Adulterated petroleum products failing core IS specifications are restricted goods ineligible for import release.

The petitioners, various importers, brought consignments declared as "industrial oil/mixed or mineral hydrocarbon oils" (classified under CTH 27101990) through Mundra Port

The Directorate of Revenue Intelligence (DRI) seized the goods under Section 110 of the Customs Act, 1962, alleging the product was actually High-Speed Diesel (HSD) or Automotive Diesel Fuel (ADF)—restricted commodities importable only via State Trading Enterprises

Samples were tested by the Central Revenues Control Laboratory (CRCL), Visakhapatnam, and later by Mangalore Refinery and Petrochemicals Limited (MRPL)

The CRCL report noted the sample met most HSD parameters but had a significantly lower flash point due to "adulteration with lighter hydrocarbons"

The petitioners challenged the seizure, relying on the Supreme Court’s decision in Gastrade International, arguing the goods did not strictly meet Indian Standards (IS) for diesel and should be released

1. Whether the "most akin test" and the testing of all 21 parameters, as mandated by the Supreme Court in Gastrade International, justify the classification of the imported goods as restricted diesel fractions despite deviations in flash point

2. Whether the seizure of goods is sustainable when laboratory reports indicate intentional adulteration to circumvent import policy restrictions

The court applied Section 110 of the Customs Act, 1962, regarding the seizure of goods

It relied extensively on the "most akin test" and the requirement to test 21 parameters under IS 1460 (ADF) and IS 16861 (HFHSD) as established in Gastrade International vs. Commissioner of Customs, Kandla (2025 INSC 411)

The court also applied 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

Furthermore, it followed the principles from Om Prakash Bhatia vs. Commissioner of Customs (2003) and Union of India vs. Rajgrow Impex LLP (2021), which prohibit the release of restricted or prohibited goods

The court distinguished this case from Gastrade International by noting that unlike the inconclusive reports in that precedent, the current laboratory reports (CRCL and MRPL) cumulatively covered the 21 mandatory parameters and provided an unambiguous opinion

Specifically, the CRCL report concluded the goods were "most akin to HFHSD" and were "adulterated with lighter hydrocarbons" to artificially lower the flash point

The court reasoned that since the goods met nearly all stringent diesel parameters except for those altered by proven adulteration, the "most akin test" identified them as restricted commodities

The court rejected the argument that using two different labs was recorded as invalid, noting that the DRI acted reasonably to ensure all 21 parameters were tested

The court emphasized the environmental impact of allowing adulterated fuel into the domestic market as a factor against the release of goods

The court ruled that when laboratory findings confirm intentional adulteration to bypass import/customs headings, the goods remain "prohibited" under the Law

The Rule was discharged, but the court granted the petitioners liberty to apply to the DRI for the re-export of the goods