Gastrade International vs. Commissioner Of Customs, Kandla

REPORTABLE
2025 INSC 411
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION


CIVIL APPEAL NO. OF 2025
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 6470 OF 2022)

GASTRADE INTERNATIONAL ...APPELLANT (S)
VERSUS
COMMISSIONER OF CUSTOMS, KANDLA …RESPONDENT(S)
With
CIVIL APPEAL NO. OF 2025
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 6472 OF 2022)

CIVIL APPEAL NO. OF 2025
(@ SPECIAL LEAVE PETITION (CIVIL) NO. OF 2025)
(@ Diary No. 32623 OF 2024)

J U D G M E N T

NONGMEIKAPAM KOTISWAR SINGH, J.
Delay condoned in Special Leave Petition arising out
of Diary No.32623 of 2024. Leave granted in all the Special
Leave Petitions.
2. The issue involved in this batch of appeals is,
Signature Not Verified
Digitally signed by
ARJUN BISHT
Date: 2025.03.28
14:55:06 IST
Reason:
whether, the imported goods is to be treated as Base Oil as
claimed by the appellants or High Speed Diesel (HSD) as
Page 1 of 76


determined by the Customs Authorities, which is contested
by the appellants. If the product is treated as HSD, it would
be a prohibited item that could not have been imported by
a private entity other than a State Trading Enterprise, in
which event it would be liable to be confiscated and penalty
be imposed on the appellant importers.
3. The Commissioner of Customs, the Adjudicating
Authority held vide order dated 03.12.2019 that the said
product is not Base Oil, but HSD and accordingly, ordered
confiscation of the same apart from levying penalties. On the
other hand, the appellate authority, the Customs, Excise
and Service Tax Appellate Tribunal (CESTAT) held the same
to be Base Oil and not HSD, thus reversing the decision of
the Adjudicating Authority. On being challenged before the
High Court of Gujarat, by the Customs Authorities, the High
Court reversed the decision of the Appellate Tribunal and
affirmed the decision of the Adjudicating Authority holding
the imported goods to be HSD.
4. In order to appreciate the issues in proper
perspective, a brief reference of the relevant facts may be
necessary.
Page 2 of 76


Facts in brief
5.
The three appellants, M/s Gastrade International,
M/s Rajkamal Industrial Pvt Ltd and M/s Divinity lmpex
imported the goods from UAE by sea per vessel ''Al Heera"
which was docked at Kandla Port. The importers declared
the goods as “Base Oil SN 50” seeking clearance of the same
under Chapter Heading 27101960, which is for Base Oil. On
the basis of the Intelligence Report, the Directorate of
Revenue Intelligence (“DRI”), classifying the said cargo as
HSD under Chapter Heading 27101930, which is prohibited
from being imported except only by State Trading
Enterprises, seized the said cargo. As per Import Policy ITC
(HS), 2017, High Speed Diesel (HSD) and Low Diesel Oil
(LDO) are covered under the EXIM Code 27101930 and
27101940 and in terms of policy as notified under
Notification dated 20.05.2015 issued by the DGFT
Department of Commerce, these items could be imported
only by the State Trading Enterprises and thus, not by
appellants. The samples of the seized goods were sent to
Central Excise and Customs Laboratory at Vadodara for
testing which returned the report on 11.05.2018 with the
Page 3 of 76


finding that the samples drawn from the seized goods had
characteristics of High Speed Diesel Oil/Automative Fuel Oil
conforming to IS 1460: 2005 in respect of 8 parameters and
that the samples were “other than Base Oil”. The appellant-
importers contested the said test report and the requested
the Customs authorities for retesting the samples at the
Central Revenues Control Laboratory (CRCL), New Delhi or
Indian Institute of Petroleum, Dehradun. Accordingly, the
samples were sent to CRCL.
6. The Central Revenues Control Laboratory to which
the samples were again sent also submitted a report dated
03.07.2018 with the finding that the samples conform to the
specifications of HSD Oil (Automotive Diesel Fuel) as per IS
1460: 2005 in respect of 10 parameters and each of the
samples is “other than Base Oil”.
7. Not satisfied with the aforesaid results, one of the
appellants, M/s Rajkamal Industrial Pvt. Ltd. approached
the High Court of Gujarat by filing a Special Civil Application
No. 10882 of 2018 in which the High Court passed an
interim order on 30.07.2018 directing the Department to
send requisite quantity of samples to the Indian Oil
Page 4 of 76


Corporation Ltd. (IOCL), Mumbai which is one of the notified
laboratories as per the Department's circular dated
16.11.2017.
8. The samples were accordingly sent to the Central
Laboratory, Indian Oil Corporation Limited in Mumbai which
submitted the report dated 14.08.2018 stating that the
sample had been tested as per Indian Standard 1460: 2005
and the sample met 14 parameters as per the laboratory
capability out of prescribed 21 parameters in terms of the
specification IS: 1460: 2005.
9. The DRI, thereafter, issued show cause notices to the
appellants on 24.04.2019 alleging improper classification. In
the said show cause notices, it was stated that the imported
goods are classifiable as HSD under CTH 27101930, that the
imported goods were liable to be confiscated under Sections
111(d) and (m) of the Customs Act, 1962 ( for short, “Act”)
and that penalties are liable to the imposed under Sections
112(a) and (b) of the Act and the Directors of the appellant-
companies were also liable to be imposed penalties under
Sections 112(a) and (b), Section 114AA and the Section 117
of the Act.
Page 5 of 76


The show cause notices also stated that the earlier
imports were liable to be classified as Light Diesel Oil under
CTH 27101940 and these were also liable to be confiscated
under Sections 111(d) and (m) of the Act and penalty be
imposed under Sections 112 (a) and (b) and Section 114AA
of the Act.
Show cause notice was also issued to the buyer, in
respect of the appellant – Gastrade International Pvt. Ltd., of
the earlier imported goods stating that the earlier imports
were LDO under CTH 27101940 and were liable to be
confiscated under Sections 111(d) and (m) of the Act and
penalties were liable to be imposed under Section 112(b).
Show cause notice was also issued to the exporters of the
said goods as to why penalty should not be imposed on them
under Sections 112(a) and (b), 114AA and 117 of the Act.
Finding by the Adjudicating Authority
10. After considering the replies furnished by the parties
and considering the evidence, both oral and documentary,
relied upon, and hearing the parties, the Adjudicating
Authority, the Principal Commissioner of Customs, Custom
Page 6 of 76


House, Kandla passed the Orders-in-Original No. KND-
CUSTM-000-COM-12-2019-20 dated 05.12.2019, KND-
CUSTM-000-COM-13-2019-20 dated 05.12.2019, and KND-
CUSTM-000-COM-14-2019-20 dated 05.12.2019, rejecting
the claim of the appellants and upholding the departmental
findings. In the course of the enquiry and hearing conducted
by the Adjudicating Authority, one of the experts, namely Dr.
Gobind Singh, Manager (Lab), IOCL Central Laboratory,
Mumbai was also examined.
11. The Adjudicating Authority concluded that as per the
findings of the three independent laboratories of repute, the
samples meet the parameters specified under IS 1460:2005
prescribed for High-Speed Diesel, a hydrocarbon oil and the
importers could not produce any authentic or authoritative
literature about what is Base Oil SN 50 and thus failed to
prove that the goods imported were Base Oil falling under
Chapter 27101960 of Customs Tariff Act, 1975 (for short,
“Tariff Act”).
12. The Adjudicating Authority also repelled the
contention of the appellants that since IOCL had tested only
14 out of 22 parameters for IS 1460:2005, and thus, all the
Page 7 of 76


parameters had not been tested, it cannot be said that the
sample is of HSD. It was also held that the appellants could
not point out which of these remaining eight parameters will
not be satisfied if tested.
13. Accordingly, the Adjudicating Authority held that the
goods were liable to confiscation under Sections 111 (d) and
(m) of the Act. The Directors of the appellants were held
liable for penalty under Sections 112(a) and 114AA of the
Act. However, granting permission to the appellants to
redeem the confiscated goods for re-export on payment of
fine.
14. Being aggrieved by the aforesaid orders in original
passed by the Adjudicating Authority, the appellants
preferred appeals before the Custom Excise Service Tax
Appellate Tribunal (CESTAT).
Finding by the Appellate Authority (CESTAT)
15. According to the CESTAT, as per the statutory
definition provided in the Tariff Act which needs to be
construed strictly, only such hydrocarbon oil that conforms
to the Indian Standard Specification IS1460:2005 can be
classified as HSD. As per the said specification, 21/22
Page 8 of 76


parameters have been mentioned and no exception has been
provided to the effect that if any or some of the parameters
out of 21/22 parameters are not met, even then the product
will be determined as HSD. According to CESTAT, only such
product that meets all the 21/22 parameters as specified in
IS 1460:2005 can be qualified as HSD. The CESTAT held
that in the present case, since eight parameters were not
tested, it cannot be said that the product is conforming to IS
1460:2005, and if it is not conforming to IS 1460:2005, it
does not fall within the definition of HSD as provided under
Supplementary Note of Chapter 27.
The CESTAT also held that the burden is on the
Department to establish the classification of goods as HSD,
which conforms to IS 1460:2005, and in the absence of
testing of all the parameters, it can be only an assumption
of the Department that on the basis of 14 parameters, a
product can be classified as HSD.
16.
The CESTAT also took the view that the test report of
IOCL Laboratory is not conclusive. The CESTAT was of the
opinion that the expert, Dr. Gobind Singh who was examined
had not considered that the flash point is an important
Page 9 of 76


parameter for testing the goods and he could not give any
firm opinion as regards the parameter of flash point. The
CESTAT held that the test conducted by Dr. Gobind Singh
of IOCL cannot be considered to be conclusive to determine
that the product is HSD. The CESTAT was of the view that
in the present case as the flash point tested was above 93°C,
the goods cannot be classified as HSD. The CESTAT also
held that the Department had with a predetermined mind
got the goods tested for HSD, whereas the said goods should
have been tested as to whether these are Base Oil or not,
and only when the parameters are not met for Base Oil then
the Department could have resorted to carrying out the test
for classifying the goods either under HSD or any other
classification.
17. The CESTAT held that even if the product is not Base
oil, since it was not proved by the Department beyond doubt
that the impugned goods are HSD, the case of the
Department would fail.
18. Accordingly, the CESTAT held that the goods are not
classifiable as HSD under CTH 27101930. Consequently,
the claim of the appellants for classification of goods as Base
Page 10 of 76


Oil under CTH 271019160 was maintained and in view of
the submission made by the appellants that irrespective of
the decision of the classification, they would seek permission
to re-export, the appellants were allowed to re-export the
goods and the CESTAT set aside the order of confiscation,
imposition of penalty and the redemption fine by the
Department vide a common order dated 28.09.2021 passed
in the aforesaid Customs Appeal No.10240 of 2020, Customs
Appeal No.10291 of 2020 and Customs Appeal No.10298 of
2020.
19. Being aggrieved by the aforesaid decision of the
CESTAT, the Department preferred three appeals before the
High Court of Gujarat, which were registered as Revenue Tax
Appeal No.297 of 2021, Revenue Tax Appeal No. 298 of 2021
and Revenue Tax Appeal No.299 of 2021, which were allowed
by a common judgement and order dated 20.01.2022 passed
by the High Court, which is the subject matter of challenge
in this batch of appeals.


Page 11 of 76


Finding by the High Court
20.
Before the High Court, the issue of maintainability of
the appeals under Section 130 of the Act was raised, which
was decided in favour of the Department. However, the
appellants have not pressed this issue before us and as such
we make no observation about the decision, and we confine
our consideration only on the issue as to whether the High
Court was correct in concluding that the imported oil is not
Base Oil as claimed by the appellant-importers and is HSD
as classified by the Department.
21. The High Court noted that though it would appear
that what had been decided by the Tribunal could be termed
as a question of fact, and whether the subject goods fall
within one category or the other would essentially be a
question of fact, yet while deciding the same, if the Tribunal
overlooks certain basic principles of law applicable to the
case on hand and records findings which could be termed as
perverse, then definitely such a decision of the Tribunal
would give rise to a question of law and hence maintainable.
Page 12 of 76


The High Court thereafter proceeded to examine the
materials on record.
22. Coming to the evidence of Shri Gobind Singh,
Manager (Lab), IOCL Central Laboratory, Mumbai, the High
Court observed that a plain reading of the statement and
cross-examination of Dr. Gobind Singh would indicate that
the expert in no uncertain terms had made himself clear that
all the 14 tests which were carried out revealed only one
thing that the sample was of High-Speed Diesel, and not
Base Oil as asserted by the assessees.
The High Court also noted that the expert was honest
enough to admit that the IOC laboratory was equipped to
conduct only 14 tests and it had no facility or means to
conduct the remaining seven tests. The High Court then
considered whether the analysis could be said to be complete
or conclusive as regards the nature of the sample only if all
the 21 tests were undertaken, more particularly when the
expert had asserted that all the 14 tests carried out indicated
only one thing that the sample analysed was that of High
Speed Diesel.
Page 13 of 76


23. The High Court went on to observe that it is not in
dispute that the onus of establishing that the sample meets
the specification IS1460:2005 lay upon the Customs
Authority, and the burden of proof is on the Authority to
show that the particular goods or item in question is taxable
in the manner claimed by them. According to the High Court,
there should be material to enter an appropriate finding in
that regard and the material may be either oral or
documentary, and it is for the Authority to lay evidence on
that behalf even before the Adjudicating Authority.
24. The High Court went on to observe relying on the
decisions of this Court in Collector of Customs, Madras
and others Vs. D Bhoormall, AIR 1974 SC 859 ; A.N. Guha
& Co Vs. Collector [1996 (86) ELT 333]; R.V.E
Venkatachala Gounder Vs. Arulmigu Viswesaraswami
& V.P. [Order dated 08.10.2003 in Civil Appeal number
10585 of 1996] that the Department is not required to prove
its case with mathematical precision to a demonstrable
degree and legal proof is not necessarily a perfect proof.
25. It was observed by the High Court that so long as the
Department has been able to establish its case with such a
Page 14 of 76


degree of preponderance, the existence of fact could be said
to have been proved. The High Court observed that the only
ground on which the Tribunal interfered with the findings
recorded by the Adjudicating Authority was that the
laboratories were not in a position to conduct all 21 tests.
According to the High Court, the Tribunal ignored the fact
that all the tests carried out in three different laboratories
revealed only one thing that the sample showed the
characteristics of HSD. The High Court then observed that if
the Department was able to lead evidence to this extent, the
onus thereafter shifted upon the assessee to establish that
these tests cannot be said to be conclusive of the fact that
the subject good is HSD. However, no such attempt had
been made by the assessees.
26. The High Court further went on to observe that it was
not at all convinced with the findings recorded by the
Tribunal. The High Court held that the Tribunal could be
said to have ignored the material evidence in the form of the
three test reports of three different laboratories, certifying
the samples to meet the specification IS1460:2005 and
assessees have not been able to show anything based on
Page 15 of 76


which the High Court can take the view that if all the
prescribed 22 tests are not carried out, the report would
remain incomplete and would not be admissible in evidence
or would not be conclusive of the nature of the sample.
27. The High Court observed that if these 14 tests indicate
the sample to be one of the HSD, this evidence could not
have been discarded, ignored or overlooked only on the
ground that seven other tests could not be undertaken by
the laboratories because of lack of adequate facility to
conduct these seven tests. According to the High Court, to
say so would require the Department to prove its case with
mathematical accuracy and beyond reasonable doubt.
Accordingly, the High Court allowed the appeals preferred by
the Department and set aside the order of the CESTAT.
Consideration by this Court
28. From the above three decisions of the Adjudicating
Authority, the Appellate Authority (CESTAT), and the High
Court, it is quite evident that their decisions primarily
hinged upon the reports of the three laboratories, namely,
Central Excise and Customs Laboratory at Vadodara,
Central Revenues Control Laboratory (CRCL), New Delhi and
Page 16 of 76


Central Laboratory, Indian Oil Corporation Limited, Mumbai
where the samples of the questioned goods were sent for
testing as to whether these conformed to the Indian
Standards Specification of Bureau of Indian Standards IS:
1460:2005. All three fora also referred to the expert evidence
of Dr Gobind Singh.
29. Considering the different conclusions arrived at by
the three fora on the same set of the results of the tests
conducted by three different laboratories, it would be
necessary to examine these tests to understand how these
fora had arrived at their conclusions.
30. Since the reference point of these tests is Indian
Standard Specification of the Bureau of Indian Standards,
IS1460:2005, which prescribes the specifications for HSD
under the Tariff Act, it would be necessary to refer to these
parameters before we proceed to examine the implications of
the results of the three tests and arrive at the correct
conclusion.
31. Section 2 of the Tariff Act provides the rates at which
duties of customs shall be levied under the Customs Act as
specified in the First and Second Schedules to the Tariff Act.
Page 17 of 76


Chapter 27 of the First Schedule to the Tariff Act deals
with the rate of duties leviable in respect of mineral fuels,
mineral oils, and products of their distillation; bituminous
substances; mineral waxes.
Supplementary Note to Chapter 27 defines various
kinds of oils specifying the attributes to these, including that
of HSD. Accordingly, relevant portions of this
Supplementary Note are reproduced hereunder for easy
reference.
“SUPPLEMENTARY NOTES:
In this Chapter the following expressions have the
meanings hereby assigned to them:

a) Motor Spirit means any hydrocarbon oil (excluding
crude mineral oil) which has its flashpoint below
250C and which either by itself or in admixture with
any other substance, is suitable for use as fuel in
spark ignition engines. “Special boiling point spirits
(subheadings 2710 12 11, 2710 12 12 and 2710 12
13) means light oils, as defined in Chapter Note 4, not
containing any anti-knock preparations, and with a
difference of not more than 600C between the
temperature at which 5% and 90% by volume
(including losses) distil;

b) “Natural gasoline liquid (NGL)” is a low–boiling
liquid petroleum product extracted from Natural Gas;

c) “Superior kerosine Oil (SKO)” means any
hydrocarbon oil conforming to the Indian Standards
Specification of Bureau of Indian Standards IS:1459-
1974 (Reaffirmed 1996);

d) “Aviation turbine fuel (ATF)” means any
hydrocarbon oil conforming to the Indian Standards
Page 18 of 76


Specification of Bureau of Indian Standards
IS:1571:1992:2000;

e) “High-speed diesel (HSD)” means any hydrocarbon
oil conforming to the Indian Standards Specification
of Bureau of Indian Standards IS: 1460:2005;

f) “Light diesel oil (LDO)” means any hydrocarbon oil
conforming to the Indian Standards Specification of
Bureau of Indian Standards IS: 15770:2008;

g) “Fuel oil means any hydrocarbon oils conforming to
the Indian Standards Specification of Bureau of
Indian Standards IS:1593:1982 (Reaffirmed in the
year 1997);

h) “Lubricating oil” means any oil, which is ordinarily
used, for lubrication, excluding any hydrocarbon oil,
which has its flash point below 93.30 Centigrade;

i) “Jute batching oil” and “textile oil” are hydrocarbon
oils which have their flash point at or above 93.30C,
and is ordinarily used for the batching of jute or other
textile fibres;

j) The expression “petroleum jelly crude” (subheading
2712 10 10) by the ASTM D 1500 method

k) For the purposes of these additional notes, the tests
prescribed have the meaning hereby assigned to them

1) “Flash Point” shall be determined in accordance
with the test prescribed in this behalf in the rules
made under the Petroleum Act, 1934 (30 of 1934);
2) …………………………………………………..
………………………………………………………
5) …………………………………………………..


32. Thus, High Speed Diesel (HSD) has been defined as
any hydrocarbon oil conforming to the Indian Standards
Specification of Bureau of Indian Standards IS: 1460:2005.
Page 19 of 76


33. As regards the Indian Standards Specification of
Bureau of Indian Standards IS1460:2005 relating to High
Speed Diesel, the specifications provided are as follows:
EURO IV/BHARAT STAGE IV EMISSION NORMS COMPLAINT –
SPECIFICATION FOR AUTOMOTIVE DIESEL FUEL

Page 20 of 76

1) This limit is applicable prior to addition of ignition improvers, if
used. In case a value exceeding the limit is obtained on finished
fuels in the market, ASTM D 4046/ISO 13759 shall be used to
establish the presence of nitrate containing compound. In such
case the present limit for carbon residue cannot be applied.
However, the use of ignition improver does not exempt the
manufacturer from meeting this requirement prior to the addition
of additives.
2) For Fuel processed from Assam crude, Cetane number and Cetane
index is relaxed by 3 units.
3) Winter shall be the period from November to February in central
and northern plains of India (both months inclusive) and rest of
the months of the year shall be called as summer.
4) Applicable for Naval applications and fishing vessels requiring High
Flash Automotive Diesel Fuel.
5) For fuel processed from Assam crude, the density range is relaxed
to 820-855.
6) In case of dispute, IS 1448 [P : 32] shall be the referee test method.
7) For Automotive Diesel Fuel supplied to Indian Navy, the limit of
sulphur shall be in agreement between the buyer and the
supplier.
8) In case of dispute, IS 1448 [P : 34] shall be the referee test method.
9) This test shall be carried out only at the refinery or manufacturer's
end. In case of dispute, ASTM D 2274 shall be the referee method.
10) Shall be applicable only for Automotive Diesel Fuel blended with
5 percent (v/v) Bio-diesel conforming to IS 15607 and the limit
shall proportionately vary as and when the different blending
percent of Bio-diesel is permitted.
…..
…..

Page 21 of 76


34. It may be relevant herein to mention that flash point
has been defined under Section 2 (c) of the Petroleum Act,
1934 as follows:
“2 (c) ‘Flash-point’ of any petroleum means the lowest
temperature at which it yields a vapour which will
give a momentary flash when ignited, determined in
accordance with the provisions of Chapter II and the
rules made thereunder;”

35. We will now examine the results of the three tests
conducted by the three laboratories, which are reproduced
as follows:-
1. Central Excise and Customs Laboratory at
Vadodara.
Report dated 11.05.2018.

Lab No. RCL/AH/DRI/216/07.05.2018
TANK NO. 1
Report
The sample is in the form of light pale yellow colored
liquid. It is composed of mineral hydrocarbon oil having
following characteristics:-

1. Flash point (PMCC) = Above 66°
2. ASH Content = Nil
3. Acidity= NIL
4. Water Content= NIL
5. Densi1y at 15° = 0,8301 g/ml
6. Distillation recovery
a. At 350° = more than 85%
b. At 360° = more than 95%
7. Kinetic viscosity at 40° = 3.80 CST
8. Sediment = N1L

In view of the above analytical parameter the
sample has characteristics of high speed diesel
oil/Automotive Fuel Oil confirming to IS: 1460:2005 &
Page 22 of 76


amended thereafter in terms of parameters 1 to 8
mentioned above.

It is other than base oil

Sealed remnant returned

Dispatch No. 177
Sd/-
Date:11.05.2018 11
.05.2018
Pradeep Maroo
Chemical Examiner Grade-II
Seen
Deepali
02/07/2018

2. Central Revenues Control Laboratory (CRCL),
New Delhi.
Report dated 03.07.2018.
Government of India
Ministry of Finance, Department of Revenue Central Board
of Indirect Taxes & Customs Central Revenues Control
Laboratory Hillside Road, Pusa, New Delhi-110012
Tel.:011-21520123/25843494, Fax: 011-25843495
Email: dir.crcl-cbec@nic.in Website: http://crcl.gov.in
_______________________________________________________
F.No.-27-Cus/C-05 to 14/2018-19 Dated: 03.07.2018
To
The Additional Director,
Directorate of Revenue Intelligence,
Ahmedabad Zoal Unit,
No. 15, Magnet Corporate Park,
100 ft Thaltej-Hebatpur Road.
Near Sola Flyover, Thaltej,
Ahmedabad-380054

Sub. : Testing of samples declared as Base Oil SN 50- reg.
Please refer to your letter F. No. DRIAZU/CI/ENQ-
l2/2018 dated 06.06.2018 on the subject cited above
Page 23 of 76


forwarding therewith 10 samples described as Base Oil SN 50
pertaining to B/E No. 6252179, 6251273, 6251276. 6251277,
6251258. 6251267. 6251268, 6252184, 6251270 and
6251278 all dated 04.05.2018 and TM No. 1A to 1OA dated
06.06.2018 for retesting.
The samples u/r have been registered here under Lab Nos.
CLR-05 to CLR 14 dated 14.06.2018 respectively.
The samples have been analyzed and Test reports are
as under:-
Report :-
Each of the ten samples is in the form of pale yellow
colored liquid. Each is composed of mineral hydrocarbon oil,
having more than 70% mineral hydrocarbon oil and possesses
following characteristics:-
Test Results of the samples
Page 24 of 76


Lab No. CLR-05 CLR-06 CLR-07 CLR-08 CLR-09 CLR-10 CLR--
11
CLR--
12
CLR--
13
CLR--
14
TM Mo. 1A 2A 3A 4A 5A 6A 7A 8A 9A 10A
Characteris
tic
Limit as
per IS
1460:200
5 and
amended

Acidity.
Inorganic
Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
Acidity,
total mg of
KOH/g
To report 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05
Ash
percent by
mass
0.01
Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
(max.)
Carbon
residue
(Ramx
bottom) on
10% resdue
percent by
mass
0.30
0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01
(mat.)
Density at
15°C
0.8200
.8287 .8316 .8310 .8288 .8284 .8286 .8286 .8282 .8284 .8281
0.8450
Flash Point
(PMCC)
66° (min.) 113°C 115°C 93°C 88°C 98°C 100°C 95°C 78°C 106°C 111°C
Kinematic
40°C, cSI
2.0 to 4.5 3.7 4.4 4.4 4.4 4.0 3.9 3.5 4.1 4.0 4.0
Kinematic
Viscosity
37.8°C
- 4.3 4.9 4.8 4.7 4.7 4.3 4.3 4.3 4.3 4.3
Distillation
range, °C
95 238-
356
234-
358
234-
352
238-
354
240-
356
238-
344
240-
354
240-
350
240-
342
238-
325
Percent v/v
Recovered
ot 360°C










356°C
358°C
352°C
354°C
356°C
344°C
354°C
350°C
342°C
325°C



















95%
volume
recovered
at

Pour Point,
Max
3°C
8°C 8°C 8°C 8°C 8°C 8°C 8°C 8°C 8°C 8°C
15°C
a) Winter

b) Summer
Cetaile
Index
46 (min.) 65.7 66.0 65.6 66.2 66.0 66.5 66.6 66.6 67.0 67.7
Water
content,
percent v/v
mg/kg
200
(max.)
Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil


Page 25 of 76



On the basis of above analytical parameters, each of the ten
samples conforms to the specifications of High Speed Diesel Oil/
(Automotive Diesel Fuel as per IS 1460:2005 and further amended).
Each is other than Base Oil.
Sealed remnants are returned separately.
Sd/-
03.07:2018
(K. C. Agrawal)
Joint Director

Copy to: The Chemical Examiner Gr-I (I/e) Central Excise &
Customs Laboratory, Vadodara.

3. Central Laboratory, Indian Oil Corporation
Limited, Mumbai.
Report dated 14.08.2018

Indian Oil Corporation Limited
Central Laboratory
“K” Oil H Installation. Sewri (East), Mumbai-400 015
Telefax 0222416 3062 (D). 022 2292 4761
Marketing Division


QUALITY CONTROL TEST REPOT FOR HIGH SPEED DIESEL
SPECIFICATION NO. IS:1460-2005 AMENDED
NO.2 MARCH 2010
Test Required High Speed Diesel Analysis
Test Report No. & Date LSE/3791/2018 dated
14/08/2013
Name of Customer Directorate 01 Revenue
Intelligence, Ahmedabad
Source of Sample 7S (Composite), Vessel MT. AL
HEERA
Sample Drawn By Jointly by Representative of
DRI, Ahmedabad
Page 26 of 76


Seal No. Glass bottle sealed with Lead
Seal (Yellow tag with Panchas
signature)
Date of Sampling 05/05/2018
Date of Sample Received 09/08/2018
Reason for Testing AS per letter ref.
DRI/AZU/CI/ENQ-12(INT
02/2018/2018: dated
08/08/2018. Goods declared
as “Base Oil SN 50-IN Bulk” to
be tested as per High Speed
Diesel Specification IS
1460:2005 amended.

SL.No CHARACTERIST
ICS
REQUIREMENTS TEST METHOD (P)
of
IS:1448/ISO/ASTM
RESULTS
I. Acidity,
inorganic
Nil P:2 Mil
II Acidity, total,
mg of KOH/g,
Max
To report P:2 0.06
III Ash, percent by
mass, Max
0.01 P:4 0.002
IV Carbon residue
(Rams bottom)
on 10 percent
residue, percent
by mass, Max
0.30 P:8 0.03
V Cetane Number,
Min.
51 P:9 FNA
VI Cetane index,
Min
46 D-4737 66.9
VII Pour Point, Max:
(a) Winter/(b)
Summer
3°C/15°C P:10 3
VIII Copper strip
corrosion for 3

hrs at 50°C
Not worse than
No.1
P:15 1a
IX Distillation, %
v/v, recovered at
360”C, Min
95 P:18 95
X Flash Point:
a) Abel°C Min
b) Pensky
martens closed
cup, °C, Min
35
66
P:20
P:21
--112
XI Kinematic
viscosity, cSt, at
40 C
2.0 to 4.5 P:25 3.997
XII Sediment,
percent by
mass, Max
- P:30 0.02
Page 27 of 76


XIII Total
Contamination,
mg/Kg, Max
24 EN 12662 FNA
XIV Density at 15°C,
3
kg/m
820-845 P:16 829.5
XV Total Sulphur,
mg/kg, Max
50 D-4294 37
XVI Water content,
mg/kg, Max
200 ISO-12937 75
XVII Cold Filter
Plugging Point
°C (CFPP), Max,
(a) Winter/(b)
Summer
6°C/18”C P:110 FNA
XVIII Oxidation
3
Stability, g/ m
25 ISO:12205 FNA
XIX Policyclic
Aromatic
Hydrocarbon
(PAH), % m, Max
11 IP-391 FNA
XX Lubricity
Corrected Wear
Scar Dia @ 60°C,
microns, Max
460 ISO:12156-1 FNA
XXI Oxygen Content,
% m, Max
0.6 Annex. B- FNA

REMARKS:
I. FNA: Stands for "Facility Not Available"
2. Flash point test was first done by Abel apparatus but,
since it was more than 66°C, it was done by PMCC.
3. As stated in Point no. 6 of your letter No.
DR1/AZU/CI/ENQ-l2(INT-02/2018)/20l8 dated
08/08/2018 stating as per the order of the Hon'ble High
Court of Gujarat. this sample has been tested as per
Indian Standard 15: 1460:2005 as amended & under this
specification there are total XXI tests covered out of which
we have
tested only XIV parameters as per our lab capability.
4. This sample meet the specification for only XIV
parameters tested at our lab as per the specification
IS:l460:2005 amended.

NOTE
1. This test report refers only to the particular sample submitted for
testing. Results relate to sample as received.
2. This test report shall not be reproduced except in full, without the
written approval of the laboratory.
3. Form No: QF/OPN/07
Page 28 of 76


4. The test results reported are valid at the time of & under stated
conditions of the test.
--- - End of test report------


Tested by

Sd/-
Dr. Gobind Singh
Manager (Lab).
Indian Oil Corporation Limited.
14.08.2018
Reviewed by
Sd/-
14.08.2018

36. Apart from the aforesaid three test results, all three
forums had also referred to the evidence of the expert,
namely, Dr. Gobind Singh, Manager (Lab), IOCL Central
Laboratory, Mumbai, more specifically to his cross-
examination, while arriving at the respective conclusions.
Hence, it may be apposite to reproduce the same as below:
(i)The cross-examination of Shri Singh at the
instance of M/s. Rajkamal Industrial Pvt.
Ltd., is as under:

“(Before the Principal Commissioner of Customs,
Custom House, Kandla)
Cross Examination of Shri Gobind Singh, Manager
(Lab), IOCL, Central Laboratory, Mumbai in the matter
of SCN F. No.DRI/AZU/CI/INQ-12(INT-2/2018 dated
22.04.2019 issued to M/s. Rajkamal Industrial Pvt Ltd
& Others by Shri Hardik Modh, Advocate.

Q: What is your name?
A: Dr. Gobind Singh.
Page 29 of 76


Q: Where have you been working and for how long?
A: I have been working in IOCL at Sewree at Mumabi
since 2012.
Q: How many samples have you tested in respect of
petroleum products?
A: I have tested large number of samples running into
hundreds of samples.
Q: Are you aware of letter dated 04.08.2018 written by
the Assistant Director of DRI whereby it was requested
to Mr. Vivek W. Sawant, DGM, IOCL to test the samples
as requested under test memo in accordance with the
parameters prescribed under IS 1460:2005 for “High
Speed Diesel” and to categorize the identity of the
goods. Had you tested these good only to ascertain
whether the parameters prescribed under Indian
Standard IS 1460:2005 for High Speed Diesel?
A: Yes.
Q: As per the letter dated 04.08.2018, you were
requested to verify whether the samples were HSD as
per IS 1460:2005. Have you followed these
instructions?
A: Yes.
Q: Have you signed the test reports annexed with
“Relied upon Documents” as Sr. No.25 to the Show
Cause Notice dated 22.04.2019?
A: Yes.
Q: What does it mean ‘reviewed by’?
A: The samples were tested by me and checked,
supervised and signed by my senior at the lab.
Q: Table I of IS 1460:2005 provides total 22 parameters
are to be tested for ascertaining whether the sample
meets with the criteria of HSD?
A: The Sample meets with the specification IS
1460:2005 for the parameters tested at our laboratory
which are 14 parameters tested as per our lab
capabilities.
Q: Does it mean that the other 8 parameters are not
important for ascertaining or deciding whether the
sample meets with the criteria of HSD?
A: Already provided in the report that in the lab the
samples were tested as per IS 1406:2005 and there is
facility available only for testing of 14 parameters and
Page 30 of 76


for the remaining 8 parameters, the facility is not
available for which I can’t comment.
Q: Do you know the function/characteristics of the 8
parameters provided under IS 1406:2005 that have not
been tested?
A: As the 8 parameters have not been tested, I can’t
comment in respect of these parameters.
Q:On perusal of report, have you concluded that it
meets with the criteria of high speed diesel of IS
1460:2005?
A: Again, it is submitted in the report that the samples
tested for 14 parameters as per IS 1406:2005, at the lab
which itself is for high speed diesel?
Q: In respect of Flash Point, two methods are
prescribed, Abel as well as PMCC. Remark No.2 of test
report provides that flash point was tested by Abel
apparatus method but since it was more than 66°C,
sample was tested by PMCC. In which situation, sample
of HSD is required to be tested at Abel method and
PMCC method?
A: If the temperature is above 66°C then PMCC is
required and if the temperature is below 66°C than it is
required to do with Able method.
Q: Do you think so one of the ingredients for
considering HSD is flashpoint?
A: Can’t comment on ingredients. The minimum
temperature for Flash Point 35°C as prescribed in
standard. We have submitted the report.
Q: What is the maximum and minimum flashpoint for
considering the sample as HSD?
A: Only the minimum limit is talked about that is 35°C
and there is no maximum limit prescribed in the
standard.
Q: If case, the Flash Point exceeds above 100°C, 150°C,
200°C etc., then does it still pertains to HSD standard?
A: Can’t comment as above 35°C whatever the Flash
Point is, it does not matter.
Q: Point No.1 of supplementary note of Chapter 27 of
Customs Tariff Act provides that “Jute Batching Oil”,
“Textile Oil” are Hydrocarbon Oils, which have their
flash points on and above 93°C. In case flash point
exceeds 93°C, what you call it?
Page 31 of 76


A: Can’t comment. As flashpoint isn’t the only
parameter. We have tested the samples that were
submitted to us as per IS 1460:2005.
Q: IOCL supplies HSD to various parties. Have you
ever come across any situation in which you have found
the Flash Point of all these test reports above 93°C and
considered as a HSD?
A: Flash Point is not the only parameter which is used
to measuring the sample as per IS 1460:2005.
Q: Can you Say it is an automotive diesel?
A: Already written in the lab report and we have tested
the samples as per the parameters as per IS
1460:2005.”


(ii)The cross-examination of Shri Singh at the
instance of M/s. Gastrade International is as
under:

“(Before the Principal Commissioner of Customs,
Custom House, Kandla)
Cross Examination of Shri Gobind Singh, Manager
(Lab), IOCL, Central Laboratory, Mumbai in the matter
of SCN F. No. DRI/AZU/CI/ENQ-11(INT-2/2018 dated
24.04.2019 issued to M/s. Gastrade International &
Others by Shri Hardik Modh, Advocate.

Q: What is your name·?
A: Dr. Gobind Singh.
Q: Where have you been working and for how long?
A: I have been working in IOCL at Sewree at Mumbai
since 2012.
Q: How many samples have you tested in respect of
petroleum products?
A: I have tested large number of samples running into
hundreds of samples.
Q; Are you aware of letter dated 04.08.2018 written by
the Assistant Director of DRI whereby it was requested
to Mr Vivek W. Sawant, DGM, IOCL to test the samples
as requested under test memo in accordance with the
parameters prescribed under IS 1460:2005 for "High
Speed Diesel" and to categorize the identity of the
Page 32 of 76


goods. Had you tested these good only to ascertain
whether the parameters prescribed under Indian
Standard IS 1460:2005 for High Speed Diesel?
A. Yes.
Q: As per the letter dated 04.08.2018, you were
requested to verify whether the samples were HSD as
per IS : 1460:2005. Have you followed these
instructions?
A: Yes.
Q: Have you signed the test reports annexed with 'Relied
upon Documents at Sr. No.14 to the Show Cause Notice
dated 24.04 2019?
A. Yes.
Q: What does it mean 'reviewed by'?
A: The samples were tested by me and checked,
supervised and signed by my senior at the lab.
Q: Table I of IS 1480:2005 provides total 22 parameters
are to be tested for ascertaining whether the sample
meets with the criteria of HSD?
A: The Sample meets with the specification IS
1460:2005 for the parameters tested at our laboratory
which are 14 parameters tested as per our lab
capabilities.
Q: Does it mean that the other a parameters are not
important for ascertaining or deciding whether the
sample meets with the criteria of HSD?
A: Already provided In the report that in the lab the
samples were tested as per IS 1406:2005 and there is
facility available only for testing of 14 parameters and
for the remaining 8 parameters, the facility is not
available for which I can't comment.
Q: Do you know the function/characteristics of the 8
parameters provided under IS 1406:2005 that have not
been tested?
A; As the 8 parameters have not been tested, I can’t
comment in respect of these Parameters.
Q: On perusal of report, have you concluded that it
meets with the criteria of high speed diesel Of IS
1460:2005?
A: Again, it is submitted in the report that the samples
tested for 14 parameters as per IS 1406;2005, at the lab
which itself is for high speed diesel.
Page 33 of 76


Q: In respect of Flash Point, two methods are
prescribed, Abel as well as PMCC. Remark No. 2 of test
report provides that flash point was tested by Abel
apparatus method but since it was more than 66 °C ,
sample was tested by PMCC. In which situation, sample
of HSD is required to be tested at Abel method and
PMCC method?
A: If the temperature is above 66 °C then PMCC is
required and If the temperature is below 66°C than it is
required to do with Able method.
Q: Do you think so one of the Ingredients for
considering HSD is flashpoint?
A: Can't comment on ingredients. The minimum
temperature for Flash Point 35°C as prescribed in
standard. We have submitted the report.
Q: What is the maximum and minimum flashpoint for
·considering the sample as HSD?
A: Only the minimum limit Is talked about that is 35°C
and there is no maximum limit prescribed in the
standard.
Q. If case, the Flash Point exceeds above 100 •c, 150 •c,
200 •c etc., then does it still pertains 10 HSD standard?
A: Can't comment as above 35°C whatever the Flash
Point is, it does not matter.
Q: Point No. I of supplementary note of Chapter 27 of
Customs Tariff Act provides that "Jute Batching Oil,
"Textile Oil” are Hydrocarbon oils, which have their
flash points on and above 93°C. In case flash point
exceeds 93°C, what you call It?
A: Can't comment. As flashpoint isn't the only
parameter. We have tested the samples that were
submitted to us as per IS 1460:2005.
Q: IOCL supplies HSD to various parties. Have you
ever come across any situation in which you have found
the Flash Point of all these test reports above 93°C and
considered as a HSD?
A: Flash Point is not the only parameter which is used
to measuring the sample as per IS 1460:2005.
Q: Can you say it is an automotive diesel?
A: Already written in the lab report and we have tested
the samples as per the parameters as per IS 1460:2005.

Page 34 of 76


(iii)The cross-examination of Shri Singh at the
instance of Divinity Impex is as under:

Cross-examination of Shri Gobind Singh, Manager
(Lab), IOCL, Central Laboratory, Mumbai in the matter
of SCN F.No.DRI/AXU/CI/ENQ-13(INT-02/2018)/2018
dated 24.04.2019 issued to M/s. Divinity Impex &
Others by Shri Kumar Pal Mehta, Practising Company
Secretary and Authorized representative of M/s Divinity
Impex.

Q: What is your name?
A: Shri (Dr.) Gobind Singh.
Q: What is your qualification?
A: P.hd Chemistry.
Q: How many years of experience do you have?
A: 7 years.
Q: How many samples have you tested till now?
A: Whatever the samples that are submitted to me, I
have tested them.
Q: What are the exact numbers of samples you have
tested?
A: whatever the number of samples that are submitted
to me by DRI, I have tested them.
Q: Have you personally examined the samples?
A: Yes.
Q: When did you receive the samples from DRI?
A: 09.08.2018.
Q: Have you yourself prepared the report?
A: There is a procedure for that. The samples were
received by concerned authority, after that I have tested
and prepared the report and my senior has reviewed the
report thereafter.
Q: After how many days of the seizure of the sample by
the DRI, the sample was received by you?
Adjudicating Authority intervened and said that this is a
matter of record and it is a sheer wastage of time of
Adjudicating Authority and the person whose cross
examination is being done.
Q: What is the standard specification for testing the
samples of HSD?
A: IS 1460:2005.
Q: How many parameters were tested for the samples?
Page 35 of 76


A: A total of 14 parameters were tested as prescribed in
the standard as per the Lab capabilities .
Q: Did certain parameters were not tested due to the
testing facility of other parameters not being available
at the lab?
A: Yes, as the lab is a marketing lab and it is not a
refining lab.
Q: Have your tested the sample as per IS 1460:2005?
A: This sample has been tested as per the standard IS
1460:2005 and under this specification there are total
22 tests covered out of which we have tested only 14
parameters as per our Lab capability.”
(emphasis added)


37. Since the findings and conclusions reached by the
Adjudicating Authority and Appellate Tribunal merged with
the High Court's decision, we will focus our attention on the
High Court’s analysis and conclusion.
38. The conclusion of the High Court that the questioned
imported good is HSD was based on the following premise:
(i) Though it is the settled position of law that the
burden of showing the correct classification lies
on the Revenue, it would suffice if the Revenue
is able to establish its case with such a degree of
preponderance that the existence of a fact could
be said to have been proved, and it is not
necessary to establish on a part of the Revenue
to prove the fact with mathematical precision.
Page 36 of 76


(ii) Once the Revenue has been able to prove the
classification on the basis of preponderance of
probabilities, the burden would then shift to the
assessee to prove its claim.
(iii) In the present case, the High Court was satisfied
that in respect of the sample, in the third test
since 14 out of 21 parameters laid down under
the Indian Standards Specification of Bureau of
Indian Standards IS1460:2005 relating to HSD
were satisfied the sample would be of High Speed
Diesel and not Base Oil.
(iv) Though the High Court was conscious of the fact
that all the tests in respect of the 21 parameters
laid down under IS1460:2005 relating to High
Speed Diesel were not conducted but only in
respect of the 14 parameters in the third test,
and since the IOCL laboratory was equipped to
conduct only 14 tests as it had no facility to
conduct remaining seven tests, by applying the
principle of proof on preponderance of
probability, the High Court took the view that the
Revenue had been able to discharge its burden
of the fact that the imported goods was High
Speed Diesel and not Base Oil.
(v) In holding so, the High Court was impressed by
the evidence of the expert Dr. Gobind Singh of
the IOCL laboratory who had conducted the test
Page 37 of 76


and the High Court was of the view that such
expert evidence could not have been ignored.
(vi) The High Court took the view that the Tribunal
had ignored the fact that all the tests carried out
in three different laboratories reveal only one
thing that the sample showed the characteristics
of HSD.
(vii) The High Court also held that the assessees have
not been able to show anything on the basis of
which it could be said that if all the prescribed
21/22 tests are not carried out, the report would
remain incomplete and would not be admissible
in evidence or would not be conclusive of the
nature of the sample.
(viii) The High Court also took the view that since the
14 tests indicate the sample to be one of High
Speed Diesel, merely on the ground that 7 other
test could not be undertaken by the laboratories
because of lack of adequate facility to conduct
these test, such an evidence could not have been
ignored in view of the legal position that the
Revenue need not prove its case with
mathematical accuracy and beyond reasonable
doubt.

39. There cannot be any dispute to the proposition of law
as noted by the High Court that the burden of proof as
Page 38 of 76


regards the classification of any goods of importation is upon
the Revenue/Customs authority and the standard of proof
in proceedings under the Tariff Act is not “beyond reasonable
doubt”. However, whether “preponderance of probability”
can be the appropriate test for classification under the
Customs Act would be required to be examined in the light
of the “General Rules for the interpretation of this Schedule”
as provided in the First Schedule – Import Tariff in Part 2 of
the Tariff Act (hereinafter referred to as the “Rules”)
40. The aforesaid Rules provide the principles on the basis
of which the goods in the First Schedule to the Tariff Act are
to be classified, which had escaped the attention of all the
three forums below and each forum had adopted its own
methodology to determine the proper classification of the
goods/substance in issue as discussed above dehors the
aforesaid rules for interpretation.
41. Rule 1 of the aforesaid Rules lays down that the
classification shall be determined on the basis of the terms
of the headings and relative Section or Chapter Notes.
Page 39 of 76


Rule 2 is to be invoked when it relates to an
incomplete or unfinished article or a mixture of substances,
with which we are not concerned.
Rule 3 is attracted when for certain reasons, the goods
are prima facie classifiable under two or more headings. This
situation also does not arise in the present case.
Rule 4 further provides that goods which cannot be
classified in accordance with the above rules shall be
classified under the heading appropriate to the goods to
which they are “most akin”.
For better appreciation, relevant portions of the
aforesaid Rules are reproduced herein below.
General Rules for the interpretation of this
Schedule
Classification of goods in this Schedule shall be governed by
the following principles:

1. The titles of Sections, Chapters and sub-chapters are
provided for ease of reference only; for legal purposes,
classification shall be determined according to the terms
of the headings and any relative Section or Chapter
Notes and, provided such headings or Notes do not
otherwise require, according to the following
provisions:
2. (a) Any reference in a heading to an article shall be
taken to include a reference to that article incomplete or
unfinished, provided that, as presented, the incomplete
or unfinished articles has the essential character of the
Page 40 of 76


complete or finished article. It shall also be taken to
include a reference to that article complete or finished
(or falling to be classified as complete or finished
by virtue of this rule), presented unassembled or
disassembled.
(b) Any reference in a heading to a material or substance
shall be taken to include a reference to mixtures or
combinations of that material or substance with other
materials or substances. Any reference to goods of a
given material or substance shall be taken to include a
reference to goods consisting wholly or partly of such
material or substance. The classification of goods
consisting of more than one material or substance shall
be according to the principles
of rule 3.
3. When by application of rule 2(b) or for any other
reason, goods are, prima facie, classifiable under two or
more headings, classification shall be effected as
follows:
(a) The heading which provides the most specific
description shall be preferred providing a more general
description. However, when two or more headings each
to headings refer to part only of the materials or
substances contained in mixed or composite goods or to
part only of the items in a set put up for retail sale, those
headings are to be regarded as equally specific in
relation to those goods, even if one of them gives a more
complete or precise
Description of the goods.(b) Mixtures, composite goods
consisting of different materials or made up of different
components, and goods put up in sets for retail sale,
which cannot be classified by reference to (a), shall be
classified as if they consisted of the material or
component which gives them their essential character,
in so far as this criterion is applicable.
(c) When goods cannot be classified by reference to (a)
or (b), they shall be classified under the heading which
occurs last in numerical order among those which
equally merit consideration.
4. Goods which cannot be classified in accordance with
the above rules shall be classified under the heading
appropriate to the goods to which they are most akin.
Page 41 of 76


5. In addition to the foregoing provisions, the following
rules shall apply in respect of the goods referred to
therein:
(a) Camera cases, musical instrument cases, gun cases,
drawing instrument cases, necklace cases and similar
containers, specially shaped or fitted to contain a
specific article or set of articles, suitable for long-term
use and presented with the articles for which they are
intended, shall be classified with such articles when of a
kind normally sold therewith. This rule does not,
however, apply to containers which give the whole its
essential character;
(b) Subject to the provisions of (a) above, packing
materials and packing containers presented with the
goods therein shall be classified with the goods if they
are of a kind normally used for packing such goods.
However, this provisions does not apply when such
packing materials or packing containers are clearly
suitable for repetitive use.
6. For legal purposes, the classification of goods in the
sub-headings of a heading shall be determined
according to the terms of those sub headings and any
related sub headings Notes and, mutatis mutandis, to the
above rules, on the understanding that only sub headings
at the same level are comparable. For the purposes of
this rule the relative Section and Chapter Notes also
apply, unless the context otherwise requires.

xxxxxxxxxxx”
(emphasis added)


42. The aforesaid Rule 4 abundantly makes it clear that
goods which cannot be classified in accordance with the
preceding rules shall be classified under the heading
appropriate to the goods to which they are “most akin.”
Page 42 of 76


There may be situations where, because of scientific
advancements, innovations and discoveries, there may be
new imported products that may not exactly fit the
specifications mentioned under the Chapters, Headings, or
Notes under the Tariff Act. In such events, if the attributes
of these articles show close resemblance, thus, “most akin”
to those articles/goods which are already specified in the
First Schedule to the Tariff Act, these new products will be
classified accordingly with which these imported goods are
“most akin” or bear closest resemblance or similarity.
43. In the present case as discussed above, based on the
three laboratory tests and evidence of the expert opinion, the
High Court had concluded that the Customs Authority had
been able to prove that the imported product is HSD by
applying the test of preponderance of probability. The High
Court had not referred to the aforesaid Rules in arriving at
its conclusion by invoking the “most akin” test as
contemplated under Rule 4.
44. Before we proceed further, it would be apposite to
critically examine the aforesaid test reports and the evidence
of the expert.
Page 43 of 76


45. A careful perusal of the first report furnished by the
Central Excise and Custom Laboratory at Vadodara on
11.05.2018 would show that the samples were tested in
respect of only 8 parameters out of 21. Even in respect of the
said 8 parameters, as regards the flash point, for which the
specification is 66 (minimum) as per Pensky Martens Closed

Cup (PMCC) test, the result mentions it to be above 66 C.
Therefore, in respect of flash point it cannot be said that the
sample conforms to this specification.
The test report mentions that in view of the analytical
parameter, “the sample has characteristics of High Speed
Diesel/Automotive Fuel Oil” conforming to IS1460:2005 and
that it is not Base Oil. However, the said report does not
specifically give the opinion that the sample is that of HSD
or can be treated as that of HSD. The report merely says that
the sample has characteristics of HSD Oil. There is a sea of
difference when the opinion says that a sample has
characteristics of High Speed Diesel in contradistinction to
the other possible opinion that the sample is or can be
considered to be High Speed Diesel Oil. If a questioned
article bears only certain characteristics of a specified
Page 44 of 76


article, can the questioned article be treated to be or equated
with the specified article? We are afraid, the answer has to
be in the negative, unless the opinion clearly states that
because of the salient features in the questioned article
(samples), the questioned article and the specified article
(HSD in the present case) are substantially similar so as to
identify the questioned article with the specified article.
46. The first report of the Central Excise and Custom
Laboratory at Vadodara, however, neither says that because
of the characteristics ascertained, the tested sample can be
treated as that of HSD. In other words, no clear opinion has
been given in the first test result by the expert that the
samples are indeed that of HSD or can be treated to be that
of HSD.
47. Therefore, in our opinion, the first test based on
examination of 8 parameters against 21/22 prescribed
cannot be considered to be a definitive opinion to take the
view that the sample is indeed that of HSD. It would be
speculative or assumptive to say on the basis of the aforesaid
opinion that the sample is that of HSD.
Page 45 of 76


48. Coming to the second test report furnished by the
Central Revenues Control Laboratory, CRCL, New Delhi on
03.07.2018, the said report indicates that the sample was
tested in respect of 12 out of 21/22 prescribed parameters
and we find that of the aforesaid 12 parameters, at least on
2 parameters, the sample does not appear to fulfil the
requirements of IS 1460:2005.
49. As per IS 1460:2005, the flash point is 66  C
(minimum), whereas the test result in respect of the said
sample is shown as 113  C which is far above the prescribed
minimum specification.
Further, in respect of the Distillation Range of which
the IS 1460:2005 has prescribed as 85 (minimum) at 350  C

and 95 (minimum) at 370 C, the result of the test of the
samples shows it to be 238 at 356  C, 234 at 358  C, 234 at
352  C, 238 at 354  C, 240 at 356  C, 238 at 344  C, 240 at
354  C, 240 at 350  C, 240 at 342  C and 238 at 325  C. These
figures reflected in the test result are far above the
prescribed figure of 85 (minimum) and 95 (minimum) as per
IS 1460:2005.
Page 46 of 76


Under the circumstances, though the second test was
conducted in respect of 12 out of 21 parameters as per IS
1460:2005, in respect of 2 parameters, of flash point and
distillation range, the samples did not match the IS
1460:2005 specifications. Thus, it can be said that the
samples conform to only 10 parameters. If that is so, can it
be said that the samples are of High Speed Diesel? We doubt
so.
50. It has been noticed as in the case of the opinion given
in the first test report, the second report also merely
mentions that each of the ten samples conforms (though not
so in respect of two parameters as mentioned above) to the
specifications of High Speed Diesel/Automotive Diesel Fuel
as per IS 1460:2005. The second test report does not
specifically state that because of the characteristics
ascertained, the samples can be treated as that of HSD. The
second report also avoids giving any such categorical finding
or opinion that the samples are of HSD except for stating
that these samples conform to the IS specification (though
only in respect of 10 out of 21 specifications).
Page 47 of 76


51. Coming to the third test report prepared by the Indian
Oil Corporation Limited dated 14.08.2018 upon which much
reliance has been placed by the High Court, similar
inconclusive opinion has been given.
Interestingly, we have also noted that in respect of a
parameter namely, flashpoint, the third report mentions that
the flash point of the sample is 112  C which is far above the
minimum flashpoint mentioned under the IS specification
which is 66  C. It may be noted that in the first report, the
flashpoint of the sample has been shown as above 66  C,
which itself is quite vague unlike in the second and third
reports, which mention very high flash points. Therefore, it
cannot be said that as far as the parameter of flashpoint is
concerned, the samples truly conform to the Indian
Standard Bureau of Specification IS 1460:2005.
What troubles us is whether on the basis of tests
conducted only in respect of 14 out of 21 parameters in the
third test, can it be said that the samples are that of HSD?
52. It is noteworthy that as in the case of earlier two
laboratory test reports, the third report prepared by the
Central Laboratory of Indian Oil Corporation Limited also
Page 48 of 76


does not give a clear and categorical opinion that the
samples tested indeed are of HSD.
In the REMARKS in the third report, it is mentioned
under paragraph 4 that,
“This sample meet the specification for
only XIV parameters tested at our lab as
per specification IS:1460:2005 a
mended”.

No other remark or observation or opinion is given to
the effect that in view of the conformity to 14 out of 21
parameters, the sample qualifies to be treated as High Speed
Diesel.
53. It was left to the Adjudicating Authority/ High Court
to draw the inference that the samples are of HSD in absence
of such opinion by the experts.
54. One noticeable aspect in the present case is that the
Adjudicating Authority/Tribunal/High Court had been
called upon to decide this issue, when there are clearly laid
down scientific criteria to determine whether the oil in issue
is HSD or not. The fact to be proved herein is not an incident,
situation, phenomenon or happening that may require a
bundle of evidence to prove its existence based on the
Page 49 of 76


standard of preponderance of probability. The issue involved
is about the proper classification of an existing
material/article based on certain specified specifications.
For this one only needs to refer to the specifications
mentioned under IS 1460:2005 and once the sample
conforms to the specifications, it would be accordingly
identified/classified as HSD which would not require any
analysis or appreciation of evidence. The rules do not provide
that any substance that partly complies with the aforesaid
parameters will be considered or deemed to be that specified
substance. If tests had been done in respect of all the 21
parameters as per IS 1460:2005, and if the results conform
to all these parameters, there will be no difficulty in
concluding that the samples are indeed that of HSD. The
problem has arisen because the tests were done only with
respect of a few parameters and not all, leaving it to the
discretion of the Adjudicating Authorities/Tribunal/High
Court to determine whether it has been proved based on
these tests that the samples are indeed that of the HSD.
Thus, this exercise has introduced an element of subjective
appraisal and evaluation of the pieces of evidence.
Page 50 of 76


55. In the present case, the evidence/materials on which
the High Court based its conclusion are the test reports and
the evidence of the expert, Dr. Gobind Singh. Since the test
reports are not conclusive as regards all the 21 stipulated
parameters under IS 1460:2005 and the evidence of Dr.
Gobind Singh is also not definitive, the test report and expert
opinion would be required to be assessed properly.
56. Section 45 of the Evidence Act of 1872 deals with
expert opinion, which reads as follows:
“ Section 45.
Opinions of experts.

Such persons are called experts.”

57. The opinion of the experts, however weighty they may
be, are not binding on the court and is only relevant for the
court to consider it to come to a final decision on any fact in
issue. However, since courts are not experts in the discipline
of science, they ordinarily accept the scientific report and act
upon it. But where the expert opinion suffers from certain
shortcomings or ambiguities, lack of clarity, or inadequacy,
Page 51 of 76


it would be subject to judicial scrutiny and it would not be
safe to rely wholly on the same under such circumstances.
58. We may briefly recapitulate the views of this Court
relating to expert witnesses.
59. This Court in State of H.P. v. Jai Lal , (1999) 7 SCC
280 observed that the credibility of expert witness depends
on the reasons stated in support of his conclusions and the
data and material furnished which form the basis of his
conclusions. It was thus observed as follows:

It was also observed that the essential principle
governing expert evidence is that the expert is not only to
Page 52 of 76


provide reasons to support his opinion but the result should
be directly demonstrable. Thus, if the report of an expert is
slipshod, inadequate or cryptic and the information of
similarities or dissimilarities is not available in his report
and his evidence in the case, then his opinion is of no use.

Page 53 of 76


the expert has to find due weightage in the mind of the
court, it has to be well authored and convincing.
………………..

40. We really need not reiterate various judgments
which have taken the view that the purpose of an expert
opinion is primarily to assist the court in arriving at a
final conclusion. Such report is not binding upon the
court. The court is expected to analyse the report, read
it in conjunction with the other evidence on record and
then form its final opinion as to whether such report is
worthy of reliance or not………………….”


61. Though these observations were made in the context
of criminal trials, keeping in mind the basic principles
underlying the relevance and assessment of expert opinion,
in our view, would be beneficial in the present case as well.
62. In the light of the above, we will examine the test
results and evidence of the expert witness, Dr. Gobind
Singh, Manager (Lab) of the IOCL, Mumbai on which the
High Court relied heavily to come to the conclusion that the
Revenue/Department had been able to establish their case
that the imported goods were HSD.
During the cross examination of the expert witness,
the following questions were asked about 8 parameters on
which the samples were not tested:
Page 54 of 76


“Q: Does it mean that the other 8 parameters are not
important for ascertaining or deciding whether the
sample meets with the criteria of HSD?
A: Already provided in the report that in the lab the
samples were tested as per IS 1406:2005 and there is a
facility available only for testing of 14 parameters and
for the remaining 8 parameters, the facility is not
available for which I can’t comment.
Q: Do you know the function/characteristics of the 8
parameters provided under IS 1460:2005 that have not
been tested?
A: As the 8 parameters have not been tested, I can’t
comment in respect of these parameters.

63. From the above, it is clearly noticeable that the expert
who undertook the tests evaded answering the crucial
question as to the importance of the 8 parameters for
deciding whether the sample is of HSD or not. It is to be
remembered that the Indian Specifications of Bureau of
Indian Standard IS:1460:2005 specifically provides 21
parameters, which are the attributes of High Speed Oil and
nothing is mentioned under the Rules as to whether
compliance with only certain of the specifications would
justify treating the article as HSD.
64. As regards the third test, only 13 specifications
conformed to the specifications (and not 14 as mentioned in
the report since in respect of the flash point, the sample did
not meet the specification). In the absence of fulfilment of
Page 55 of 76


the remaining of specifications, can it be said authoritatively
that the samples will still qualify as HSD?
Interestingly as discussed above, neither the expert
nor the test results stated categorically that these samples
are indeed that of HSD on fulfilment of some of the
parameters.
The expert was specifically asked as to whether the
sample was automotive diesel, which the expert evaded and
did not give a clear answer except for saying that it is
already written in the report and the sample has been
tested as per the IS 1460: 2005 as evident from the
following question and answer.
“Q: Can you say it is an automotive diesel?

A: Already written in the lab report and we have
tested the samples as per the parameters as per IS
1460:2005.”

65. It may be noted that in the written report, it was not
mentioned that the sample is that of HSD though it
mentions that it was tested as per the parameters of IS
1460:2005 and has characteristics of some of the
parameters.
Page 56 of 76


The Adjudicating Authority as well as the High Court,
without there being any such categorical opinion in the
report or by the expert, nevertheless, went on to conclude
that the samples were indeed of HSD by applying the test
of preponderance of probability, which we feel is
problematic.
66. Apart from this lack of clarity of opinion by the expert
and in the test reports to the effect that the samples are of
HSD, there is one aspect which we consider is also
important.
67. As noted above, all three test results show that the
samples do not meet the specification relating to flash
point. Unfortunately, the expert has avoided giving
satisfactory answers to the searching questions put to him
relating to the flash point during the cross-examination,
though as an expert in the field, he was expected to know
and clarify the legitimate doubts about the significance of
flash point in determining the nature of the fuel as evident
from the following questions and answers.
“Q: Do you think so one of the ingredients for
considering HSD is flashpoint?
Page 57 of 76


A: Can't comment on ingredients. The minimum
temperature for Flash Point 35°C as prescribed in
standard. We have submitted the report.

Q: What is the maximum and minimum flashpoint for
considering the sample as HSD?
A: Only the minimum limit is talked about that is 35°C
and there is no maximum limit prescribed in the
standard.

Q: If case, the Flash Point exceeds above 100°C, 150°C,
200°C etc., then does it still pertains to HSD standard?
A: Can’t comment as above 35°C whatever the Flash
Point is, it does not matter.

Q: Point No. I of supplementary note of Chapter 27 of
Customs Tariff Act provides that "Jute Batching Oil",
"Textile Oil” are Hydrocarbon oils, which have their
flash points on and above 93°C. In case flash point
exceeds 93°C, what you call it?
A: Can’t comment. As flashpoint isn’t the only
parameter. We have tested the samples that were
submitted to us as per IS 1460:2005.

Q: IOCL supplies HSD to various parties. Have you
ever come across any situation in which you have found
the Flash Point of all these test reports above 93°C and
considered as a HSD?
A: Flash Point is not the only parameter which is used
to measuring the sample as per IS 1460:2005

Q: Can you say it is an automotive diesel?
A: Already written in the lab report and we have tested
the samples as per the parameters as per IS
1460:2005.”


68. We are quite befuddled by the answers given by the
expert about flash point, as if he was not aware of the
importance of flash point in petroleum products. He was
Page 58 of 76


evasive as regards nonconformity on this parameter in
determining whether the samples are those of HSD.
Flash point has been mentioned in the Supplementary
Note to Chapter 27 in Appendix-2 to the Customs Tariff Act
by stating that it shall be determined following the test
prescribed in this behalf in the rules made under the
Petroleum Act, 1934.
Under Section 2(c) of the Petroleum Act, 1934 flash-
point of any petroleum has been defined as the lowest
temperature at which it yields a vapour which will give a
momentary flash when ignited, determined in accordance
with the provisions of Chapter II and the rules made
thereunder.
69. The Petroleum Act classifies petroleum products
under three categories, depending on the quantum of flash
point, namely,
(i) “Petroleum Class A” which means petroleum having a
flash-point below twenty-three degrees Centigrade;
(ii) “Petroleum Class B” which means petroleum having a
flash-point of twenty-three degrees Centigrade and
above but below sixty-five degrees Centigrade;
Page 59 of 76


(iii) “Petroleum Class C” which means petroleum having a
flash-point of sixty-five degrees Centigrade and above
but below ninety-three degree Centigrade.
70. Specification regarding flash point is accordingly of
some significance, even if it may not be the most important
parameter in 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.
It has been submitted on behalf of the appellants,
relying on the decision of this Court in Durga Oil Company
Vs State of U.P., (1998) 6 SCC 299, that HSD is petroleum
Class B product. Thus, by implication, if the flash point of
the sample goes above 93  C, it is questionable whether the
Page 60 of 76


imported oil can be considered to be HSD, even though the
maximum flash point for HSD has not been specifically
mentioned in the IS: 1460:2005, but only the minimum.
71 . Because of the evasive and non-committal answers
given by the expert Dr. Gobind Singh, the legitimate
conclusion that can be drawn is that his opinion and also
the test results are inconclusive, unclear and cannot be said
to be fully reliable to determine the oil as HSD.
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
Page 61 of 76


considered to be that of HSD, we would have accorded due
deference to such opinion.
But as noted above, neither the expert nor the test
results categorically and in clearly terms mention that these
samples are that of HSD, except for making an ambiguous
remark that these samples conform to certain parameters of
HSD as per IS 1460:2005. As discussed above, by mere
conformation to certain parameters of HSD, the samples
cannot be equated with HSD. The expert opinion and the test
results are as vague as these can be qua classification of the
oil as HSD.
73. However, as noted above, the High Court, by applying
the test of preponderance of probability concluded that the
substance in question is HSD.
74. At this juncture it may be apposite to dwell briefly
upon the meaning of the expression “ preponderance of
probability ” in contradistinction to “ proof beyond reasonable
doubt”.
75. Under Section 3 of the Evidence Act, 1872, a fact is
said to be proved when, after considering the matters before
Page 62 of 76


it, the court either believes it to exist, or considers its
existence so probable that a prudent man ought, under the
circumstances of the particular case, to act upon the
supposition that it exists, which clearly indicates that the
Evidence Act does not insist upon absolute standard of
proof. Evidence Act also nowhere defines as to the meaning
of proof based on “preponderance of probability ” and “beyond
reasonable doubt” which are different standards of proof.
76. Different standards of proof have evolved in criminal
and civil jurisdictions in course of time considering the
differential stakes involved in these proceedings. In a
criminal proceeding, the stakes are higher for a defendant as
it involves precious rights and liberties of the person with a
potential to lose the same if convicted of the offence charged.
On the other hand, civil liability is less blameworthy, and
penalty, if any, is less severe.
77. The expression “ preponderance of probability” has
M. Siddiq (Ram
been explained by this Court in
Janmabhumi Temple-5 J) v. Suresh Das , (2020) 1 SCC 1 .
In the aforesaid case, this Court applied the test of a prudent
man who upon weighing the various probabilities finds that
Page 63 of 76

Page 64 of 76

Page 65 of 76

may be varying range in the degree of probabilities.
Certainly, where the proceedings involve requirement of
fulfilment of technical/scientific parameters with
Page 66 of 76


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
Page 67 of 76


1460:2005 and not about conformity with all
the 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
Page 68 of 76


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
Page 69 of 76


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
Page 70 of 76


relative Section or Chapter 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
Page 71 of 76


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
Page 72 of 76


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.
85 . The oil in question does not fully satisfy the
specifications of HSD in terms of IS 1460:2005. Hence, the
correct test will be whether the oil/article in issue is most
akin to HSD or not for which appropriate scientific evidence
in the form of laboratory test reports and opinion of the
scientific experts will be of utmost relevance.
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 atleast 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 73 of 76


Revenue/Customs Authority cannot take action against the
appellants based on inconclusive evidence.
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.
88. Before parting with these appeals, we deem it necessary
to issue certain ancillary directions.
Page 74 of 76


We are of the view that non-examination of any
product/article/goods on all the parameters laid down by
the customs authority will always lead to uncertainty and
doubt, which are required to be removed when dealing with
confiscatory proceedings.
The genesis of the prolonged litigation lies in the non-
availability of adequate facilities for testing all the
parameters provided under Bureau of Indian Standard
Specifications. Such a dispute could have been avoided had
the testing facilities for all the parameters been available.
Since the Authorities themselves had laid down the specific
parameters for classification of goods, as in the present case
by referring to classification under IS 1460:2005, it is
incumbent upon the Authorities to ensure that necessary
facilities are made available for testing of any disputed article
on all these parameters as otherwise, laying down such
parameters would be meaningless.
Hence, to avoid these difficulties, doubts and
uncertainties in future, the respondents are directed to
ensure that proper facilities are made available in the
appropriate laboratories for undertaking tests for all these
Page 75 of 76


parameters or at least for those parameters which the
Authorities consider are of essential character to satisfy the
“most akin” test without which the article in issue cannot be
properly classified. Accordingly, we direct the respondents
to take necessary steps in this regard within a period of six
months for proper testing in all the parameters in future.
89. For the reasons discussed above, we allow these
appeals by setting aside the impugned common judgment
and order dated 20.01.2022 passed in Revenue Tax Appeal
No. 297 of 2021, Revenue Tax Appeal No. 298 of 2021 and
Revenue Tax Appeal No. 299 of 2021.
90. Appeals are accordingly disposed of in the aforesaid
terms.

……………………………J.
(B.V. NAGARATHNA)



……………….…………………………J.
(NONGMEIKAPAM KOTISWAR SINGH)

New Delhi;
March 28, 2025.
Page 76 of 76