M/s. Rumi Petro Chem (I) Private Limited vs COMMISSIONER OF CUSTOMS-KANDLA

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
AHMEDABAD

REGIONAL BENCH, COURT NO. 1

CUSTOMS APPEAL NO. 10569 OF 2026

[ Arising out of impugned order no. CUS/SIIB/INT/611/2025-SIIB-O/o Commr-Cus-Kandla
Dated 09.11.2025 passed by the Ld. Commissioner of Customs-Kandla]

M/S. Rumi Petro Chem(I) Private Limited
Plot No.21, Survey No.134, Opp. P.W.D. Office,
Chandola Lake, Danilimada, Ahmedabad,
Gujarat-380028

…Appellant

Vs.
COMMISSIONER OF CUSTOMS-KANDLA
Office of the Commissioner of Customs,
Custom House, Kandla,
New Customs Building, Near Balaji Temple,
Kandla, Kutch,
Gujarat-370210
Respondent


Appearance:
Present for the Appellant :Shri Hardik Modh, Advocates And Solicitors
Present for the Respondent: Shri R J Dave, Superintendent (AR)


CORAM: HON'BLE MR. SOMESH ARORA, MEMBER ( JUDICIAL )

Final order No. 10823/2026_

Date of Hearing : 26/10/2026
Date of Decision: 12/11/2026

SOMESH ARORA

M/s Rumi Petrochem (India) Pvt. Ltd (importer) had filed two Bills of
Entry Nos. 4393422 and 4393432, both dated 09.09.2025 for import of
Distillate Marine Oil (HSN:27101961). CRCL, Visakhapatnam, vide their Test
Report dated 26.09.2025 reported that the sample closely resembled or most
akin to High Flash High Speed Diesel (IS: 16861), However, the Flash Point of
the sample was reported as 52 C which is lower than the prescribed minimum
limit of 66 C under IS: 16861 and the report indicated that the sample did not
meet the parameter of IS 16731-distilate marine fuel in respect of cloud point
which is above - 16 C (- 10 C) However, on the other hand, the importer had
declared the imported goods, laden from Sohar. Oman and supplied by M/s

Petro Global FZE, UAE as "Distillate Marine Oil [only for industrial use)",
classified under CTH 2710 19 61 whose import policy is free. However, HFHSD
of IS 16861 is classified under CTH 2710 19 49 and its import is restricted and
allowed through IOC subject to para 2.21 of Foreign Trade Policy.
1.1 Further, as per specific comments in the aforesaid Test Report, the
lower Flash Point could be due to blending/mixing of petroleum fraction below
180 C and above 150 C.
1.2 Further, as per Additional Comments, the sample was also analysed
on GC-MS and GC-MS Data revealing that the sample has carbon chain as
similar to Diesel fraction (a straight run cut of crude distillation between the
ling range of 150 °C-370 "C, blended with small amount of Residual
hydrocarbon fraction Boiling like base oil etc.). The analysis also revealed that
deliberate efforts were made to lower the flash point, so that the product does
not match the flash point requirements of HFHSD (IS: 16861).
1.3 On the basis of the aforesaid Test Report, the cargo was seized on
29.09.2025 u/s 110 of the Customs Act, 1962 on the suspicion that imported
goods closely resembled or were most akin to HFHSD IS 16861 but flash point
of 52 °C which are below the minimum 66 °C under IS 16861 for HFHSD, that
the sample also failed IS 16731 [Distillate Marine Fuel) in respect of cloud
point which was above 16 °C in the said case. Further, HFHSD under Customs
T1 2710 1949 was restricted for import by private importers.
1.4 Further, as per clarification sought, CRCL, New Delhi replied on the
basis of parameters tested by CRCL Vishakhapatnam that the Vizag Test
Reports were in order but do not conform to the declared product
specifications. Deliberate mixing with lower hydrocarbon fractions could not
be ruled out. The product may be classified as diesel fraction.
1.5 The Adjudicating Authority, keeping in view the Test Report and the
clarifcations. agreed for provisional release of the goods with a reasonable

expectation that the importer shall use the provisionally released goods as
intended for DMX Grade of IS 16731. The End Use condition would also
address the department's concern by ruling out risk of diversion to automotive
and other uses reserved for HFHSD under IS 16861. The importer was
therefore directed vide Provisional Release Order dated 09.11.2025 to furnish
an End-use Bond and undertaking to the effect that:
a) The goods shall not be used as Automotive Diesel (IS 1460) or
HFHSD (IS 16861) or as a propulsion fuel on board vessels; use, if
any on board, shall be limited to emergency generator/fire-pump
engines etc. consistent with SOLAS and as intended for DMX grade
of IS 16731;
b) In case the goods are sold to any other buyer, the responsibility to
ensure that goods will be used in the same manner as specified in
(a) above will be on importer and appropriate documents at the end
of buyer will be maintained demonstrating end use;
c) The importer and buyer shall maintain batch-wise accounts of
storage, processing and consumption of the provisionally released
goods and shall produce the accounts on demand by the
investigating officer.


The following additional conditions were also imposed:

i. Execution of bond by the importer for 100% of the assessable
value of the seized goods securing production of the goods or
their value;
ii. Bank Gaurantee for 10% of the assessable value to cover fine,
penalty and any other differential duty that may arise upon
adjudication in case mis-classification is proved. For now, the
importer will be paying the duty applicable to the Distillate Marine
Oil before taking the provisional release.

iii. Representative Sample already drawn shall be preserved and one
more set of samples of sufficient quantity will be drawnand
preserved before taking provisional release of the goods.
1.6 In view of the same, it is humbly prayed that the Provisional Release
Order of the Adjudicating Authority being just and proper deserves to be
upheld and the appeal may be dismissed.
2. The present appeal seeks modification of the onerous conditions imposed
for provisional release of the imported goods, in line with the conditions
prescribed by the Hon'ble High Court and the Tribunal in the cases of other
similarly situated importers, including Prajakt Agro and Noya Infrastructure.
The goods have already been provisionally released, and the present challenge
is confined to modification of the onerous conditions, including discharge and
return of the bank guarantee.
2.1 The Provisional Release Order dated 09.11.2025 imposed the following
conditions for release of the goods:-
I. End-use bond and undertaking: The Appellant was required to
furnish an undertaking regarding the industrial end-use of the
imported goods and assume responsibility for their use by
subsequent buyers.
II. Maintenance of records: Batch-wise records of sale, movement and
end-use of the goods were required to be maintained.
III. Bond: Execution of a bond equivalent to 100% of the assessable
value of the imported goods.
IV. Bank guarantee: Furnishing of a bank guarantee of Rs.
1,01,38,000/- being equivalent to 10% of the assessable value,
renewable until conclusion of adjudication.
V. Samples: Preservation and drawal of representative samples of the
imported

3. On 26.08.2025, the Bills of Lading for the cargo aboard MT Glory 1 were
issued, as recorded in the Discharge Permission.
3.1 On 08.09.2025, Discharge Permission No. 1243 was issued for the
discharge of 2,491.475 MT of Distillate Marine Oil, intended exclusively for
industrial use, into Aegis Vopak Terminals, Tank No. 206.
3.2 On 09.09.2025, Warehouse Bills of Entry Nos. 4393422 covering 1,800
MT and 4393432 covering 691.475 MT were filed under CTI 27101961,
aggregating to a total quantity of 2,491.475 MT.
3.3 On 26.09.2025, CRCL, Visakhapatnam, reported that the imported goods
had a flash point of 52°C and a cloud point of −10°C, amongst other
parameters. Despite the goods not conforming to HFHSD specifications, the
laboratory opined that the goods were "most akin to HFHSD" and alleged
possible deliberate blending, without any conclusive scientific basis to
substantiate such an inference.
3.4 On 27.09.2025, the Appellant disputed the laboratory's inference by
relying upon the 14°C shortfall from the prescribed minimum flash point of
HFHSD and asserted that the goods were imported for industrial use,
accordingly seeking clearance.
3.5 On 29.09.2025, the goods were seized under Section 110(1) of the
Customs Act, 1962, relying upon the laboratory's opinion that the goods
closely resembled or were most akin to HFHSD and were liable to confiscation
under Section 111 of the Customs Act, 1962.
3.6 On 08.10.2025, CRCL, New Delhi, clarified that the goods fell within the
broad category of diesel fractions, which included both HFHSD and Distillate
Marine Fuel, and further observed that deliberate blending could not be

scientifically established. It also recommended verification of the end-use of
the imported goods.
3.7 On 13.10.2025, the Appellant filed a detailed representation reiterating
the declared classification of the goods, the discrepancy in the flash-point
parameters, the prior clearances granted in respect of similar goods and its
objections to the laboratory's inference of deliberate blending.
3.8 On 17.10.2025, Customs, Kandla, sought further clarification from CRCL,
New Delhi, regarding the Appellant's objections to the classification of the
imported goods as HFHSD, particularly flash-point and cloud-point
parameters.
3.9 On 28.10.2025, CRCL, New Delhi, clarified that the imported goods did
not meet HFHSD specifications owing to their flash point and further observed
that cloud point was not a significant parameter for uses other than marine
applications in colder conditions. Verification of the end-use of the goods was
accordingly recommended.
3.10 On 30.10.2025, in the similar case of Prajakt Agro Pvt. Ltd., Customs,
Kandla, sought clarification from CRCL, New Delhi, regarding the applicability
of the "most akin" test in light of the Supreme Court's decision in Gastrade
international.
3.11 On 04.11.2025, CRCL, New Delhi, clarified that determining whether
the goods were "most akin" to HFHSD or Distillate Marine Fuel was
inconsequential, as both fall within the broader category of diesel fractions. It
further confirmed that the samples did not fully satisfy the specifications of
any one Indian Standard.
3.12 On 05.11.2025, the Appellant sought urgent clearance of the imported
goods, stating that it had incurred accumulated tank charges amounting to

Rs. 21,21,050/- and approximate interest of Rs. 20,000/- per day, which
constituted additional costs for which no compensation had been provided.
3.13 On 09.11.2025, the Commissioner of Customs, Kandla, passed the
impugned provisional-release order under Section 110A of the Customs Act,
1962. The Commissioner held that the goods did not conform to HFHSD
specifications, that CRCL had not tested all mandatory parameters, and that
the tested parameters were more consistent with DMX-type Distillate Marine
Fuel rather than HFHSD. Accordingly, the Commissioner held that the goods
could not be treated as restricted HFHSD at that stage and that the balance
of convenience favoured the importer. However, despite these findings,
provisional release was made subject to onerous conditions, including an end-
use bond and undertaking, buyer-end responsibility, maintenance of batch-
wise records and a bond equivalent to 100% of the assessable value, a bank
guarantee for 10% of the assessable value (renewable until adjudication), and
preservation/drawal of smaples.
3.14 On 08.09.2025 to 07.12.2025: Owing to the continued detention of
the imported goods, the Appellant had already incurred terminal charges of
₹21,21,052/- for the periods 08.09.2025 to 07.10.2025 and 08.10.2025 to
07.11.2025, with further charges continuing to accrue. The Appellant was
subsequently charged another ₹10,60,526/- for the period 08.11.2025 to
07.12.2025, taking the aggregate to ₹31,81,578/-. Faced with mounting
terminal charges and financial hardship, the Appellant as per stated positon
was constrained to comply with the onerous conditions of provisional release.
3.15 15.11.2025: In view of the mounting terminal charges and consequent
financial hardship, the Appellant was constrained to comply with the onerous
conditions of the impugned order, without prejudice to its rights and
contentions, by furnishing the requisite undertaking and ICICI Bank
Guarantee dated 11.11.2025 for ₹1,01,38,000/- (Page 93). Consequently, the

goods were provisionally released under ex-bond Bills of Entry Nos. 5713734
and 5714292, both dated 15.11.2025.
GROUNDS TAKEN BY THE PARTY
3.16 09.12.2025: The Hon’ble Gujarat High Court, in Aparajita Energy
Pvt. Ltd. v. Union of India (SCA No. 12944/2025) and Noya Infrastructure LLP
v. Union of India (SCA No. 12943/2025 and connected matters), held that
cloud-point deviation alone could not justify seizure, particularly when its
relevance depended upon the intended use of the goods and there was no
definitive laboratory finding establishing the goods as restricted HFHSD. The
Court also disapproved discriminatory treatment of similarly situated
importers and directed release of the goods subject to furnishing an end-use
certificate and cooperation with the investigation.
3.17 19.01.2026: This Hon’ble Tribunal, in the case of Prajakt Agro
Industries Pvt. Ltd. v. Commissioner of Customs, Kandla (Final Order No.
10024/2026 passed in Appeal No. C/11585/2025), set aside the onerous
conditions imposed for provisional release of identical goods, following the
decisions of the Hon’ble Gujarat High Court in Aparajita Energy and Noya
Infrastructure. The Tribunal also took note of the statement made by the
Respondent that the decision of the Hon’ble Gujarat High Court was being
followed and provisional release was being permitted to other importers
without requiring any bank guarantee or imposing any harsh conditions for
provisional release of goods.
4. The Learned A.R for the department justified the impugned order by
reiterating the findings recorded therein fact with the cited case law.
FINDINGS
5. The Court has considered the rival submissions. It finds that recently, in
the matter of M/s. Quantum Petro Chem India Vs. Commissioner of Customs,

Kandla, this court of the Tribunal has given findings in relation to a similar
product. The findings are contained in paragraphs 17 to 18, reproduced below;
“17. The Learned AR confronted with the position of Hon'ble Gujarat
High Court in the matter of Aparajita Energy Private Limited Vs. UOI,
reported in 2025 (12) TMI 1025-Gujarat High Court, as well as the decision
of Division Bench in the case of Prajakt Agro Industries Pvt Ltd. Vs.
Commissioner of Customs, Kandla, delivered vide Final Order No.
10024/2024 dated 19.01.2026 in which under similar circumstances, test
reports relied upon by the Department and same having been clarified by
CRCL, New Delhi, were considered at the stage of provisional release. As
also the decision of Hon'ble Gujarat High Court in Noya Infrastructure LLP
vs. UOI, reported in 2025 (12) TMI 2026 - Gujarat High Court, in which
the Hon'ble High Court, after considering the same class of goods, namely,
distillate oil, and also that the test reports were not definitive as to whether
the distillate oil was, in fact, diesel or HFHSD, the Hon'ble Gujarat High
Court recognized the CRCL clarification that diesel fraction is a broad
category including HFHSD and other distillate oils that cloud point cannot
be used as sole basis to seize of the cargo and directed the vacation of
seizure and release of the goods, subject to filing of end-use certificate.
Which decision was also followed by this CESTAT in Prajakt Agro industries
Pvt. Ltd. cited (Supra) to do away with bank guarantee condition. This
court finds that the decision to seek bank guarantee in the instant case is
also against the directives of Hon'ble Gujarat High Court in Noya
Infrastructure LLP vs UOI, reported in 2025 (12) TMI 2026, as well as the
decision in Prajakt Agro Industries Pvt. Ltd. cited (supra). The condition of
furnishing a bank guarantee, therefore, in the special circumstances of this
matter, is liable to be set aside.
17.1 The learned AR has sought that as was directed by the Hon'ble
Gujarat High Court party, should produce an end-use certificate.
17.2 From the records, this court finds that same has already been
produced on record as Exhibit-J at page No. 86 to 99. However, if any,
end-use certificate still remains party shall produce, the same before the
authorities along with the certificates already on record. On same having
been produced, in totality and a bond having been given the bank
guarantee shall be liable to be returned.
18. The appeal is allowed subject to the above condition.”

6. In view of the foregoing, the discharge of the Bank Guarantee shall be
considered subject to the production of an end-use certificate and execution
of a bond.
7. The appeal is allowed subject to the above condition.

(Order pronounced in the open court on 12.11.2026)





(SOMESH ARORA)
MEMBER ( JUDICIAL )

Sahil