to
MT Tuna. This Bill of
Lading and concerned
Certificate of Origin
contains Country of
Attachments:
#1 : chats\WhatsApp
Native\attachments 1789
\BILL OF LAD1NG...pdf
(The sender sent Bill of
Lading for MT Tuna
containing port of loading as
Basrah, Iraq)
origin as Iraq and Port of
Loading Basrah, Iraq for
20110.767 MT goods. The
goods were the same which
were imported to Kandla
India per vessel MT Tuna. I
am not aware the purpose
of declaring the country of
origin as Oman in the
documents submitted with
Customs House,
Kandla.
Our MD Shri Nitin Kumar
Didwania can explain the
reason for same.
I am not aware why did
these timings were created
though the vessel MT Tuna
did not berth at Oman as
per Whatsapp chat
conversations. Our MD Shri
Nitin Kumar Didwania can
explain the reason for
same.
From:
[email protected] s
app.net HME - Abby Alex
Timestamp: 03-02-2021
8:58:41 AM(UTC+0) Source
App: WhatsApp
Body:
Also please let me know if
you are OK with the below
timings for Tuna.
NOR Sohar Jan 30th
48 hours of loading
Completion of loading Feb
2nd early AM hours
From:
[email protected]
app.net SG (owner)
Timestamp: 04-02-2021
9:52:18 AM(UTC+0) Source
App: WhatsApp
These messages were only
forwarded by me as
received from our MD Shri
Nitin Kumar Didwania. I am
not aware about the
purpose of changing HS
Code, actual details which
HS Code was changed
and
requirement of two
Certificates of Origin.
Body:
3. HS CODE
CHANGED IN ALL OBLS.
6
4. LC DETAILS ADDED IN
7
86
From:
91829 1990409@s .whats
app.net SG (owner)
Timestamp: 04-02-2021
10:20:03 AM(UTC+0)
Source App: WhatsApp
Body:
We will require 2
Certificates of origin
3. For BL# 1,2,3,4,5
4. Certificate of Origin for
Our MD Shri Nitin Kumar
Didwania can explain the
reason for same.
BL# 6 & 7
Body:
@971501159789
As per your
instruction, Tuna is
sailing towards the
discharge port with
AIS turned off."
Mr. Abby Alex sent this
message informing that as
per instructions of our MD
of M/s. HML, the AIS of
vessel MT Tuna was
switched off
while moving towards
Kandla, India to discharge
the goods."
From:
[email protected] s
app.net HME - Abby Alex
Timestamp: 04-02-2021
11:03:19 AM(UTC-F0)
Source App: WhatsApp

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83. During the statement, Shri Satish Gaichor was asked to comment on the following
discrepancies:-
As per Bills of
Lading no. 1 to
7 dated
02.02.2021
submitted by us
with Customs,
Kandla
A s per
documents (other
than Bills of
Lading) said
to have been
produced b y us
alongwith
concerned
Bills of Entry
As per documents
recovered during
investigation (Bill of
Lading No.TN-100019-
21 dated 24.01.2021,
Cargo Manifest dated
24.01.2021, Certificate
of Origin dated
24.01.2021,Commercial

no. TN-100081-
21 dated
24.01.2021, Free Zone
Bill of Entry dated
28.01.2021)
Jabal Al- Aswad
Company, Iraq
M/ s. Aureole
Trading LLC,
Dubai, UAE
Shipper/
Supplier
/Consignee
M/ s. Delta
Shipping an d
Trading
LL
C, Sohar, Oman
Port of Loading Sohar, Oman Sohar, Oman Basrah, Iraq
Country of Origin Not mentioned Oman Iraq
HS Code/CTH of
Product
271011229 27101229 27075000
Qty. (MT) 20110.767 20110.767 20110.767


70. Shri Satish Gaichor stated that their MD Shri Nitin Kumar Didwania
could explain the reason behind same; that they had just followed his
instructions regarding preparation of documents and submission of the
same with Customs Authorities. On being asked to provide documents
having correct material particulars and also to provide corresponding
export documents submitted by actual overseas supplier/shipper with
respective Customs Authorities such as Export declaration form/shipping
bills, insurance documents etc. pertaining to goods exported to India per
said three vessels, Shri Satish Gaichor stated that these documents were
not available with him; that their MD Shri Nitin Kumar Didwania is the right
person to provide the same.

DISCUSSION ON EVIDENCE FROM TEST REPORTS-
71. Relying on various Test reports that were referred to in the order of
the Hon'ble High Court of Gujarat, SCN alleged that the goods to be
Natural Gasoline Liquid and the noticee submitted that the goods are
Naphtha. The Show cause notice has alleged that M/s. Hazel Mercantile

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Ltd. (M/s. HML) imported 20110.77MT Natural Gasoline Liquid
(NGL)/Motor Gasoline in the guise of goods declared as 'Naptha'
classifying the same under CTH 27101229. The import of NGL/Motor
Gasoline is a restricted item and can be imported through State Trading
Enterprise (STEs) only in terms of policy condition of Chapter 27. The
noticee argues that the goods are Naptha under CTH 27101229 as per
Test reports of Geo Chem and IIP, Dehradun.

72. I find that the department as well as the importer has relied upon
various Test reports/Certificates. The Test reports relied upon in the SCN
are as follows:-
(1)TEST REPORT AND OPINION OF CHEMICAL EXAMINER-
Test report bearing No. 6454/2659863/06.02.2021 dated 25.02.2021
(RUD-3), which is reproduced below:-

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(2) TEST REPORT BY CRCL, DELHI- In pursuance of the direction of
Hon'ble High Court, the department forwarded the sample to CRCL, Delhi for
retesting vide letter dated 15.04.2021 under Test Memo No. 44/2021-22
dated 15.04.2021 (RUD No. 26). In the Test Memo, the laboratory was
asked to examine the sample with respect to all possible descriptions of
goods including Naphtha as declared by M/s. HML. The queries raised vide
Test Memo No. 44/2021-22 are as under:-
 " Whe ther the re pre se ntative sample co nfir ms
to description/ Characteristics/ Specifications/properties of
"Naphtha" i.e. "Full Range Naphtha" as per Customs Tariff heading
(CTH) 27101229?
 Whether the representative sample is mixture/ blended item of Light
Naphtha (CTH- 27101221) and/or Heavy Naphtha (CTH-27101222)
and/or Full Range Naphtha (CTH- 27101229) with or without any
other goods and falling under `Others' category goods as per CTH
27101290.
Whether the representative sample confirms to Characteristics/

Specrications/ properties of "Natural Gasoline Liquid"?
 Whether the representative sample confirms to Characteristics/
Specrications/ properties of "Motor Gasoline" as per CTH 27101241?
 Whether the representative sample is mixture/blended item of any of
the goods mentioned at Sr. No. 2 to 5 above with or without any other
goods and falling under `Others' category goods as per CTH 27101290
of Customs Tariff
 Whether the representative sample is other than that of mentioned at
Sr. No. 2 to 6 above? If so, details /identification thereof?"
(3) The CRCL, New Delhi provided the test results vide Re-Test Report
bearing C.No. 27-Cus/C-08/2021-22 dated 28.05.2021(RUD No. 27).

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The conclusion of Re-Test Report of the CRCL, New Delhi with respect to the
sample drawn from the subject goods on 09.04.2021 is reproduced
hereunder: -
"The sample is in the form of clear colourless liquid
having. it is mainly composed of lighter mineral
hydrocarbon oil, having mineral hydrocarbon oil content
more than 70% by Wt. It is having following
characteristic………... The sample is a low boiling liquid
extracted from natural gas. It is `11IGL."
73. The noticee/importer relies on the following Test reports-
(1) Test Report/Certificate of Quality of M/s.
Muscut International Shipping & Logistics LLP (MIS) said to
be the load port report:- I find that there are sufficient
evidences in the form of chats and documents which indicate
that the port of loading declared by M/s. HML i.e. Sohar,
Oman is not correct. Similarly, the shipper/supplier/consignee
declared by
M/s. HML as M/s. Aureole Trading LLC were not the actual
supplier/shipper/consigner. Therefore, the load port report of M/s.
MIS loses its authenticity and the same cannot be relied upon as a
valid document while deciding the issue of classification.
(2)Test Report of M/s. TUV India Pvt. Ltd.:- I find that M/s. HML
relied on a Test Report of M/s. TUV India Pvt. Ltd. claiming that the
report was pertaining to samples drawn by their surveyor M/s. TUV
India Pvt. Ltd. and that the Test Report indicated the subject goods
as Naphtha. I find that no permission was sought from Customs
authorities while drawing the samples, thus the same can not be
relied upon.
(3) RE-TESTING BY M/s. HML AS PER ORDER OF HON'BLE HC
OF GUJARAT-
In Pursuance of the order dated 05.04.2021 of the Hon'ble High Court
of Gujarat, samples marked as S4& S5, were submitted to M/s. Geo Chem
Laboratories Pvt. Ltd and IIP, Dehradun respectively by the importer. The
test report provided by M/s. Geochem is as under:-

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(4) The Test report provided by IIP, Dehradun is reproduced hereinbelow: -

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Indian Institute of Petroleum, Dehradun Confidential

1.0 INTRODUCTION
Studies on Sealed Naphtha samples from M/s Hazel Mercantile Limited, Mumbai.
2.0 STANDARD TEST METHODS
Naphtha sample (Marked as S5 with Seal No.715255, Location: MT-Tuna) was analyzed
in our laboratory for the following tests using respective standard test methods.
S.No. Properties Standard method
1 Specific Gravity 60°F ASTM D4052
g
2 Density @l5 °C ASTM D4052
3 Colour Saybolt ASTM D156
4 RVP @37.8 °C ASTM D6378
5 Total Sulfur(ppm) ASTM D4294
6 RON GC method
7 MON GC method
8 Existent Gum ASTM D381
9 Distillation. °C




IBP
5%(v/v)
10%(v/v)
20%(v/v)
30%(v/v)
40%(v/v)
50%(v/v)
60%(v/v)
70%(v/v)
80%(v/v)
90%(v/v)
95%(v/v)
FBP
Recovery
Residue
LOSS
10

ASTM D86
ASTM D6730
Composition, liquid vol%
Total Paraffins


n-Paraffins


Olefins
Nahthenes
Aromatics
11 Benzene UOP 744
12 Carbon Di Sulphide ASTM D5623
13 MTBE ASTMD4815
ETBE
TAME
DIPE
Methanol
Ethanol
Isopropanol,
n-propanol
isobutanol
tert-butanol
sec -butanol
n-butanol
Total Oxygenates

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RESULTS
Naphtha Sample (Marked as S5 with Seal No.715255, Location: MT-Tuna) Report:
Physico-Chemical Properties and Composition:


S.No. Properties Report
1 Specific Gravity g 60/60°F 0.6514
2 Density @15 °C (we) 0.6513
3 Colour Saybolt >+30
4 RVP @37.8 °C(kPa) 85.8
5 Total Sulfur(mg/kg) 210
6 RON (by GC method) 69.9
7 MON (by GC method) 67.8
8 Existent Gum(mg1100 mL) 1.7
9 Distillation, °C

IBP 27.0
5%(v/v) 36.5

41.0
10%(v/v)
20%(v/v) 42.0

30%(vlv) 43.0
40%(v/v) 45.0

50%(v/v) 46.5



I n d i a n i n s t i t u t e o f p e t r o l e u m D e h r a d u m C o n f i d e n t i a l

60%(v/v) 49.0
70%(v/v) 52.5
80%(v/v) 59.0
90%(v/v) 72.5
95%(v/v) 87.5
FBP 115.5
Recovery%(v/v) 96.0
Residue%(v/v) 1.0
Loss%(v/v) 3.0
10 Composition, liquid vor/o Volume %
Total Paraffins(Normal & iso) 95.10
Naphthenes 3.86
Olefins 0.22
Aromatics 0.82
n-Paraffins 48.35

11
Composition, liquid vol% Volume %

Benzene 0.37
12
Composition, liquid (mg/kg) mg/kg

Carbon Di Sulfide 6.06
13 Composition, liquid vol% Volume %
MTBE 0.01

ETBE 0.00
TAME 0.02

DIPE 0.00

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Methanol 0.00
Ethanol 0.00

Isopropanol, 0.00
n-propanol 0.00

isobutanol 0.00
tert-butanol 0.00

sec -butanol 0.00
0.00
n-butanol
Total Oxygenates 0.03

Indian Institute of Petroleum. Dehradun confidential

Carbon number wise analysis (% volume) based on ASTM D6730 method:
Paraffin
Naphthenes Olefins Aromatics
Carbon
No.
Normal Total
Iso

Paraffin
1 -- -- -- -- -- --
0.04 -- --
2 0.04 -- --

3 -- -- -- -- ----

1.12 -- 1.12 -- -- --

5 34.07 28.39 62.46 0.93 0.00 --
6 9.92 12.88 22.80 1.32 0.01 0.28
7 2.42 3.67 6.09 1.15 0.21 0.32
8 0.67 1.55 2.22 0.40 0.00 0.22
9 0.11 0.26 0.37 0.06 0.00 --
10 -- -- -- -- --

11 -- -- -- -- -- --
12 -- -- -- -- -- --
Total
48.35 46.75 95.10 3.86 0.22 0.82

Conclusion:
Based on the above observations/results, this sealed naphtha sample
(Marked as S5 with Seal No.715255, Location: MT-Tuna) falls under the
light naphtha range.
73 Kindly note that the analysis results given above cannot be deemed to
be a certificate on your product. These are the results of analysis performed
on samples provided to us.
74. I find that the Hon'ble High Court of Gujarat vide order dated
15.09.2021, while deciding the issue of validity of test reports made some
important observations as reproduced below:-
"What is evident from the communications annexed to the petition is that the petitioner
independently forwarded the samples for re-testing to the Geochem Laboratory and to
the 11PM without consulting the statutory authorities. Based on the order dated
05.04.2021 passed by the Court, it appears that the petitioner by its letters supplied a
long list of 66 parameters proposed to be tested which was subsequently changed to a
proposal of 49 parameters for testing. From reading of the affidavit-in-reply of the
respondent, it appears that no parameters were suggested by the petitioner pertaining
to the test of goods as Natural Gasoline Liquid. Even if the letters dated 16.02.2021 and
17.02.2021 which are pressed into service by Mr. Nankani are considered as creating
a doubt about the Custom House Laboratory what is indicated is that though the

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lines of investigation was in context of whether the goods was Naphtha, the CRCL report
dated 28.05.2021 (page 447 of the paperbook) in accordance with the parameters prescribed
by the authorities in the test memo indicate unequivocally that the consignment is that of
Natural Gasoline Liquid.
We are afraid then when the validity of the reports are disputed inasmuch as it
is the case of the Union of India through its investigating agency that the
parameters and scientific analysis of the reports on which the petitioner seeks
reliance are contradictory, this Court would be loathe in weighing its options on
such disputed questions of fact and disturbing the seizure memo an exercise
which cannot be undertaken in the midst of an investigation."
75. The Hon'ble Court observed that the test reports relied upon by the
petitioner (M/s. HML) were contradictory in nature in respect of analysis,
parameters and conclusions and also opined that the samples were
forwarded to the laboratories without consulting the statutory authorities.
The Hon'ble Court further noted that M/s. HML did not suggest any
parameter for testing of sample as "NGL". It was further stressed upon by
the Hon'ble Court that the CRCL report dated 28.05.2021 in accordance with
the parameters prescribed by the authorities in the test memo indicate
unequivocally that the consignment was that of Natural Gasoline Liquid.
76. Without prejudice to the above fmdings, I proceed to examine the
parameters tested by Geochem and IIPL as given below:-
MT TO MA (NAPHTHA ANALYSIS CO IVI PAR 'SIC' PI)

G ECAC I-I EIVI II P.
Sr Pio Parameters Method Result Method Result
0 Appearance
-
3_ Specific Gravity @ eCI F
0 65
0.653_4
-
2 Cie nsity @ 15 C 0.6506 girro I 0.6519 mica
ASThA 04052:2035
ASThA 04052
-
9 Colour Saytiolt ASTIVI 03_5e:203_5 G retorter than 910ASTIVI ID 156 Greater than -.510
R e i d V a p o u r P r e s s u r e
4.
ASThA 0929:2020 3_2.7 Fast/837.6 ImalASThA 0637E 835.83 IcPal
( R V P )
5 Sulphur ASThA 04.294. 23_0 m(3,(43
ASTIVI 04294.: mome 157 pprn
e Flash Point I P-170 203_9
Below 0 chow C
ERsti 1 lation: I. B. P.""" 95 chow C

27.0 deg C
5% Recovered 50 chow C 55.5 deg C
10% Re cove red 40 chow C 41.0 deg C
20% Recovered 45_ doom C 42.5 deg C
90% Re cove red .12 chow C 45.0 deg C
4-0% Re cove red 4.4 chow C 45.0 deg C
SO% Re cove red
42 chow C 45.5 deg C
A S T h A 0 5 6 = 2 0 2 0 7
6 7 % R e c o v e r e d 51 c how C 49.0 deg C
70% Re cove red
59 chow C 52_ 5 deg C
130% Re cove red 55 chow C 59_0 deg C
ASThA Cane
90% Re cove red HO chow C 72.5 deg C
95% Re cove red 105 chow C 837.5 deg C
ERsti 1 lation: F.13.P..... 120 chow C 115.5 deg C
Re cove ry 00.0 96 vol 96.0 96 yd.)
Residue 1.5 96 vol 1.0 96 yd.)
LOSS 0.5 96 vol 9.0 96 yd.)
a Total Paraffins
94.3_83 36(v,v)
95 10 36(v,v)
9 hi-Paraffins 47_93 56(Ne"e) 443.95 36(v,v)
10 0 1 ef i ns 0.05 56(Ne"e) 0.22 36(v,v)
9.836 36(v,v)
11 hiaphthe nes 4. 0156(Ne", )
0.832 96(v,v)
12 Aromatics 0.02 56(Ne"e)
19 Benzene 0.20 56(Ne"e) 1.10P 74-4- 0.97 36(v,v)
14- Total Organic Chloride ASThA 04929 B x 3_ PP Et
15 Mercury
ASThA 06790
ASThA 053_94:200n
x 1 PP Et
15 Arsenic x 1 PP Et
17 Le ad Content x 1-01.1.13
0 .11
ASThA 0622E:10 - - .,.83/I
1B Carbon ER Sul p hide p.s rivi osema 6.06 rrogjkis
GC-NAIAD/OS/CA- VS. 4,56 ( I CP)
0 E E
AA
EFI3E 1 mg/1 0.00 56(Ne"e)
IVITI3E 2 rross/1 0.01 56(Ne"e)
01 PE 0.00 36(v,v)
PA
'FAME x 1 mg/1 0.02 36(v,v)
PE
ASThA 0463_5
19
GC- NA 1_0,05,CA- E,S. 4,01- 203_7
Methanol 00 %(v",)
Aceto ne
VA
: 1 mg/1O.
IVI EK x 1
mg/1
x 1 mg/1 0.00 36(v,v)
Ethanol
PI- Propancal x 1 rrogji
0.00 56(Ne"e)
-
rap.
- Etuttaincal x 1 mg/1 0.00 36(v,v)
um
Total Oxygenates x 10 mg/1 0.09 36(v,v)
20 R 0 hi ASThA 02699 ASThA 02699 69.9
23_ MC) hi ASThA 02700 ASThA 02700 67.83
22 Existent Gum ASThA 0533_ ASThA 09B3_ 1.7

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29 Acidity
Ash
24-
25 API gravity
26 Water Content
27 Reactive Sul phur
25 % Evaporated at SO E'en C
29 % Evaporated at 155 E'en C
90 Total C2 Hydrocarbons
0.00 96 (v,v)
51 Total C2 Hydrocarbons 0.04 96 ( Ne/s• )
92 Total Ca 1-lycl roc. rtio ns 0.00 96 (v,v)
55 Total C4- 1-lycl roc. rtio ns 1.12 96 (v,v)
54 Total CS Hydrocarbons 69.99 96 (Ne/Ne)
55 Total Ce Hydrocarbons 24.43_ 96 (v,v)
55 Total C7 Hydrocarbons 7.77 96 (v,v)
97 Total CB Hydrocarbons 2.834 96 (v,v)
53 Total C9 1-lycl roc. rtio ns 0.45 96 (v,v)
59 Total C10 Hydrocarbons 0.00 96 (v,v)
ASThA 06790
40 Total C11 Hydrocarbons 0.00 96 (v,v)
4-1 Total C12 Hydrocarbons 0.00 96 (v,v)
77. I find that both the labs (Geo Chem and IIP, Dehradun) have tested
samples for "Naphtha". As evident from the test reports, they neither tested
any parameter for NGL nor were they asked to do so. It is clearly observed
by the Hon'ble Court also that the samples were sent to these labs without
consulting the statutory authorities. It is further seen that IIP Dehradun has
carried out Carbon Number wise analysis based on ASTM D6730 method,
however, the same has not been done by Geo Chem laboratory, though the
Geochem lab has done Carbon Break up as Total Paraffin, N-Paraffin, Iso
Paraffin etc. Thus, the findings of the Hon'ble Court and the department's
contention that the two reports are contradictory in terms of parameters and
analysis have merit.
78 Natural gasoline is defined as a liquid hydrocarbon mixture condensed
from natural gas, composed mostly of C5-C6 alkanes (e.g. -67% pentane, -
22% hexane) and also containing isopentane—components not typical in
naphthas whereas Petroleum naphtha has broader carbon range (C5-C9 to
C10) and often contains significant aromatics and naphthenes.
79 As per U.S. Energy Information Administration (EIA), Natural gasoline
and Natural Gas Liquid (NGL) are defined as under: -
"Natural gasoline: A term used in the gas
processing industry to refer to a mixture of liquid
hydrocarbons (mostly pentanes and heavier
hydrocarbons) extracted from natural gas. It
includes isopentane."
80. As per Hess Corporation's Safety Data Sheet of Natural Gasoline,
Natural Gasoline is a complex mixture of petroleum hydrocarbons separated
as a liquid from natural gas and/or natural gas liquids from which methane,
ethane, propane, butane, and possibly pentane have been extracted. It

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consists of hydrocarbons with carbon numbers predominantly in the range
C5 to C8.
81 From the perusal of Test report of IIP Dehradun, it is seen that the said
samples had more concentration of C5-C6 only and the remaining Carbon
numbers were very less which indicate that the imported goods were having
characteristics of NGL and not naphtha.
82. Further on perusal of the Test report by CRCL, Delhi, I find that the
said Test report incorporates not only the parameters of NGL but also of
Naphtha. The said Test report tested parameters like Distillation, Flash
point, API gravity etc, which are the parameters meant for Naphtha and
also tested parameters viz. % Evaporated at 60°C, % evaporated at 135
°C, total C5 and C6 hydrocarbons among others which are the parameters
for testing of Natural Gasoline Liquid. On the basis of careful analysis of the
parameters meant for NGL as well as Naphtha, the Joint Director opined
that the sample was a Natural gasoline Liquid, whereas IIP Dehradun and
Geochem had neither been advised nor directed to test the samples for
parameters of NGL.
83. In view of the above discussion and fmdings, I find that the test report
of CRCL, Delhi is more comprehensive to ascertain whether the imported
goods were Naphtha or Natural Gasoline Liquid and the findings of % of C5-
C6 hydrocarbons recorded in IIP, Dehradun supports the conclusion that
presence of lower hydrocarbon i.e. C5(63%) and C6(24%) hydrocarbons is
sufficient to treat the goods as NGL.
CHANGE IN TARIFF-

84 Vide Notification No. 36/2015-20, dtd. 17.01.2017, the Central
Government notified the ITC (HS) Classification of relevant period, under
Section 5 of the Foreign Trade (Development and Regulation) Act, 1992,
prescribing therein the scheme of classification of goods as well as the
provisions relating to Import/Export of each of such items. In terms of said
ITC(HS) Classification, 2017, the following are the relevant entries under
Chapter 27 of Schedule I pertaining to the Import Policy:

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Policy
Exim Code Item Description Policy
conditions
Petroleum Oils and Oils obtained from
2710

Bituminous minerals (Other than
Crude) and preparations not elsewhere
specified or included, containing by
weight 70% or more of petroleum oils or of
oils obtained from bituminous minerals.
These oils being the basis constituents of
the preparations other than those
containing biodiesel and other
th t il

271012 Light oils and Preparations:

Motor spirit
State Trading
Enterprises
Import as
per Policy
2710 12 11
to
condition
27101219
5
( )
27101220 NGL (NGL) State Trading
Enterprises
Import as
per Policy
condition
5
( )
State Trading
27101290 Other
Enterprises
Import as
per Policy
condition
5
( )


84.1. From the above provisions of ITC (HS) Classification, it is apparent
that there was no specific entry for goods described as "Naphtha" of
different grades. There were no entries for the different grades of solvents,
Aviation Gasoline etc. Thus, Naphtha was then classifiable under other
category i.e. 27101290. The goods described as "NGL" as per the
supplementary Note (b) provided in Chapter 27 of the ITC (HS), was falling
at Exim Code 27101220, which was restricted for import by the Policy as
well as Policy condition provided against the said Exim Code. As per the
Policy, the item NGL falling under Exim Code 27101220 could be imported
by STEs and as per the Policy condition (5) prescribed in Chapter 27, the
import of said item is allowed through IOC subject to para 2.20 of the FTP,
except for the companies, who have been granted rights for marketing of
transportation fuels in terms of Ministry of P&G's Resolution No. P-
23015/1/2001-MKT, dtd.08.03.2002 including HPCL, BPCL & IBP, who have
been marketing transportation fuels before the date.
85. Vide Notification No. 41/2015-2020, dtd.05.12.2017, the Central
Government had notified the revised Foreign Trade Policy 2015-20 under the

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provisions of Section 5 of the Foreign Trade (Development and Regulation)
Act, 1992, which came into effect from 05.12.2017.
86. In terms of Para 2.01 of the revised Foreign Trade Policy 2015-20, all
imports should be free, unless regulated by way of "prohibition", "restriction"
or "exclusive trading through State Trading Enterprises (STEs), as laid down
in the ITC (HS) Classification.
87. It was clearly stipulated in Para 2.01 of the FTP 2015-20 that there are
some items, which are free for import/export, but subject to conditions
stipulated in other Acts or in law for the time being in force.
88. In Para 2.02 of the FTP 2015-20, it was clarified that the ITC (HS) is
aligned at 6-digit level with the international Harmonized System goods
Nomenclature maintained by World Customs Organization. However, it was
further clarified in said Para 2.02 of the FTP 2015-20 that India maintains
national Harmonized System of goods at 8-digit level. It was also prescribed
vide Para 2.02 of the FTP 2015-20that the import/export policy for all
goods are indicated against each item in ITC (HS)
89. As provided vide Para 2.20 of the FTP 2015-20, any goods, import or
export of which is governed through exclusive or special privilege granted to
STEs may be imported or exported by the concerned STEs, as per the
conditions specified in the ITC (HS). Although it was also provided in Para
2.20 of the FTP 2015-20 that the DGFT, may, grant an authorisation to any
other person to import or export any of the goods notified for exclusive
trading through STEs. Later on, w.e.f. 01.01.2020, the following changes
were introduced in respect of the entries available in Chapter 27 of the
Customs Tariff:

271012 -- Light Oils and Preparations
--- Naphtha
27101221 ---- Light Naphtha
27101222 ---- Heavy Naphtha
27101229 ---- Full Range Naphtha

___
Solvent 60/80, solvent 50/120 and solvent 145/205

(petroleum hydrocarbon solvents) as specified under
standard IS 1745:
to ----
2710123
1
Motor gasoline confirming to standard IS 2796, IS
---
17021 or IS 17076:
2710124
1
to ----

27101250 --- Aviation Gasoline conforming to standard IS 1604
27101290 --- Other

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89.1 Thus, pursuant to the above changes, the specific entries were
provided for the goods of the categories of Naphtha, Solvent, Motor Gasoline
and Aviation Gasoline, which were earlier classified under residuary entry of
"Others", whereas the entry of NGL earlier available vide CTH No. 27101220
was removed and accordingly the NGL seemingly became classifiable under
the residuary entry of 27101290.
90 The Central Government vide Notification No. 38/2015-20,
dtd.01.01.2020 issued under Section 5 of the Foreign Trade (Development
and Regulation) Act, 1992 read with Para 2.01 of the FTP 2015-20,
introduced following changes in respect of the entries available in Chapter 27
of the ITC (HS): -


271012 Light Oils and
Preparations

Naphtha
Import as per
Policy
27101221 Light Naphtha State
Trading
Enterprises
condition (5) of Chapter
27101222 Heavy Naphtha
State
Import as per
Policy
Trading
Enterprises
condition (5) of Chapter
Full Range
27101229
Naphtha
Import as per
Policy
State
Trading
Enterprises
condition (5) of Chapter

Solvent 60/80,

solvent 50/ 120
and solvent
145/205
(petroleum
hydrocarbon solvents)
Import as per
Policy
State
Trading
Enterprises
27101231-
27101239
condition (5) of Chapter
Motor gasoline

confirming to standard
IS 2796, IS 17021
or IS
Import as per
Policy
State
Trading
Enterprises
27101241
27101249
condition (5) of Chapter
27101250 Aviation Gasoline
Import as per
Policy
State
Trading
conforming to
Enterprises
condition (5) of Chapter
27
standard IS 1604

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Import as per
Policy
State
27101290 Other
Trading
Enterprises
condition (5) of Chapter



91. In light of the above, it is proposed in the SCN that Naphtha, by
virtue of Policy condition (1) of the Chapter 27, became importable
through STEs. Further, the commodities, which were falling under
residuary entry of "Others" category became classifiable with the
specific entries provided.
92. Later on, vide Notification No. 51/2015-20, dtd.18.03.2020,
issued under Section 3 of the Foreign Trade (Development and
Regulation) Act, 1992 read with Para 1.02 and 2.01 of the FTP 2015-
20, the Import Policy for three categories of Naphtha and other items
were amended. The product Naphtha, which was earlier importable by
the STEs only was made freely importable. Apparently, there was no
such change of Policy provided for NGL falling under Exim Code
27101290
NO AMENDMENT IN SUPPLEMENTARY NOTE-

93. I find that Supplementary note (b) to Chapter 27 defined NGL as
"low boiling liquid petroleum product extracted from Natural Gas". It is
pertinent to mention that despite the deletion of entry 27101220 for
NGL from the tariff w.e.f 01.01.2020, the supplementary note (b) has
neither been amended nor deleted. This clearly shows that even though the
Tariff Entry 27101220 NGL has been removed the commodity NGL is still
defined under Customs Tariff Act, 1962 which implies that w.e.f 01.01.2020
tariff entries under 2710 have been enlarged incorporating Various classes of
Naphtha, Solvent, Motor Gasoline, Aviation Gasoline and others.
94. I find that the noticee has relied upon the decision of Reliance
Industries Ltd. Versus Commissioner of Customs, Ahmedabad (2024) 25
Centax 195 (Tri.- Ahmd.) to argue that the imported goods are classifiable
as Naphtha and not as NGL. I find that the said decision of the Hon'ble
Tribunal was in respect of allowing benefit of exemption from payment of
applicable duties of customs, in terms of Notification Nos. 18/2015-Cus and
21/2015-Cus, both dated 01.04.2015 against Advance Authorizations. On
going through the decision, I find that the Hon'ble Tribunal held that-
4.7 We find that as discussed above the NGL is also a
"Naphtha? and therefore, allowed to be cleared under Advance
Authorisation, The revenue also contended that ITC HS code of
Naphtha and NGL is different, hence, Advance Authorisation
having different ITC HS code, i.e. 27101290 and NGL being

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under 27101220 the clearance of goods cannot be allowed
under the Advance Authorisation. We find that as per above
discussion, we expressed our view that NGL is also a type of
"Naphtha?. So long description is correctly mentioned if ITC HS
code is under dispute, clearance under such Advance
Authorisation is allowable in view of the judgment in the case of
Condor Footwear (I) Limited v. Commr. of Customs, Ahmedabad
2019 (367) E.L.T. 653 (Tri.-Ahmd) which is reproduced below:-
"5. We have gone through the rival submissions. We find that
appellants are holder of license issued for availment of benefit
under Notification No. 93/2004-Cus. It is not disputed that the
description in the SION norms covers the goods imported by the
appellant. However, the Revenue is of the view that the goods
are classifiable under Chapter Heading 3920 49 00 as against
the Heading 5903 10 90 mentioned in the license. Though the
license has been amended, the Revenue rejected the
amendment on the ground that such amendments did not have
retrospective effect. The Revenue has relied on the decision of
the Tribunal in the case of Square D. Textiles Exports Limited
(supra) and the decision of Hon'ble High Court of Punjab &
Haryana in the case of Vikrant Overseas (supra).




5.1 It is seen that SION norms did not prescribe any heading
against the description of the goods. A perusal of the
Notification No. 93/2004-Cus. also shows that there is no
mention of sub-heading or heading against the goods permitted
for import against license. Ld. Counsel has argued that the
classification of the goods has no bearing for admissibility of
import under the notification. The appellant have also produced
the minutes of meeting held on 11-6-2009 wherein their case
for amendment of licenses was considered by the licensing
authority. In the minutes of the said meeting, the Ministry of
Commerce has held as follows :-

Case No. 208 M/s. Condor Footwear (India) Limited Surat
NC.11/10 dated 116-2009 F. No. 1/84/162/42/AM10-DES-V
Request for import against Advance Authorisation No. 5210021658, dated
6-6-2007 - under Para 4.7 of HBP (Vol. 1) 2004-2009
"Decision : The Committee considered the case as per agenda and along
with other relevant papers and heard Sh. Rakesh Adnani, Director and
Sh. Surendra Gandhi, an authorized representative of the firm, who
appeared for personal hearing before NC. They explained the case along
with relevant papers and sample of the export item. In this case advance
authorization in question was issued on 6-6-2007 to the applicant firm
and input output norms were ratified by norms Committee by allowing
the inputs as per SION at S. No. A-3541. In this case firm imported
Synthetic cloth for Uppers (Non-Woven/Woven/Knitted/Laminated with
PVC/PU) HSW-KNO6B-LP. The Committee felt that as per SION, A-3541,
it is clearly specified that the import item viz., Synthetic cloth for Uppers
(Non-Woven/Woven/ Knitted/Laminated with PVC/PU) and Synthetic
cloth for Insole (Non-Woven/Woven/Knitted/Laminated with PVC/PU) are
to be used for Uppers & Insole of the export product Synthetic
Slippers/Sandals with PU Sole of all sorts irrespective of ITO (HS) Code,
It has been observed that description of import item was classified under
ITC (HS) Code 5903 10 90 with effect from the date of issue of the
advance authorization. It was observed that in this case, the SION
permitted the import item as per Bill of Entry and description covered

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under ITO (HS) Code 5903 10 90. The sample submitted by the firm has
a clear view that item's description allowed under SION at S. No. A-3541
are classified under ITC (HS) Code 3920 49 00 instead of ITC (HS) Code
5903
10 90. Thus, Committee after detailed deliberations in consultation with
the representatives of technical authorities present in the meeting felt
that in both the heading of ITC (HS) code, the description of item of
import and export are the same as per relevant SION, the condition of
matching of ITC (HS) Code does not arise here. Hence, in this case, it is
clarified that change in the ITC (HS) Code has no bearing on the benefits
to be given under advance authorization issued under Para 4.7 of HBP."
From the above, it is apparent that as far as the benefit of
Notification No. 93/2004-Cus. is concerned, the classification of
goods specified in SION norms is not relevant unless it is
specifically mentioned in the SION norms. The committee at
Ministry of Commerce has also clarified that any change in the ITC
(HS) Code has no bearing on the benefits to be given under
advance authorization issued under Para 4.7 of HBP.
5.2 The Revenue has relied on the decision of Hon'ble High Court
of Punjab & Haryana in the case of Vikram Overseas (supra). It is
seen that the facts in the said case are significantly different. In
the said case, the amendment was substantial in nature whereas
in the present case it is of procedural in nature. The Hon'ble High
Court of Bombay in the case of Bhilwara Spinners Limited v. UOI -
2011 (267) E.L.T. 49 (Bom.) distinguished the decision of Punjab
& Haryana High Court in the case of Vikrant Overseas (supra) on
the ground that license was amended with a clear intention of
having a retrospective effect. In the instant case the committee
has clarified that any change in the ITC (HS) Code has no bearing
on the benefits to be given under advance authorization issued
under Para 4.7 of HBP. In this circumstance, we hold that
amendment made to the license will have a retrospective effect
and the benefit of the notification cannot be denied on the ground
that the classification of the goods did not match the classification
specified in the advance license as long as the description of the
goods matches with that prescribed in the license.
6. In view of the above, appeals are allowed."
4.8 In view of above decision, even if ITC HS code is different but
so long description is correct, the clearance of import is allowed.
Accordingly, irrespective of dispute raised by revenue on
classification, the appellant is otherwise eligible for clearance of
goods under Advance Authorisation, therefore, the impugned
order is not sustainable on this ground alone.
95 I find that the issue involved in the matter of M/s. Reliance Industries,
referred above, was eligibility for clearance of goods under Advance
Authorisation and the Hon'ble Tribunal held that even if the classification
dispute remains, the benefit of Advance authotisation is allowed. Thus, the
decision of Hon'ble Tribunal can not be taken as a basis for classification of
goods.
TEST OF `MOST AKIN'-
96. As discussed in the foregoing paras, the imported goods have been
declared as Naptha by the importer and department has proposed
classification as "Natural Gasoline Liquid". On the basis of Test Report issued
by Geo Chem and IIP, Dehradun, I find that the tests have been carried out
in order to analyse the parameters of Naphtha and no parameter of NGL had
been tested whereas CRCL, Delhi has tested parameters of Naptha viz.

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Distillation (IBP, 5% recovery, 10% recovery, 50% recovery, 90% recovery
and Final Boiling Point), Density at 15 °C, Aromatics, Olefins etc. as well as
parameters of Natural Gasoline Liquid viz. Total C5, C6 Hydrocarbons, %
Evaporated at 60°C, % evaporated at 135°C, Reactive Sulphur etc.
97. On careful analysis of the parameters tested, I find that the
parameters tested suggest that the imported goods are most akin to Natural
Gasoline Liquid even when some of the parameters are also falling within the
limit of Naphtha.
98 I find that the in case of a quandary as to the real nature of goods, test
of most akin or closest resemblance has been held to be the valid test of
classification by the Hon'ble Supreme Court of India in tha matter of
Gastrade International Versus Commissioner of Customs, Kandla (2025) 29
Centax 8 (S.C.)/2025 (392) E.L.T. 529 (S.C.), relevant paras of the same
are reproduced below-
“83. By way of illustration, we may explain the position. If an importer
classifies the imported goods as "X", which is disputed by the Customs
authority and classifies the same as "Y", the test would be whether the goods
imported are "most akin" to "X" or "Y" in terms of Rule 4 of the aforesaid Rules.
The importer may also claim if he so wishes, that the goods are most akin to
"Z", though it may be akin to "Y" also, if such claim is more beneficial to him.
Thus, it has to be shown by the Customs Authority that the imported goods
bear the most affinity or resemblance or similarity to be "most akin" to the
specified goods and not mere similarity or akinness. In other words, the test
will be whether the imported goods bear the closest resemblance or similarity
with the specified good so that these can be considered to be "most akin" to
the specified good. Certainly, the principle of preponderance of probability may
fall short of the more heightened test of "most akin" for proper classification.
The imported goods may bear resemblance to more than one specified goods,
in which unless the high degree in the test of preponderance of probability is
applied, there may be difficulties in the proper classification. However, the said
difficulty may be overcome if the test of "most akin" is applied. If the attributes
of the imported goods show that the goods are "most akin" to the specified
goods amongst an array of other specified goods, these imported goods have
to be classified as the specified goods with which these goods bear the most
resemblance or most akinness. Thus, in our view, application of the principle of
preponderance of probability does not provide an accurate test. The more
accurate and precise test will be whether the goods in question are "most akin"
or most similar to the specified goods, as provided under Rule 4 referred to
above.”
99 The importer declared the goods as Naphtha, while the department
proposed their classification as Natural Gasoline Liquid (NGL). Test reports
from Geo Chem and IIP focused only on Naphtha parameters, whereas
CRCL, Delhi tested for both Naphtha and NGL parameters. Upon analyzing
the full set of test results, the characteristics of the imported goods are
found most closely resembled NGL, though some traits matched Naphtha.
This conclusion aligns with the Supreme Court's ruling in Gastrade
International vs. Commissioner of Customs (2025), which held that for
classification, the correct test is not mere probability but determining to
which product the goods are "most akin", i.e., the closest in resemblance
among the possible classifications.

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SUMMARY-
100 In view of the above discussion and findings, it is seen that the case
pertains to the import of a petroleum product by M/s Hazel Mercantile Ltd.
(HML), which was declared as "Naphtha" under Customs Heading 27101229.
However, upon examination and testing—particularly by CRCL, Delhi—it was
found that the imported goods were actually "Natural Gasoline Liquid" (NGL),
a restricted item allowed to be imported only through State Trading
Enterprises (STEs) as per the Foreign Trade Policy. The CRCL report,
conducted under official direction and encompassing both Naphtha and NGL
parameters, conclusively identified the product as "Natural Gasoline Liquid"
or NGL. In contrast, private lab (Geo Chem and IIP, Dehradun) reports relied
upon by the importer lacked statutory backing, did not test for NGL
parameters.
101. It is also seen from the report of IIP, Dehradun that on account of
predominance of pentane (63%) alongwith hexane (24%), goods are to be
treated as NGL, more so when available literature on the NGL and Naphtha
have overlapping constituents in the range of C4-C12, with lower range like
the higher proportions of pentane indicating an item to be in the nature of
NGL.
102. Despite the deletion of a specific tariff entry for NGL (27101220) from
01.01.2020, the supplementary note defining NGL remains intact, affirming
that NGL is still a separately identified and restricted product under the
Customs Tariff. The importer's reliance on the Reliance Industries Tribunal
ruling is held misplaced, as that decision dealt with eligibility for Advance
Authorisation rather than classification under import policy. Therefore, the
classification of the imported goods as NGL—restricted for import—stands
legally and technically justified.
103. In view of the above findings and evidences placed on record, I hold
that the imported goods are correctly classifiable as "Natural Gasoline Liquid"
or NG under CTH 27101290.
CONFISCATION OF GOODS-
104. I find that the though being NGL falling under CTH No. 27101290,
were mis-declared as Naphtha, under CTH No. 27101229 of Customs Tariff,
by suppressing its correct description i.e. NGL. The condition stipulated for
import through or by IOC as per the Foreign Trade Policy, were not at all

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complied with by the importer M/s. HML, in respect to the import of NGL
made by them, which was sought clearance by them under the said Bills of
Entry. Thus, there is evident mis-declaration with sole aim to circumvent the
restrictions imposed on its import under the Foreign Trade Policy. The
subject goods imported by M/s. HML per MT Tuna are therefore liable for
confiscation under Section 111(o), 111(m) and 111(d) of Customs Act,
1962.
105. Further, even in the context of the Notification No. 105 -
Cus dtd. 06.08.1938, the goods in respect of which the restricting
provisions of the Petroleum Act, 1934 and the rules made there under are
applicable and where the compliance with those provisions is required from
the importer of such goods; if non-compliance is observed on the part of the
importer, then the same have to be treated as contravention of the deemed
prohibition imposed on such goods in terms of Section 11 of the Customs
Act, 1962. Import of NGL; further to this, if to be considered as classifiable
as "Petroleum Class A", then the Licence issued under the Petroleum Rules,
1976 is mandatory for import of goods falling under "Petroleum Class A" and
only such Petroleum is allowed to be imported which are already in
possession of Licence issued under the Petroleum Rules, 1976. As per
Notification No. 105-Cus dtd. 06.08.1938, any import made in contravention
of the provisions of the Petroleum Act, 1934 (30 of 1934) may have to be
treated in deemed violation of the provisions of Section 11 of the Customs
Act, 1962. Since the importer in the instant case has failed to follow such
compliance, it is clear that they have also violated the provisions of Section
11 of the Customs Act, 1962, which makes such goods liable for confiscation
under Section 111(d) and 111(p) of the Customs Act, 1962.
106. Since the goods have been released on provisional basis for the
purpose of re-export, Redemption fine is imposable under Section 125 of the
Customs Act, 1962.
VALUATION OF GOODS-
107. I find that the received quantity of subject goods provided by Shri
Bharat Goswami, Terminal Manager, FSWAI in Litres is 31183563 Litres
(RUD No. 52). Considering the market rate of Gasoline at Rs. 88.92 per litre
as on 01.02.2021 as per website globalpetrolprces.com , the market value of
received quantity 19990.541 MT i.e. 31183563 Litres (out of declared qty.
20110.77 MT) subject goods is calculated as approximately Rs.
278,95,19,113/-(RUD No. 53). Whereas,M/s. HML has declared the
assessable value in the Bills of Entry as Rs. 79,63,76,540/- only which is

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much lesser even after further value additions on account of customs duty,
other taxes and other expenses
108. Further additional submissions were made by the advocate producing
the comparative chart of various reports which is as follows:-

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109 The Learned Advocate also made following additional submissions to
bring on record various case law:
109.1 In case of multiple contacting test reports, benefit of doubt must be
given to the assessee and the test report in favour of assessee must be
given precedence.
109.2 In the present case, the test reports issued by Geo Chem
Laboratories Pvt. Ltd. (―Geochem‖) [Pg. 270 of Appeal] and by IIP,
Dehradun, explicitly conclude that the imported goods are Naphtha, as is
declared by the Appellant. It is reiterated that the above test reports are
based on testing of the relevant parameters specified in the Indian Standard
17794:2022 issued by the Bureau of Indian Standards, as applicable for
Naphtha. As against the above, it is the case of the department that the
report dated 15.05.2021 [Pg. 146 of Appeal], including the clarification dated
19.02.2021 [Pg. 150 of Appeal], as issued by the CRCL, Kandla as well as
the test report dated 28.05.2021 issued by CRCL, Delhi [Pg. 284 of Appeal],
have concluded that the imported goods are Natural Gasoline Liquid (―NGL‖)
109.3 At the outset, it is submitted that the reports relied upon by the
department have not tested the parameters mentioned in the BIS standard
applicable for Naphtha.
110. Further, it is submitted that the CRCL test reports are also not based
on testing of the parameters specified in the Standard 3132-84 issued by the
Gas Processors Association, USA. Most importantly, it is submitted that the
CRCL test reports also do not specify the underlying technical literature or
the tested parameters to justify the conclusion that the samples were
―extracted from natural gas‖, which requirement forms part of the very
definition of the term NGL as per Supplementary Note (b) to Chapter 27. It
is submitted that in light of the above flaws in the test reports issued by the
CRCL, the Respondent erred in relying upon them to hold that the imported
goods are NGL. In any event, it is a settled position in law that in case of
conflicting test reports, the benefit of doubt must be given to the assessee
and the test report in favour of the assessee must be given precedence.
111. In this regard, reliance is placed on the following judgments, copies
whereof are enclosed: a. Shri Lakshmi Cotsyn Ltd. v. Commissioner of Cus.
& C. Ex., Kanpur, 2011 (263) ELT 299 (Tri.- Del.) b. Commissioner of
Customs, Mumbai v. Atlas Mercantile Pvt. Ltd., 2019 (366) ELT 911 (Tri.-
Mumbai), Department SLP dismissed on the ground of monetary limits, 2024
(387) ELT 262 (SC) c. Colourtex Industries Pvt. Ltd. v. CC, Ahmedabad,
2024 (2) TMI 1638 – CESTAT Ahmedabad 10. It is submitted that in the
present case as well, the reports issued by Geochem and IIP, based on BIS

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standards for Naphtha, are in favour of the Appellant, whereas the
uncorroborated test reports issued by the CRCL, Kandla and CRCL, Delhi, are
in favour of the department. Thus, it is submitted that considering the
apparent conflict, the benefit of doubt must be given to the Appellant and,
therefore, the impugned order is liable to be set aside on this ground itself.
Submissions pertaining to observations of the Hon‘ble Gujarat High Court in
its Order dated 24.08.2021. In any event, it is submitted that the

Respondent has erred in relying on the observations made by the Hon‘ble
Gujarat High Court in its Order dated 24.08.2021 [Pg 301 of Appeal], passed
while deciding the plea of the Appellant challenging the seizure of imported
goods and requesting provisional release. It is submitted that the
Respondent has erred in relying on the observations made by the Hon‘ble
Gujarat High Court in paragraphs 8 to 10 of the Order dated 24.08.2021,
without reproducing the entire context of the said observations.
112. From a perusal of the Order dated 24.08.2021, it is clear that in the
said paragraphs 8 to 10, the Hon‘ble Gujarat High Court has merely set out
the opposing contentions of both sides in respect of the conflicting test
reports. Thereafter, in paragraph 11 of the said Order, the Hon‘ble Gujarat
High Court, having taken note of the contentions of both parties, observed
that an examination into the said contentions qua the validity of the test
reports would be a question of fact, which could not be adjudged in a
petition filed under Article 226 of the Constitution of India. Thus, it is
submitted that the observations, relied upon by the Respondent in the
impugned order, were not findings of the Hon‘ble Gujarat High Court but
were merely a record of the opposing contentions of the parties.
113. Department also availed the window provided to it to make any
further submissions and vide letter dated 12.08.2026 submitted as follow:-

113.1 Direct Application of the Supreme Court Judgment in Gastrade
International:
The Hon'ble Supreme Court‘s ruling in Gastrade International [2025 INSC
411] directly bolsters the Respondent‘s case and dismantles the Appellant's
reliance on their private, restricted test reports.
 The 'Most Akin' Test (Rule 4): The Supreme Court explicitly held
that classification must be determined by assessing which specified
product the goods are 'most akin' to, invoking Rule 4 of the General
Rules for Interpretation of the Customs Tariff. The objective chemical

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data—specifically the extremely high C5-C6 pentane/hexane
concentration—makes the imported cargo chemically and physically
'most akin' to NGL, falling squarely under the restricted category of
CTH 27101290.
 Supremacy of Chapter Notes Over External Standards: The
Supreme Court reiterated that classification must be determined
strictly according to the terms of the headings and relative Chapter
Notes. The Appellants argue that CRCL did not test parameters
specified in external BIS or American GPA standards for Naphtha.
However, Supplementary Note (b) to Chapter 27 of the Customs Tariff
Act statutorily defines NGL as a 'low boiling liquid petroleum product
extracted from Natural Gas.' The CRCL report aligns perfectly with this
statutory Tariff definition, which legally supersedes any external,
private, or international guidelines the Appellant wishes to selectively
apply.
113.2. 'Conflicting Test Reports' and Benefit of Doubt: The Appellants
have heavily relied upon the Tribunal decisions in Shri Lakshmi Cotsyn Ltd.
2011 (263) ELT 299 (Tri.- Del.), Atlas Mercantile Pvt. Ltd. 2019 (366) ELT
911 (Tri.- Mumbai), and Colourtex Industries Pvt. Ltd. 2024 (2) TMI 1638 to
argue that in the event of conflicting test reports, the benefit of doubt must
be given to the assessee, and the reports of Geo Chem and IIP Dehradun
should take precedence. This reliance is entirely misplaced and misconstrued
on factual and scientific grounds.
• Revenue’s reports are not contradictory: The decisions in
Shri Lakshmi Cotsyn Ltd., Atlas Mercantile Pvt. Ltd., and
Colourtex Industries Pvt. Ltd. Cited by the appellants in their
additional submissions dealt with situations where the
department‘s reports themselves were contradictory and further
re-test were not done. Benefit of doubt was given to the
assessee because Revenue‘s own reports were contradictory. In
the instant case the said judgements are distinguishable because
Revenue‘s reports are not contradictory. The contradictions are
in conclusion of private laboratories reports (based on Appellants
close-ended query) and Revenue‘s test reports. Thus, there
arises no question of granting Benefit of Doubt to assessee.
• Objective Science vs. Subjective Visual Tests: The
judgments cited by the Appellant, particularly Shri Lakshmi
Cotsyn and Atlas Mercantile, pertained to disputes over whether

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textile yarn was 'textured' or 'non-textured'. In those cases, the
Tribunal noted that the tests were largely 'subjective' visual
examinations, leaving room for human error and genuine
ambiguity. In stark contrast, the present case involves the exact
chemical composition of liquid hydrocarbons using advanced
objective chromatography. There is no subjective ambiguity in
chemical carbon chain profiling.
• Absence of True 'Conflict' in Raw Data: The Appellants'
argument is built on the false premise that the private test
reports and the CRCL reports contradict each other. While the
conclusions drawn by the private labs (based on close-ended
queries) suggested 'Naphtha', the raw scientific data within the
Appellant's own IIP Dehradun report confirms a massive 85.26%
concentration of C5–C6 hydrocarbons (Pentane and Hexane).
This chemical footprint scientifically affirm the akinness to
Natural Gasoline Liquid (NGL). This is in line with Hon‘ble
Supreme Court‘s decision in Gastrade International cited above
emphasising ‗most akin‘ test. The raw data of the test reports
unequivocally indicate that the goods are most akin to NGL,
notwithstanding the conclusion of the reports based on biased,
close ended query.
113.3. Rebuttal Regarding the Hon'ble Gujarat High Court’s
Observations: The Appellants contend that the Respondent erred in relying
on paragraphs 8 to 10 of the Hon'ble Gujarat High Court‘s Order dated
24.08.2021, arguing that the Court was merely recording opposing
contentions and not rendering final findings of fact.
• Substantive Evidence Trumps Interim Observations: The
validity of the Order-inOriginal does not hinge solely on the
interim observations of the Hon'ble High Court. The confiscation
and penalties are grounded in absolute, unassailable evidence of
fraud that emerged after the High Court's initial involvement.
• Proof of Deliberate Fraud (Mens Rea): The Appellants
conveniently ignore the digital forensic evidence recovered from
their own mobile devices. WhatsApp chats directing the vessel
MT Tuna to turn off its AIS transponder, coupled with the
forensic recovery of the original Iraqi Bill of Lading, prove
beyond any doubt that the cargo originated in Basrah, Iraq, and
not Oman. This deliberate fabrication of origin documents

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completely vitiates any claim to 'good faith' or the 'benefit of
doubt' that the Appellants are seeking under the guise of
conflicting test reports.
• Detailed oral arguments regarding the fraud and
evidence: The hearing that took place on 05.08.26 before the
Hon‘ble Tribunal primarily focussed on the test reports of the
laboratories. No arguments regarding ‗how the fraud was
perpetrated‘ and ‗what evidence are available‘ took place before
the order was reserved. Though all the details are available in
the SCN, OIO and Revenue‘s submissions, it is requested that
the Hon‘ble Tribunal may consider hearing the case for
examination of the fraud and evidence.
113.4 The Appellants are attempting to equate a deliberate, orchestrated
Customs fraud with a routine classification dispute. The Supreme Court in
Gastrade International demands complete scientific evaluation and strict
adherence to Tariff Chapter Notes to determine what a product is 'most akin'
to. The CRCL report, supported by the Appellant's own raw data,
unequivocally proves the cargo is NGL. When this scientific truth is combined
with the proven forgery of shipping documents and the AIS blackout, the
claim for 'benefit of doubt' collapses entirely.
Discussions and findings
114. We have gone through the conflicting reports placed on record by both
sides over the stated position of the department that the imported product is
Natural Gasoline Liquid and not Naphtha as claimed the party. We
understand that as held by the Apex Court in 2023 (383) ELT 241 (S.C) in
the matter of Hewlett Packard India Sales Pvt. Ltd. V. Commissioner of
Customs (Import), Nhava Sheva if a change of classification if sought by the
department even from self assessment, then the department has to
discharge the burden of proof.
114.1 We find that in TATA Chemical Limited Vs. Commissioner of Customs
(Prev), Jamnagar as reported in 2015 (320) ELT 45 (S.C), Hon‘ble Apex
Court held that chemical examination if based on statutory procedure and
BIS standards shall be preferred as they represent the understanding of
trade about the chemical product and in case of contrary test reports, the
same should not be settled without reason. Further, in Union of India vs
Garware Nylons Ltd. as reported in 1996 (87) ELT 12 (SC), the Hon‘ble
Supreme Court while indicating that the burden of proof to show mis

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classification lies on the revenue laid a useful proposition that technical
ambiguity, if any, existing must be resolved on evidence and no opinion or
consequences can rest, if the scientific materials is of doubtful nature.
114.2 In 2022 (382) E.L.T 23 (S.C)-C.C, Mundra Vs. Sunrise Traders the
Hon‘ble Supreme Court held that the expert opinion of chemical Examiners if
inconclusive cannot be accepted to disturb classification sought by the
assessee. Also, following the decision of the Apex Court in the matter
reported in 2026 (395) ELT 429 (Gujarat) in the case of Aparajita Energy
Private Limited, the Hon‘ble Gujarat High Court further elaborated that the
expression ―Most akin‖ must be shown by the department to have been
established, including the extent of characteristic, to change the nature of
classification must be shown through the test report. Further, in (2025) 29
Centax. 8 (SC) in the matter of Gastrade International v. Commissioner of
Customs Kandla. The Hon‘ble Supreme Court while elaborating how the
expression ―most akin‖ should be interpreted in Para 87 of the order
observed that if parameters were inconclusive on the basis of evidence
available on record, the benefit of doubt must be given to the appellant.
This Tribunal has also held the statement of a person of conflicting peripheral
evidences emanating from some of the documents cannot determine
classification of technical goods in 2025 (391) ELT 652 (Tri-Ahm.) in the
matter of Stonex India Pvt. Ltd. Vs. C.C.E. In 2019 (367) ELT 346 (Mad.) in
the matter of R.R Steels Limited Vs. C.C (Chennai). The first report was
adverse, the second favourable, the Hon‘ble High Court preferred the
second. Similarly, in 1987 (28) ELT 346 (Mad.) in the matter of Jenson
Enterprises v. Collector of Customs, Cochin, with the conflicting reports
placed on records, the opinion of basic scientific investigation is to be
preferred than the opinion given without any basis.
115. In the instant case from the available comparative chart made out by
the party, 41 Parameters have been shown as relevant to establish, whether
the product is Naphtha or not? The BIS requirement approves of 12
th
Parameters and 11 types of test including 12 as the visual examination in
the case of any dispute to establish the nature of product. We also find that
the CRCL Delhi by specific gravity at nine different temperatures has used 10
tests to come to the results on the basis of various temperatures only. The
CRCL, Kandla had arrived at the same six parameters by testing specific
gravity at various temperatures. The Geochem Laboratory which is specific
to chemical substances has tested higher number of parameters at various
temperature which are 19 Number. The Indian Institute of Petroleum

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(IIP) Dehradun likewise also checked the highest parameters at various
tempretures (total 41) to conclude that the product was light Naphtha.
116. The AR has objected to the reference letter of the party to IIP as same
being suggestive, as it already indicated while making reference that the
product was Naphtha and Indian Institute of Petroleum (IIP) to provide as to
what kind of product Naphtha and it was concluded that it was light Naphtha.
117. We find that the CRCL, New Delhi in its reports dated 28.05.2021
provided as below:

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118 The report tested only 7 & 8 parameters on various temperatures and
concluded that it was Natural Gasoline Liquid. We find that the Geochem
Laboratory is a leading inspection testing and cargo Certification Company
existing since 1964 has tested various parameters in most detailed manner
and concluded as follows:

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118.1 Thus, it is clear that the lab which specializes in the discipline of
chemical testing and also has a dedicated section of petroleum and
petroleum product has clearly stated the product on the basis of test carried
out to be Naphtha. Further, Indian Institute of Petroleum, Dehradun ("IIP"),
tests reports which have been often accepted even by the various Courts on
perto products has also concluded on the basis of various tests carried out
by it that the product falls within the range of light Naphtha.
119 The Objection of the Department that while sending the report the
party had stated the product to be Naphtha and therefore the same was
improper being suggestive, cannot be given credence as the test of report by
IIP is based on elaborate testing to determine the nature of the product.
Normally, the lab of a stature will not take a broad description given on its
face value. The argument of the AR is rejectable by his, as more detailed
report obtained by the party on the samples given to him and sent to
Geochem through a very detailed examination has also concluded the
product to be Naphtha only. Samples were as drawn by the department
only
119.1 For the above reasons, and on the basis that the two test reports by
specialized testing agencies who were having greater wherewithal to test
petroleum products than the labs of the department have concluded
positively in favour of the appellant, same reports are therefore preferred by
us as acceptable.
120 We are fortified in our findings of selecting more specialized agencies
over general testing agencies and also while adopting one out of conflicting
report, reason have to be given by the following case law:

 Decision of this Bench in the matter of Colourtex Industries Pvt. Ltd V.
CC, Ahmedabad -2024 (2) TMI 1638-CESTAT Ahmedabad- Which
opted for report favorable to party for reasons stated (Textile related
reports of Textile committee to be preferred)
 Commissioner of Customs Mumbai v. Atlas Mercantile Pvt. Ltd-2019
(366) ELT 911 (Tri. Mumbai). The SLP of department was dismissed on
monetary limits in this case in 2024 (387) ELT 262 (S.C) due to law
tax effect but still rules as the last word on the subject Shri. Lakshmi
Cotsyn Ltd. Vs. Commissioner of Cus. & C.EX., Kanpur-2011 (263) ELT
299 (Tri-Del)-Textile committee for textiles is a specialized agency and
C.R.C.L is a general physician.

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120.1 We now proceed to deal with other evidences that revenue has
placed on record including the evidence of Whatsapp chat, conversation and
other evidences and submissions during the investigation regarding the
product claimed to be Naphtha by the party. We find that requirement of
Section 138C, which equally apply as per various rulings even on whatsapp
chats by treating mobile also as computer, and same requires as follows:
138C. Admissibility of micro films, facsimile copies of documents and
computer print outs as documents and as evidence
(1) Notwithstanding anything contained in any other law for the time being in
force,-
(a) a micro film of a document or the reproduction of the image or images
embodied in such micro film (whether enlarged or not); or
(b) a fascimile copy of a document; or
(c) a statement contained in a document and included in a printed material
produced by a computer (hereinafter referred to as a "computer print-out") if
the conditions mentioned in sub-section (2) and the other provisions
contained in this section are satisfied in relation to the statement and the
computer in question,
shall be deemed to be also a document for the purposes of this Act and the rules
made there under and shall be admissible in any proceedings there under, without
further proof or production of the original, as evidence of any contents of the original
or of any fact stated therein of which direct evidence would be admissible shall be
the following, namely:-
(2) The conditions referred to in sub-section (1) in respect of a computer print
out shall be the following, namely:-
(a) the computer print out containing the statement was produced by
the computer was used regularly to store or process information for
the purposes of any activities regularly carried on over that period by
the person having lawful control over the use of the computer;
(b) during the said period, there was regularly supplied to the
computer in the ordinary course of the said activities, information of
the kind contained in the statement or of the kind from which the
information so contained is derived:
(c) throughout the material part of the said period, the computer was
operating properly or, if not, then any respect in which it was not
operating properly or was out of operation during that part of that
period was not such as to affect the production of the document or the
accuracy of the contents; and
(d) the information contained in the statement reproduces or is
derived from information supplied to the computer in the ordinary
course of said activities.
(3) Where over any period, the function of storing or processing information for the
purposes of any activities regularly carried on over that period as mentioned in duse
(a) of sub-section (2) was regularly performed by computers, whether-
(a) by a combination of computers operating over that period; or
(b) by different computers operating in succession over that period; or
(c) by different combinations of computers operating in succession over that
period; or

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(d) in any other manner involving the successive operation over that period,
in whatever order, of one or more computers and one or more combinations
of computers,
all the computers used for that purpose during that period shall be treated for the
purposes of this section as constituting a single computer, and references in this
section to the computer shall be construed accordingly.

120.2 It is clear that evidence gathered can be allowed even if from the
whatsapp chats and even if retrieved from the mobile phone if various
conditions are fulfilled. (i) Regularity of information to be fed for the
purposes of any activities regularly carried on over that period by person
having lawful control over the use of mobile. (ii) All the conditions of sub
section (2) are also required to be fulfilled. Further the sub Section (3)
provides that information if is carried out by different computers i.e. mobiles
over that period then all the computers used i.e. mobiles used for the
purposes during that period shall be treated for the purpose of section
constituting a single computer and term computer (i.e. mobile) shall be
construed accordingly. This necessitates that the mobile at both ends and
more than one mobile if used should be part of the investigation. Under Sub
Rule (4), there is a requirement i.e. certificate should be given by the person
who feeds the information or operates the computer (i.e. the mobile) of such
certificate there is no talk by the department of such certification, also a
clear-cut admissible statements is also not on record so as to provide a
substitute for the certificate required under the aforesaid rule. The
adversarial statements, if any, of others are required to be subjected to
examination and cross-examination which is missing in this case. Again,
department has not brought out as to what would have been gained by the
appellant by declaring a different country of origin against the preferred
documentary evidence. In its various statements, the director concerned of
Hezel Mercantile Limited has duly tried to explain each and every WhatsApp
talk also and not pointing to any offence having been made. The absence of
certificate is clearly in violation of requirements of Section 138C. In this
context, we are of the view that the certificate of Section 138C (4) of
Customs Act, 1962 can be substituted only by an admissible statements to
indicate legal compliance. Further as has been held in (2026) 40 Centex 34
(Tri. Bom) in the matter of M/s. Mukund Steel Ltd. Vs. Commissioner of
Customs (NS-III), Raigad, it has to be shown as to what benefit was
available to the party by changing the origin of goods when no concessional
benefit was being derived Para 26 to 27 of the aforesaid decision becomes
important and are being reproduced below:-

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“Para 26. The exercise of classification in accordance with settled
judicial precedent applied to enacted law warranting conformity of
imported goods with substituting description has not been
undertaken. Even the supporting evidence to demonstrate that the
goods were shipped from Karachi to eliminate the classification
claimed in the bill of entry, viz., data from website in Pakistan,
purported originals of bills of lading that were presented in India and
„pre-shipment inspection certificates (PSIC)‟ having been erroneously
issued, do suffer from lack of validation prescribed by law for
electronic evidence and custody trail as well as lack of credibility in
statements of personnel of one „pre-shipment inspection agency
(PSIA)‟ which made itself available for investigation. Above all, it was
not demonstrated that it made commercial sense to import „stainless
steel melting scrap‟ from Pakistan. Thus, there is no indirect evidence
that could be pieced together to conclude that the claim of goods
having originated from United Arab Emirates (UAE) and, thereby,
classifiable under tariff item 9806 0000 of First Schedule to Customs
Tariff Act, 1975.
Para 27. The importer has, from the circumstances of origin of the
goods having been suspect, re-exported the goods available with
them. Their claim of having filed documents made available to them
by shippers for clearance of the past consignments has not been
countered with clear and acceptable evidence to the contrary.
Invoking of extended period of limitation under section 28(4) of
Customs Act, 1962 is without the support of essential ingredients
which are equally required for invoking section 114A of Customs Act,
1962. By continuation of proceedings after compliance with section
28(2) of Customs Act, 1962, in pursuit of extending period of
limitation without availability of necessary ingredients, as seen from
the invalidation of relied upon documents and information, retention
of the amount deposited thereto is jeopardized. Classification disputes
turn entirely upon onus of displacement of claimed classification
resting upon customs officials and by reference solely to General
Rules for Interpretation of the Import Schedule appended to Customs
Tariff Act, 1975 with no scope for any interpretation beyond the
enumerations in the First Schedule. In the peculiar facts and
circumstances of the adjudication order, which has deviated far from
the framework of assessment of goods and relied instead upon
untested facts, unproven documents and uncorroborated statements,
the findings in the impugned order are jeopardized.”

120.3 We are of the view that adjudication order in this case suffers from
the same vice of relying on untested facts, unproven documents and un-
corroborated statements including the digital evidence, therefore, even in
this case also the findings are jeopardized. Also in this, the re-export of
cargo has already taken done and accepted. Further, we also find that as
approved by the Hon‘ble Supreme Court in the matter of Commissioner of
Customs Vs. Reliance Industries Limited reported in 2024 (4) TMI 1022-S.C
th
vide order dated 9 April, 2025, the decision of this Tribunal as reported in
Reliance Industries Limited Vs. Commissioner of Customs reported in 2024
(10) TMI 1555-CESTAT AHMEDABAD, this Bench (different constitution),
inter alia, held as follows:-

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“4.2 From the above import authorization in the list of import item
Naphtha is mentioned under ITC 27101290, though we do not agree
that imported goods is not Naphtha but NGL, the appellant vehemently
argued that even the NGL is also Naphtha therefore, since the Naphtha
is allowed to be imported , the imported goods is allowable under the
same advance authorization. The appellant have vehemently argued
that assuming without admitting the goods in question were NGL still
the benefit of exemption under advance authorization was admissible
to the appellant and NGL is also a type of Naphtha. Since broad
description given in the advance authorization, we are of the view that
even though the type of Naphtha is different but the same is clearly
covered under the advance authorization and hence irrespective of the
department‟s contention that the goods is NGL but the NGL is also a
type of Naphtha, the same is covered by the advance authorization.
Accordingly, the clearance of goods under Advance Authorization
cannot be questioned.
4.3 As regard ITC code no. even if the departments contention is that
TI 27101290 does not cover NGL for the purpose of advance
authorization it does not affect the eligibility to clear the goods under
the advance authorization so long the description mentioned in the
advance authorization covers the description of imported goods.
Therefore, even if it is assumed that the goods imported is NGL, the
same is permissible to be cleared under the advance authorization
which is issued for imported item namely Naphtha. We find that the
Glossary of petroleum terms under IS 4639: 1968 defines
Naphtha/petroleum Naphtha as under:-

“A generic term applies to refined, partly refined or unrefined
petroleum products and liquid products of natural gas not less
than 10% of which distil below 175°C and not less than 95% of
which distil below 240°C when subjected to standard method“
4.4 Further IS specification 11794;2022 which provides the
requirements and test methods of Naphtha used as a feed stock in
petrochemical plant, steam cracking, fuel pump as a gasoline and
various other applications in the refineries defines Naphtha as
“Petroleum Naphtha is an intermediate of crude distillation. It is either
a light distilled petroleum fraction derive out of various processes in
the refinery or a light liquid fraction recovered in the production of
crude oil and natural gas. The refinery sources of Naphtha are crude
distillation unit, crude catalytic cracking unit, Hydro treaters,
Hydrocrackers, Naphtha splitters etc. It is generally known as Naphtha.
It is further found that Chemical Condensed Dictionary, 6th Edition also
defined Naphtha as “ A generic term
applies to refined, partly refined or unrefined petroleum products and
liquid products of natural gas, not less than 10 % of distills below
347°F (175°C) and not less than 95% of which distil below 474°F
(240°C) when subjected to distillation in accordance with the standard
method of test for distillation of gasoline , naphtha, kerosene and
similar petroleum products (ASTMD86)”.
4.5 From the above it is evident that naphtha is a genus and NGL is a
species. Accordingly, advance authorization specifically covered and
allow import of naphtha. It is clear that all species including NGL ,
would be covered under the genus of Naphtha, and will also
automatically get covered by the Advance Authorizations in the present
case. In view of this assuming without admitting that the goods in
question imported were NGL the same shall have no revenue
implication as the said import of Naphtha squarely covered by advance
authorization in question. As such there was neither any infirmity in
the import of the goods in question nor in the exemption claimed by
the appellant under the advance authorization scheme read with
governing notification 18/2015-CUS dated 01.04.2015 (as

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amended)therefore, even if the contention of the revenue is that the
goods imported is NGL is correct then also the clearance of goods
under advance authorization cannot be said to be incorrect or illegal.
On this basis itself the entire demand is liable to be set aside.
4.6 Without prejudice to the above, we also find that the NGL is a type
of Naphtha which is evident from the legislative changes made under
the Finance Act, 2019 with Notification No. 89/2019-Cus (N.T)
10.12.2029 to heading 2710 of the Customs Tariff Act, 1975 whereby
the 8 digits tariff items under 6 digits sub heading 271012 which
covers light oils and preparations were substituted. As per this
substitution, the specific tariff item 27101220 which covered NGL was
deleted and three new tariff items 27101221 ( Light Naphtha),
27101222 (Heavy Naphtha) and 27101223 (Full Rich Naphtha) were
inserted to cover Naphtha . An interpretation of this substitution
indicates that the same was brought in effect (a) to end the dispute on
classification of Naphtha and NGL (b) to specifically covered all types of
Naphtha including NGL. It is for this reason because the specific entry
of NGL was deleted as the same goods have rendered the tariff items
27101221, 27101222 and 27101223 otiose. Therefore, we do not find
any infirmity in either the import of goods in question or in the
exemption claimed by the appellant under advance authorization.”

120.4 It is clear that in that case, this Tribunal held that though they do
not agree that ―imported goods‖ are ―not Naphtha‖ but NGL, if still went on
to hold that even NGL is nothing but a species of the generic term Naphtha,
o
only that distillation in that is 10% at below 175 C and 95% of which distills
o
below 240 C. It also relied upon IS specification 11794:2022 to arrive at this
decision and in Para 4.5 held that all species including ―NGL‖ would be
covered the genus of ―Naphtha‖ and therefore entitled to Advance
Authorization, as was required in that case. It is also cleared from the
conclusion at the end of Para 4.6 that this Tribunal found no infirmity neither
in the import of goods under Tariff Heading 27101290 nor in the claim of
exemption. This becomes more evident from Para 4.10 of the same decision
reproduced below:-
“4.10 We further find that the department has failed to discharge the
burden cast upon them to establish that the subject goods were
classifiable under tariff item 27101220 of the Customs Act, 1975 as
NGL as against Tariff Item No. 27101290 as Naphtha claimed by the
appellant. It is a trite law that burden of proof is on the taxing
authorities to show that the particular case or item in question is
taxable in the manner claimed by them and it is further the taxing
authority to lay evidence in their behalf , this view is supported by
Hon‟ble Supreme Court Judgment in the of State of Madhya Pradesh
vs. Marico Industries ltd reported in 2016 (338) ELT 335 (SC). We
also find that TI 27101220 of the Custom Tariff Act, 1975 covers NGL
and as per supplementary note (V) under Chapter 27 of Customs
Tariff Act, 1975, NGL is defined as “ A low boiling liquid petroleum

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product extracted from natural gas” . Thus, to classify under TI No.
27101220 of the Custom Tariff Act, 1975 as NGL it must satisfy the
following conditions:-
(i) the product must be low boiling liquid petroleum product &
(ii) the product must be extracted from natural gas.”
120.5 Therefore, it is clear that the matter of classification of Naphtha has
also travelled right up to the Apex Court in that case and the same has been
decided as consideration of ―NGL‖ as species of genus ―Naphtha‖. As regard,
the department relies on Gastrade International Limited Vs. Commissioner of
Customs-Kandala as reported in 2025 (4) TMI 23 (S.C) in the cited decision,
it was held that if by testing of parameters ‗most Akin‘ test in relation to the
alleged product is established by the department then on the basis of
akinness based on vital tests the classification can be arrived at. However
we find this argument is self defeating as has already been found that report
of IIP Dehradun as well as GEO are based upon much higher number of
parameters and apart from being reports of more specialized agency than
CRCL etc., also succeed to pass the test of akinness in favour of the
appellant.
120.6 Thus, on the basis of akinness, as also the consequences when tests
are inconclusive, or even on the basis of ―common parlance‖ test of ―NGL‖
being species of ―Naphtha‖, the department has not been able to
authoritatively establish the classification it has sought. In the facts and
legality of the matter, therefore the classification of the appellant cannot be
allowed to be disturbed.
120.7 Based on above factual and legal proposition, we find that the
conclusion reached by the adjudicating authority below are incorrect and
cannot be adopted by us. Accordingly, we are inclined to allow the appeal by
ignoring other pleas of the department as we are with appellant on the basis
of facts and legal propositions, on merits. In parting, we appreciate efforts of
both sides in placing various elaborate agreements before us specially by the

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A.R of the department. We also suggest that department rather than relying
on Section 138C, which is meant for computers should create a dedicated
sui-generis Section for mobile phones as evidence and prescribe procedure
to extract it.
121. Appeals are allowable. Some are therefore allowed.
(Pronounced in the open court on 07.09.2026)
(SOMESH ARORA)
MEMBER ( JUDICIAL )



(A.K. JYOTISHI)
MEMBER ( TECHNICAL )
Prachi