DEEP INTERNATIONAL vs UNION OF INDIA
- Court
- Gujarat High Court
- Case type
- SPECIAL CIVIL APPLICATION
- Decided on
- 09-03-2026
C/SCA/16799/2025 JUDGMENT DATED: 09/03/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 16799 of 2025
With
R/SPECIAL CIVIL APPLICATION NO. 1239 of 2026
With
R/SPECIAL CIVIL APPLICATION NO. 1355 of 2026
With
R/SPECIAL CIVIL APPLICATION NO. 1356 of 2026
With
R/SPECIAL CIVIL APPLICATION NO. 1357 of 2026
With
R/SPECIAL CIVIL APPLICATION NO. 1375 of 2026
With
R/SPECIAL CIVIL APPLICATION NO. 1542 of 2026
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI Sd/-
=============================================
Approved for Reporting Yes No
a
=============================================
DEEP INTERNATIONAL & ANR.
Versus
UNION OF INDIA & ORS.
=============================================
Appearance :
IN R/SPECIAL CIVIL APPLICATION NO.16799 of 2025 :
MR SHALIN MEHTA, SENIOR ADVOCATE with
JEET Y RAJYAGURU(8039) for the Petitioner(s) No. 1,2
MR N. VENKATARAMAN, ADDITIONAL SOLICITOR GENERAL WITH
MR UTKARSH R SHARMA(6157) for the Respondent(s) No. 1,2
TIRTH NAYAK(8563) for the Respondent(s) No. 3
IN R/SPECIAL CIVIL APPLICATION NOS.1239 of 2026 :
MR KUNAL NANAVATI AND MR KAUSTUBH SHRIVASTAV FOR THE
PETITIONER(s)
IN R/SPECIAL CIVIL APPLICATION NOS.1355 of 2026,
1356 of 2026, 1357 of 2026 & 1375 of 2026 :
MR CHIRAG SHETTY, MR AMIT LADDHA, With MR HARDIK P MODH,
ADVOCATES for the PETITIONERS
IN R/SPECIAL CIVIL APPLICATION NOS. 1542 of 2026 :
MR S.N. SOPARKAR, SENIOR ADVOCATE with MR ANURAG V AGRAWAL,
AND MR DEVENDRA HARNESHA, ADVOCATES for the PETITIONER
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C/SCA/16799/2025 JUDGMENT DATED: 09/03/2026
MR PRADIP D BHATE(1523) for the Respondent(s) No. 1
MR N. VENKATARAMAN, ADDL. SOLICITOR GENERAL WITH
MR UTKARSH R SHARMA(6157) for the Respondent(s) No. 2,3
=============================================
CORAM: HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 09/03/2026
COMMON ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. Since common question of law and facts arise, the
matters are taken up for hearing and are being decided by this
common judgment and order.
2. In all these writ petitions, the petitioners-importers, who
have purchased / imported industrial oil, have challenged the
action of the Directorate of Revenue Intelligence (for short,
“DRI”) seizing the goods by issuing seizure memos under
Section 110 of the Customs Act, 1962.
3. The writ petition being Special Civil Application No.16799
of 2025 is taken up as the lead matter.
4. The fate of the respective writ petitions hinges on the
Test Reports of the samples of the commodity/industrial oil,
which were initially sent to the Central Revenues Control
Laboratory, Visakhapatnam (for short, “CRCL”) and thereafter
sent to Mangalore Refinery and Petrochemicals Limited (for
short, “MRPL”). Prior to sending the samples to these
laboratories, the samples were tested at private laboratory at
Kandla by the petitioners and the report was in their favour.
5. It is the case of the petitioners that the action of the
respondents in seizing the industrial oil is illegal and that the
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commodity/consignment is required to be released in view of
the decision of the Supreme Court in the case of Gastrade
International vs. Commissioner of Customs, Kandla, 2025 INSC
411.
SUBMISSIONS ON BEHALF OF THE IMPORTERS:
6. Learned Senior Advocate Mr.S.N.Soparkar and learned
Senior Advocate Mr.Shalin Mehta, appearing for the respective
petitioners, at the outset, have pointed out the Test Report
dated 11.11.2025 issued by CRCL, Visakhapatnam, and has
submitted that the report nowhere mentions that the sample in
question of the industrial oil (CTH 27101990) is High-Speed
Diesel (HFHSD) [IS 16861:2018] or ADF [IS 1460:2025], i.e.
Automotive Diesel Fuel.
7. It is submitted that upon arrival of the consignment at
Mundra Port, the importer, with utmost caution, got the sample
tested in private laboratories at Kachchh, which did not report
any adverse findings. It is further submitted that the DRI
collected samples and sent them to the Visakhapatnam
Laboratory, which issued the Test Report as mentioned
hereinabove, and subsequently, during the pendency of the
writ petition, the sample was further sent to MRPL for
conducting tests of 11 parameters, which is impermissible in
view of the judgment of the Supreme Court in the case of
Gastrade International (supra) followed by this Court in the
case of Noya Infrastructure LLP, vs. Union of India decided vide
judgment dated 09.12.2025 passed by this Court in Special
Civil Application No.12943 of 2025.
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8. While referring to the Test Reports, it is contended by the
learned Senior Advocates that if samples having diesel
fractions in the case of distillate oil, which include HFHSD (IS
16861), Automotive Diesel Fuel (IS 1460:2025), Gas Oil (IS
17789), Distillate Marine Fuel (IS 16731), and Light Diesel Oil
(IS 15770), are found and the sample does not meet the
requirements of any of these products as per the respective
Indian Standards due to deviation from the prescribed limits
with respect to one of the parameters, the sample can still be
categorized as a diesel fraction based on carbon chain,
distillation range and other parameters. It is submitted that the
sample bears close similarity with one or more of the aforesaid
IS specifications, which have overlapping parameters.
Therefore, even if the product falls within the category of
diesel fraction, the same would not have any adverse
consequences, as all such products are diesel fractions. It is
contended that the sample meets with the critical parameters
of flash point and percentage distillation recovery. Hence, the
seizure is uncalled for.
9. It is further contended that if the sample has close
similarity with any one or more of the aforesaid Indian
Standards, which have overlapping parameters and fall under
the category of diesel fraction, the same would have no
adverse consequences, as all such products are diesel
fractions. In this regard reliance is placed on the
communication dated 04.11.2025, issued by the
Director,CRCL, and is submitted that this communication has
been duly considered by this Court in the case of Noya
Infrastructure LLP (supra) decided vide judgment dated
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09.12.2025 passed by this Court in Special Civil Application
No.12943 of 2025 and allied matters, where in, on a similar
issue concerning imported distillate marine fuel, this Court has
quashed and set aside the seizure memos issued by the DRI.
10. Learned Senior Advocates have extensively relied upon
the judgment of the Supreme Court in the case of Gastrade
International (supra) and has submitted that the Test
Reports, on which reliance has been placed by the respondents
are vague in nature and do not specifically mention that the
consignment or the sample is in fact ADF or HFHSD. Hence, the
action of the DRI is required to be quashed and set aside.
SUBMISSIONS ON BEHALF OF THE DRI :
11. Opposing the present writ petitions and the submissions
advanced on behalf of the petitioners, learned Additional
Solicitor General of India Mr.N. Venkatraman assisted by the
learned Senior Standing Counsel Mr.Utkarsh Sharma, has
submitted that the consignments declared by the petitioners
as industrial oil / mixed or mineral hydrocarbon oils are not
explicitly defined in the Customs Tariff. It is submitted that
upon investigation, the DRI found that the actual product is
Automotive Diesel Fuel ADF and HFHSD, which is a restricted
commodity classifiable under CTH 2710 1944, conforming to IS
1460, and IS 16861, and cannot be imported except through
State Trading Enterprises (STEs).
12. It is submitted that the goods in question have been
adulterated in order to classify them under a different Customs
Tariff Heading so as to circumvent the import policy
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restrictions. Reliance is placed on the definition of
“adulteration” under Section 2(a) of the Motor Spirit and High
Speed Diesel (Regulation of Supply, Distribution and
Prevention of Malpractices) Order, 2005,(in short ‘Malpractices
Order,2005’) issued by the Government in exercise of powers
conferred under Section 3 of the Essential Commodities Act,
1955.
13. It is further submitted that the sampling process
conducted by the DRI was lawful and was carried out in the
presence of representatives of the concerned parties. The
samples were drawn container-wise after preparing the
necessary panchnamas.
14. Learned ASG while referring to the Test Report of CRCL,
Visakhapatnam, has asserted that according to the report,
there were minor deviations in two to three parameters,
namely flash point, sulphur and marginal distillation recovery,
and these deviations were deliberately brought about by
adulterating the product with lighter hydrocarbons, which is
apparent from the test results. It is further submitted that in
view of the judgment of the Supreme Court in Gastrade
International (supra) , the samples were also sent to MRPL,
so that all 21 parameters can be tested, and the test result
showed that the product corresponded with the parameters of
ADF as well as HFHSD.
15. It is asserted by the learned ASG that the importers have
deliberately adulterated the fuel by adding sulphur in order to
alter the flash point, which is a critical parameter. It is further
submitted that due to adulteration with sulphur, lubricity in
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some cases, where sulphur levels are very high—also falls
outside the prescribed range under IS 1460 for ADF. It is
contended that the lowering of the flash point results from
mixing or blending with lighter hydrocarbons, and such
adulteration has been detected in both the Test Reports. In this
regard, while referring to the statements of the importers
recorded during the investigation, he has submitted that the
petitioners have accepted that they had adulterated the fuel
for lowering down the flash point. Thus, it is urged that the
reports conclusively establish that the commodity or fuel is in
fact a restricted and prohibited commodity meeting the
parameters of HFHSD and ADF.
16. It is further urged that the judgment of the Supreme
Court in Gastrade International (supra) does not restrict
the respondents from undertaking tests in more than one
laboratory. In order to ensure that adulterated fuel does not
enter the domestic market and cause environmental harm, the
samples were also sent for testing to MRPL.
17. With regard to the reliance placed by the petitioners on
certain communications, it is submitted that the Central
Revenue Control Laboratory (CRCL) is a subordinate office
functioning under the control of the Central Board of Indirect
Taxes and Customs (CBIC), Department of Revenue, Ministry of
Finance. It is submitted that the Chief Chemist, re-designated
as Director (Revenue Laboratories) pursuant to the Ministry of
Finance order dated 10.05.1999, exercises supervision and
control over the technical work carried out by CRCL
laboratories across the country. However, the Director
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functions under the administrative and overall control of the
CBIC, Department of Revenue, Ministry of Finance.
18. It is submitted that this administrative hierarchy clearly
indicates that the Director, CRCL, may only advise the CBIC but
is not empowered to issue circulars, directions or instructions
to the CBIC or to any of its formations directly, including the
Directorate of Revenue Intelligence (DRI), which reports to the
CBIC through the Director General.
19. Learned ASG, while referring to the decision of the
Supreme Court in Gastrade International (supra) , has
further submitted that the observations made therein would
not assist the petitioners. In the present case, after applying
the “most akin test”, the laboratory reports of CRCL,
Visakhapatnam and MRPL conclusively establish that the goods
in question correspond with the parameters of HFHSD and
ADF. Hence, according to the learned ASG, the case of the
petitioners does not fall within the ratio laid down in Gastrade
International . It is therefore urged that the petitions may not
be entertained.
20. He has sought to distinguish the judgment of the
Supreme Court in the case of Gastrade International
(supra) and has prayed that the writ petitions may be
dismissed with costs.
21. Finally, by placing reliance on the judgments of the
Supreme Court in the case of Om Prakash Bhatia vs.
Commissioner of Customs, 2003 (155) ELT 423 (SC), and in the
case of Union of India vs. Rajgrow Impex LLP, 2021 (377) ELT
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145 (SC), it is submitted that prohibited or restricted goods
cannot be ordered to be released. It is therefore urged that this
Court should not interfere with the action of the respondents in
seizing the goods. In this regard, reliance is also placed on the
judgment of the Supreme Court in Neeharika Infrastructure
Pvt. Ltd. vs. State of Maharashtra & Ors., 2021 INSC 253.
ANALSYIS AND CONCLUSION :
22. We have heard the learned advocates appearing for the
respective parties and have perused the documents on record,
more particularly the Test Reports, which were tendered by the
respective parties during the course of hearing of the petitions.
The said reports are not disputed by the petitioners, except to
the extent that during the pendency of the petitions, the DRI
has further undertaken tests of the samples drawn from the
consignments, which were handed over to the respective
petitioners as well as their learned advocates. The same are
ordered to be taken on record.
23. It is not in dispute that HFHSD(IS 16861), and ADF(IS
1460), are restricted commodities and are only allowed to be
imported by State Trading Enterprises.
24. The case of the respective parties primarily hinges on two
Test Reports; one undertaken by CRCL, Visakhapatnam, and
the other by MRPL, as well as on the law enunciated by the
Supreme Court in the case of Gastrade International
(supra) .
25. Since the Test Reports in all the petitions are common,
for the sake of convenience, we propose to incorporate the
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Test Report in the lead matter i.e. Special Civil Application
No.16799 of 2025. One of the test reports is reproduced
hereunder.
TEST REPORT
Lab No: 178-DRI Date: 18.11.2025
DRI/GRU/Int-26/2025 22.10.2025
F.No: Date:
Test Memo No: 467/2025 Date: 16.10.2025
B.E. No: 4869187 Date: 03.10.2025
Sample Received from: Senior Intelligence Officer, (DRI), Gandhidham
Regional Unit.
Description of Sample: Industrial Oil (CTH 27101990)
Date of Receipt: 22.10.2025
Sample Plan: Sample not Drawn by this laboratory
REPORT: The sample is in the form of pale yellow coloured oily liquid. It is
mainly composed of Mineral Hydrocarbon Oils having mineral oil content
more than 70 % by weight. It is having following characteristics:
No. Parameter Result
1. Appearance = clear & bright, free from
sediments, suspended matter
& undissolved water
2. Total Acid Number (mg of KOH/ gr) = Less than 0.20% by wt.
3. Ash content = Nil
4. Carbon residue on 10% Residue = Less than 0.30% by wt.
5. Cetane Number = To be done at Refinery end.
6. Cetane Index = 54.16
7. Pour Point = below 3°C.
8. Flash Point(Abel), deg. C = 21.0°C
9. Density at 15°C = 0.8204 g/ml
10. Kinematic viscosity at 40°C = 2.11 cSt.
11. Sulphur Content = 1241 ppm.
12. Distillation: IBP = 84.4°C
50% distilled at, °C = 256.5°C
85% Recovery by vol., at °C = 330.4°C
% Volume recovered at 360 deg. C = 92 % by vol.
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No. Parameter Result
95% Recovery by vol., at °C = 367.4.0°C
13. Cold Filter Plugging Point = Facility available at Refinery
end only
14. Oxidation stability = To be done at refinery end
only.
15. Lubricity wear scan at 60°C = Facility available at Refinery
end only
16. Fame Content = Absent
17. PAH % by max = not determined as it is not a
characteristic parameter.
18. Water = Less than 200 PPM.
The sample has been tested for all the characteristics parameters
tested above & which are stringent parameters also to characterize
petroleum fuels.
The sample meets all characteristic parameters of automotive diesel
fuel except flash point (21.0°C), which is 14.0°C lower than required
i.e. 35.0°C, the percentage distillation recovery at 360°C is 92% (3%
lower than requirement of 95%) and Sulphur which is 1241 PPM,
which is very high as comparison to required value of 10 PPM (BS-
VI).
The sample also meets the stringent parameter of HFHSD as
mentioned in IS: 16861 except flash point (21.0°C), which is 45.0°C
lower than the required, which was lowered by using lighter
hydrocarbons.
The GCMS chromatogram of sample reveals that the sample is
mainly composed of diesel fraction (more than 95 % & less than 98
%) & adulterated with lighter hydrocarbons.
The sample is most akin to HFHSD (IS 16861)/ adulterated HFHSD.
Sealed remnant sample returned herewith
End of the Report
Note 1: The results relate only to the items tested.
Note 2: Sample not Drawn by this laboratory.
Note 3: The report shall not be reproduced except in full without
approval of this laboratory.
Note 4: Remnant sample should be collected within 30 days
otherwise it will disposed off.
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26. During the pendency of the writ petition, the samples
were tested for 11 parameters by MRPL. Thus, initially the
Visakhapatnam Laboratory tested the samples for 18
parameters and thereafter 11 parameters were tested by
MRPL, few of them are common. It is established that all 21
parameters as suggest by the Supreme court have been
tested.
SAMPLE ANALYSIS REPORT FOR 828/2025
SAMPLE DRAWN BY : DRI,
Gandhidham
DATE OF
ANALYSIS
: 21/12/2025
DATE OF SAMPLE DRAWN : 24.11.2025 TEST REPORT
No.
: MRPL/DRI/2026/02
DATE OF SAMPLE
RECEIPT
: 06.12.2025 TEST REPORT
DATE
: 26.12.2025
S.No. ADF(IS 1460:2025) HFHSD(IS 16861:2018) Result Remarks
Parameter(v) Cetane Found meeting
1 - 51.2
number, min 51.0 IS1460:2025
Found meeting
both IS1460:2025
and IS
16861:2018
specifications
Parameter(vii) Pour point:
Deg Cel.
Max(a)Winter(November to
February)+3°C
Parameter(vi) Pour point
Deg Cel.
Max(a)Winter(November to
February)+3°C
2
-18°C
Found meeting
both IS1460:2025
and
IS16861:2018
specifications
Parameter (vii)Copper strip
corrosion for 3h at 50Deg
C,Max.
Parameter (vii)Copper strip
corrosion for 3h at 50Deg
C,Max.
3
Class1
Found meeting
both IS1460:2025
and
IS16861:2018
specifications
Found meeting
IS16861:2018
Found meeting
IS16861:2018
Parameter (viii) Distillation
percent (v/v) recovered, a)
At 350Deg cel. min.85.0% b)
At 370Deg cel. Min.95.0%
Parameter (ix) Distillation
95%v/v recovery, Deg Cel
Max360°C
95% rec,
temp 357°C
4
93.5 95.5
Failed to meet
IS1460:2025 and
IS 16861:2018
requirement.
Parameter (x) Flash point,
5
Abel, °C, Min35.0
Flash Point Pensky Martens
<20
closed cup °C, Min66.0
Parameter (xii) Total
contamination mg/Kg, max
24
Found meeting
- 11
IS1460:2025
6
7 Parameter (xiv) total
sulphur, mg/Kg. Max.10
Parameter (xii) Total sulphur
% by mass Max 0.2%
0.20% Failed to meet
IS1460:2025
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S.No. ADF(IS 1460:2025) HFHSD(IS 16861:2018) Result Remarks
requirement.
However meeting
the specification
IS16861:2018.
Found meeting
both IS1460:2025
and
IS16861:2018
specifications
Parameter (xvi) Cold Filter
Plugging Point (CFPP)3, °C,
Max: a) Winter +6
Cold filter plugging point
-10
(CFPP), °C, report
8
Failed to meet IS
16861:2018
requirement,
however meets
IS 1460:2025
specification
through
EN16091.
Parameter (xvii) Oxidation
stability g/m3 25 max
(ASTM D2274) or 60 min
(EN16091)
28 (ASTM
D2274) and
Parameter (xv) Oxidation
stability, g/m3 - Max 25.0
(ASTM D2274)
9
>60min
(EN16091)
Parameter(xix) Polycyclic
Aromatic
Hydrocarbon(PAH)percent
by mass, Max8.0
Found meeting
- 1.04
IS1460:2025
10
Failed to
meetIS1460:2025
and IS
16861:2018
requirement.
Lubricity, wear scar
diameter (wsd) at 60°C, µm,
Max460
Lubricity, Corrected WSD at
540
60°C, microns max520
11
27. A careful analysis of the Test Report of CRCL,
Visakhapatnam, specifically indicates that the sample has
been tested for all the characteristic parameters i.e. 18
parameters, which are stringent parameters for characterizing
petroleum fuel.
28. A categorical finding has been recorded by CRCL,
Visakhapatnam that “ the sample meets all characteristic
parameters of HFHSD as mentioned in IS: 16861, except the
flash point (21.0°C), which is 45° C lower than the required
66.0°C, and the percentage distillation recovery at 370°C,
which is 94%, i.e. 1% lower than the requirement of 95%. ”
29. The test result further records that the sample is mainly
composed of diesel fraction (more than 95%, less than 98%)
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and is adulterated with lighter hydrocarbons. It has been
opined that “the sample is most akin to HFHSD (IS 16861) /
adulterated HFHSD”. Thus, CRCL, Visakhapatnam has opined
that the sample is most akin to HFHSD / adulterated HFHSD
and meets all the characteristic parameters of HFHSD as
mentioned in IS 16861, except the flash point and the MRPL in
its Test Report dated 26.12.2025, has analyzed the sample for
11 parameters.
30. Thus, cumulatively, the tests conducted by MRPL and
CRCL cover 21 parameters, which has been emphasized by the
Supreme Court in the case of Gastrade International
(supra) .
31. The remarks recorded in the MRPL Test Report indicate
that the sample meets the parameters of ADF (IS 1460:2025),
i.e. Automotive Diesel Fuel (ADF), as well as certain
parameters of HFHSD (IS 16861). The parameters mentioned
at Sr. No.1 onwards in the MRPL report are found to be
meeting the requirements of ADF as prescribed under IS
1460:2025.
32. The sample meets the parameters of HFHSD (IS 16861)
with respect to the parameters namely Parameters II, III, IV,
VII, VIII, IX and XI.
33. Thus, except for the flash point, which is a common
parameter in both the reports of CRCL and MRPL, the sample
does not meet the Indian Standards prescribed for ADF and
HFHSD. It is the case of the respondents that the flash point
has been lowered by adulterating the commodity i.e. the
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industrial oil, so that the same appears to fall within
permissible parameters and the consignment can be cleared.
The Test Report strengthens the submission, since it
categorically records that the flash point has been lowered by
using hydrocarbons.
34. It is not in dispute that industrial oil falling under CTH
2710 1990 as declared by the petitioners, is not specifically
defined in the Customs Tariff. It is a residual tariff entry and is
freely importable as per the prevailing policy, with no defined
IS specification.
35. According to the DRI, if the combined reading of both the
Test Reports is considered, the actual product imported by the
petitioners is Automotive Diesel Fuel (ADF) / HFHSD, which is a
restricted commodity classifiable under CTH 2710 1944 and
conforming to IS 1460. The Test Reports of CRCL,
Visakhapatnam and MRPL record that the sample meets
several stringent parameters of HFHSD.
36. The report of CRCL, Visakhapatnam specifically records
that the sample is adulterated with lighter hydrocarbons and is
most akin to HFHSD (IS 16861) / adulterated HFHSD. The MRPL
report has also examined the sample with reference to both
ADF and HFHSD and has tested 11 parameters .
37. The DRI has specifically contended that sulphur is added
to make the imported petrochemical product fall outside the
prescribed sulphur range under IS 1460 for ADF. It is further
contended that lubricity naturally decreases when sulphur is
reduced during the desulphurization process undertaken to
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make diesel compliant with emission standards prescribed
under the relevant IS standards.
38. It is the specific case of the DRI that, due to adulteration
of the sample with sulphur, lubricity in some cases, where
sulphur content is very high, also falls outside the prescribed
range under IS 1460 for ADF. It is further contended that a low
flash point results from mixing or blending with lighter
hydrocarbons due to adulteration, which has been detected
and reported by CRCL, Visakhapatnam.
39. Keeping in mind the aforesaid observations as well as the
Test Reports, we may now examine the legal proposition
enunciated by the Supreme Court in the case of Gastrade
International (supra) .
40. At this stage, we may briefly advert to the facts recorded
by the Supreme Court in the case of Gastrade International
(supra) . The importers had approached the Supreme Court
after challenging the orders passed by the appellate
authorities, and the matter had reached the Customs, Excise
and Service Tax Appellate Tribunal (CESTAT) after the
necessary investigation, which is not the fact in the present
case.
41. The Supreme Court had also considered the evidence of
an expert, who did not specifically opine on the nature of the
tested sample or whether it met the standards prescribed
under IS 1460:2005.
42. It is also pertinent to note that three Test Reports were
placed before the Supreme Court in respect of the samples
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collected from the consignment, which was alleged to be
HFHSD oil (Automotive Diesel Fuel). The first Test Report
merely opined that the sample had characteristics of High-
Speed Diesel / Automotive Diesel Fuel. The second and third
Test Reports, namely those of CRCL, Vadodara and CRCL, New
Delhi, recorded that out of 12 parameters tested, at least two
parameters did not fulfill the requirements prescribed under IS
1460:2005.
43. Thus, there was no categorical finding or opinion in these
Test Reports that the samples were in fact High Speed Diesel,
except for broadly indicating that certain parameters
corresponded with the relevant IS specifications. Thereafter, a
third Test Report prepared by the Indian Oil Corporation was
also inconclusive and did not provide a definite opinion that
the samples were in fact High Speed Diesel (Automotive Diesel
Fuel).
44. In the backdrop of these Test Reports, as well as
deposition of expert, which did not specifically conclude that
the sample was High Speed Diesel / Automotive Diesel Fuel,
the Supreme Court emphasized the application of the “most
akin test”. The Supreme Court also directed the competent
authority to undertake testing of all 21 parameters in order to
ascertain the true nature of the petroleum product. The
relevant observations which weighed with the Supreme Court
in the case of Gastrade International (supra), while setting
aside the action of the respondents and order of the High Court
are reproduced hereunder.
“70. Specification regarding flash point is accordingly of some
significance, even if it may not be the most important parameter in
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determining whether a petroleum product is HSD or not. From the
specification provided under IS:1460:2005, HSD will have flash
point of minimum 66 C. Thus, it will be treated as Petroleum Class C
in terms of the Petroleum Act. It is not anyone's case that HSD is not
a hydrocarbon and not an automotive fuel. If that is so, it will be
classifiable under the Petroleum Act as a Class C Petroleum product,
if not Class B or Class A product. As mentioned above, the range of
the flash point of Petroleum Class C is between 65 C and 93 C
whereas the test results show a higher flash point.
xxxx
72. We would however, like to clarify that we are not stepping into
the shoes of the scientific expert relating to the determination of the
nature of the oil, as to whether it is HSD or Base Oil. Nevertheless,
we are satisfied that there is a very germane and relevant factor on
which the expert had failed to clarify, and in respect of which the
test reports have also remained silent, that is, relating to flash point,
making the classification of the imported oil as HSD by the Customs
authority highly doubtful. If the expert or the test reports had
clearly mentioned that in spite of the high degree of flash point
shown by the samples, and non-examination in respect of all the
parameters, these samples can still be considered to be that of HSD,
we would have accorded due deference to such opinion.
xxxx
78. What the aforesaid decisions postulate is that there may be
varying range in the degree of probabilities. Certainly, where the
proceedings involve requirement of fulfilment of technical/scientific
parameters with confiscatory and penal consequences, the degree of
probability would be of a higher order and not mere probability.
79. In the present case, what we have observed is that the High
Court, on the basis of the laboratory tests, more particularly the
third test conducted by IOCL, Mumbai Laboratory and the opinion of
the expert, namely Dr. Gobind Singh, and by observing that it is not
necessary to establish on the part of the Revenue to prove the fact
with mathematical precision, held that the Department has been
able to establish its case on the basis of preponderance of
probability that the imported oil was not Base Oil but HSD, which
could not have been imported by the appellants and upheld the
order of the Adjudicating Authority.
80. However, this analysis and conclusions arrived at by the High
Court are problematic for the following reasons:
(i) There was no expert opinion at all that the samples which were
tested were indeed of HSD.
(ii) The opinion as contained in the test results was merely
mentioning about conformity of the samples with certain
specifications of IS 1460:2005 and not about conformity with all the
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specifications.
(iii) Once the rule making authority had clearly delineated the
requisite parameters for ascertaining the nature of the
goods/substance, compliance/conformity with the stated parameters
would be the requirement.
(iv) There are 21 parameters laid down under IS 1460:2005 and
none of the tests have shown compliance with all these parameters.
The last and third test have reported compliance with 14
parameters, though as discussed above in respect of 2 of the
aforesaid 14 parameters, namely, flash point and distillation range,
the same are not in conformity. Thus, it cannot be said there is
substantial compliance with the parameters of IS 1460:2005.
(v) Flash point, though may not be the most important parameter,
yet, its importance in determining the nature of the Automotive oil
cannot be ignored. Flash point being a very important criteria to
classify petroleum products, non-compliance of the samples on this
parameter would make the classification doubtful.
(vi) Evasive answers and non-clarification on certain aspects of the
flash point of the samples by the expert Dr. Gobind Singh certainly
cast a serious doubt on the samples being identified as that of HSD.
The expert himself also has not said that the samples are of HSD
except for stating that the samples conform to certain specifications
of the IS 1460:2005.
(vii) In view of the ambiguity and lack of clarity in the expert
opinion/laboratory test results, it would be unsafe to draw the
inference that the Department had been able to prove their case
even by applying the test of preponderance of probability merely
because the samples conform to certain parameters.
(viii) If the Department with all the resources at their command and
access to various laboratory facilities could not get the samples
tested in respect of all the 21 parameters, expecting the
assesses/appellants to get the samples tested to show that these do
not conform the specifications and are not HSD does not appear to
be reasonable. Thus, shifting of onus to the assesses to prove
otherwise appears to be unreasonable and meaningless.
(ix) The burden was not on the assessees to demonstrate that non-
conformity with the remaining 8 parameters would vitiate the
conclusion that the samples were of HSD.
81. The aforesaid difficulties in our opinion can be overcome, if we
apply the test of 'most akin' as contemplated under Rule 4 of the
General Rules for Interpretation referred to above.
82. The real test for classification, according to us, would be as to
whether any goods or substance in question is 'most akin' or bears
the closest resemblance or similarity to any of the specified goods
mentioned under the Headings and relative Section or Chapter
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Notes under the Tariff Act, and not by applying the test of
preponderance of probability.
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 event, 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.
84. In the present case, as noticed above, the finding of the High
Court is based primarily on applying the test of preponderance of
probability which may not necessarily fulfil the 'most akin' test. The
High Court came to the conclusion based on the incomplete test
reports and noncommittal opinion of the expert Dr. Gobind Singh
who in categorical terms had not stated that the imported goods are
HSD. There was no opinion that the imported goods are most similar
to HSD to satisfy the test of 'most akin'. The definitive opinion and
finding that the imported goods are 'most akin' to HSD is missing in
the reports and opinion for classifying the imported goods as HSD.”
45. In context of the test reports in the instant case, the
relevant observations of the Supreme Court, are succinctly
stated as under:
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“a) where the proceedings involve requirement of fulfilment of
technical/scientific parameters with confiscatory and penal
consequences, the degree of probability would be of a higher order
and not mere probability.
b) The opinion of the test report specifying the goods under the
Headings of IS has to be unambiguous relating the specification.
c) The testing of all 21 parameters is mandatory as laid down in
the IS specifications.
d) Flash point being a very important criteria to classify
petroleum products, non-compliance of the samples on this
parameter would make the classification doubtful.
e) The predicaments for conforming the goods can be overcome
by applying the test of 'most akin' for determining the goods
mentioned under the Headings and relative Section or Chapter
Notes under the Tariff Act, and not by applying the test of
preponderance of probability.“
46. Keeping in mind the aforesaid principles enunciated by
the Supreme Court, we have attempted to distinguish the case
of the petitioners for the following reasons.
47. Significantly, in the Test Reports in the case of Gastrade
International (supra), the Apex Court has recorded that
there was no opinion and finding expressed that the imported
goods are “most akin” to HSD, which is not the issue in the
Test Reports in question. In the first test report of CRCL,
Visakhapatnam, out of 18 parameters tested, except for the
parameters relating to flash point, distillation recovery and
sulphur, the report categorically records that the sample is
mainly composed of diesel fraction, is adulterated with lighter
hydrocarbons, and is most “akin to HFHSD (IS 16861) /
adulterated HFHSD”. The diesel fraction is found to be between
95% to 98%). Thus, out of 21 parameters, the 18 parameters
tested by CRCL, Visakhapatnam and MRPL, there is a clear
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opinion by the laboratory that the sample meets all
characteristics of ADF and HFHSD, except the flash point,
which is lowered by mixing lighter hydrocarbons. In this
context, we may refer to the definition of ‘adulteration’ as
supplied in the ‘Malpractices Order,2005’. It reads thus:
“2(a) "adulteration" means [presence of marker in motor
spirit and high speed diesel and/or] [Inserted by Notification
No. G.S.R. 18(E) dated 12.1.2007 (w.e.f. 21.12.2005).] the
introduction of any foreign substance into motor spirit or high
speed diesel illegally or unauthorisedly with the result that the
product does not conform to the requirements of the Bureau of
Indian Standards specifications number IS 2796 and IS 1460
for motor spirit and high speed diesel respectively or any other
requirement notified by the Central Government from time to
time;”
Thus, any foreign substance, which is blended in high speed
diesel illegally or unauthorizedly, which ultimate results into
failure of requirements of BIS specifications IS 1460 is an
adulteration.
48. In the instant case, there is a definite conclusion that the
flash point, which is one of the most important parameters as
emphasized by the Supreme Court, has been lowered by the
use of lighter hydrocarbons and the product is therefore
characterized as adulterated HFHSD. No such clear and
unambiguous opinion was rendered by any of the three
laboratories in the case of Gastrade International(supra)
and also by the expert, who was examined during the inquiry.
This Court while placing reliance on this decision,had directed
for release of seized distillate marine fuel vide decision in case
of Noya International(supra), on which heavy reliance is placed
by the petitioner. We may clarify that in the case of those
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petitioners, the Test Reports of CRCL, Vizag were considered,
which were ambiguous in nature.
49. The petitioners have also placed reliance on the
communication dated 04.11.2025. The same is written in
response to the clarification sought by the Assistant
Commissioner, Kandla relating to the Test Reports of CRCL,
Vizag in case of goods of importer M/s. Prajakt Agro Industries.
In view of the specific findings of the laboratories in case of the
present petitioners, the said communication cannot come to
their rescue. However, we do not agree with the submissions,
of the respondent department of discarding the clarificatory
communications for the reason that the Director of the Central
Revenues Control Laboratory functioning under the Central
Board of Indirect Taxes and Customs has not been shown to
lack the authority to issue such clarification. In the present
case, the respondent cannot disown the letters/ clarifications,
particularly in view of the fact that no communication has been
placed before this Court indicating that any cautionary advice
has been issued to the Director restraining him from issuing
the clarification or suggesting him that he lacked the authority
to issue the same.
50. Thus, if the rule of the “most akin test” is applied, the
product declared by the petitioners as industrial oil is found to
be Automotive Diesel Fuel / HFHSD, which is a restricted
commodity. Hence, in view of the settled legal position laid
down in the cases of Om Prakash Bhatia (supra) and Raj
Grow Impex (supra) , we are not inclined to set aside the
action of seizure of goods in question. Though, reliance is
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placed on the inculpatory statements of the
petitioners/importers before us by DRI, we have not expressed
any opinion in this regard, since the investigation is still in
progress.
51. We do not agree to the submissions advanced on behalf
of the petitioners that the laboratory test results are liable to
be discarded merely because the samples are tested in two
different laboratories. The petitioners have not questioned the
collection of the samples. Once the samples of the same
commodity are duly collected, they can be tested in different
laboratories, particularly when one laboratory may not be fully
equipped to undertake testing of all 21 parameters.
52. We have also noticed that DRI has acted positively in
releasing the seized goods by issuing NOC to 333 containers
based on favourable reports. The petitioners have not alleged
any mala fides against the officers of the DRI, who undertook
the sampling and testing process. The petitioners have not
challenged the test results. Hence, even if there are two or
more Test Reports from different laboratories, so long as they
conform to the directions of the Supreme Court in the case of
Gastrade International (supra) and test the parameters
prescribed under the relevant Indian Standards, such test
results cannot be discarded merely because they were
undertaken by different laboratories.
53. The product imported by the petitioners, if released, will
have a direct environmental impact affecting society at large.
In such circumstances, having regard to the nature of the
product, the Test Reports cannot be discarded merely because
different parameters were tested in two different laboratories.
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Order in SCA Nos.1355/2026, 1356/2026 & 1357/2026 :
54. Since the petitioners did not cooperate with the
respondent authority in collecting a further sample to be sent
to Mangalore Refinery and Petrochemicals Limited, we have
placed reliance on the report of CRCL, Visakhapatnam dated
28.11.2025, which is akin to the reports in the lead matter
being Special Civil Application No.16799 of 2025. Hence, on
two counts, the petitions are required to be dismissed – firstly,
on the basis of the Test Report of CRCL, Visakhapatnam; and
secondly, on account of the non-cooperation of the petitioners
in permitting the DRI to collect the sample and send the same
to the MRPL.
Order in SCA No.1679/2026 :
55. The order passed in the lead matter shall apply to those
Bills of Entry where the report of CRCL, Visakhapatnam and
MRPL has already been received. In respect of the Bills of Entry
where the MRPL report is awaited, if the same parameters and
results, as recorded in other Bills of Entry already considered
by this Court are found, the action of the DRI in seizing such
consignments shall be treated as appropriate.
56. All the captioned writ petitions, stand dismissed . Rule
discharged. No order as to costs. However, we clarify that in
case the petitioners file an application for re-export of goods,
the DRI shall consider the same, and pass appropriate orders
on such application.
Sd/- .
(A. S. SUPEHIA, J)
Sd/- .
(PRANAV TRIVEDI,J)
MAHESH /02to09
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