Customs classification and confiscation: contemporaneous test reports prevailed, and a procedural licensing lapse did not justify penalty.
Mineral hydrocarbon oil was held correctly classifiable under heading 27101990, because the evidence did not establish the 90% distillation requirement at 210 C needed for sub-heading 2710 12, and the contemporaneous Kolkata and IOCL test reports were preferred over a later Delhi report for a volatile product. Confiscation, redemption fine and penalty were also held unsustainable, because the objection under the Petroleum Rules, 2002 related only to a regularisable procedural lapse rather than a substantive import prohibition; once the licensing position was regularised, Section 111(d) confiscation and the consequential penalty under Section 112(a)(i) could not survive.
Issues: (i) Whether the imported mineral hydrocarbon oil was classifiable under heading 27101990 as declared by the importer or under heading 2710 1290 as light oils and preparations. (ii) Whether confiscation, redemption fine and penalty were sustainable for alleged contravention of the Petroleum Rules, 2002 and the Customs Act, 1962.
Issue (i): Whether the imported mineral hydrocarbon oil was classifiable under heading 27101990 as declared by the importer or under heading 2710 1290 as light oils and preparations.
Analysis: The classification turned on Chapter 27, Note 4, under which goods fall in sub-heading 2710 12 only if 90% or more by volume distil at 210 C by the prescribed method. The contemporaneous test reports from the Kolkata laboratory and IOCL did not support classification as light oils and preparations, while the later report from Delhi was treated as less reliable because the samples were tested after a long lapse in a volatile product. The comparative evaluation of the reports supported acceptance of the importer's declared classification.
Conclusion: The goods were held to be correctly classifiable under heading 27101990 as declared by the importer.
Issue (ii): Whether confiscation, redemption fine and penalty were sustainable for alleged contravention of the Petroleum Rules, 2002 and the Customs Act, 1962.
Analysis: The import was in drums and the departmental objection rested on the absence of approval and bulk-import permission under the Petroleum Rules, 2002. The record showed that the relevant licensing position was subsequently regularised, and the infraction, if any, was treated as procedural rather than a substantive prohibition on import. In that view, confiscation under Section 111(d) could not survive, and the consequential redemption fine and penalty under Section 112(a)(i) also ceased to be maintainable.
Conclusion: Confiscation, redemption fine and penalty were held not sustainable.
Final Conclusion: The impugned order was set aside and the appeals were allowed with consequential relief, leaving the importer without liability for confiscation-related monetary consequences.
Ratio Decidendi: For sub-heading 2710 12, the statutory requirement of 90% or more distillation at 210 C must be satisfied on reliable and contemporaneous test evidence; where the alleged breach is only procedural and the goods are not prohibited, confiscation and consequential penalty do not survive.
TaxTMI 
AI Drafter ✕
TaxTMI 
