TaxTMI 
TaxTMI 
2025 (4) TMI 23
X X X X Extracts X X X X
X X X X Extracts X X X X
....h 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. 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 un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 appellantcompanies were also liable to be imposed penalties under Sections 112(a) and (b), Section 114AA and the Section 117 of the Act. 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 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 param....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubject matter of challenge in this batch of appeals. 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. The High Court thereafter proceeded to examine the materials on record. 22. Comi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 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 observ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 Specification of Bureau of Indian Standards IS:1571:199....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndex, Min 462) D 4737/ISO 4264 vii) Pour point3), Max: [P : 10]/D 5949 or D 5950 or D 5985 a) Winter 3° C b) Summer 15 C viii) Copper strip corrosion for 3 h at 50°C Not worse than No. 1 [P : 15]/ISO 2160 ix) Distillation, percent v/v, recovered at 360°C, Min 95 [P : 18]/ISO 3405 x) Flash point* : a) Abel, °C, Min 35 [P : 20] b) Pensky Martens closed cup4), °C, Min 66 [P : 21] xi) Kinematic viscosity, cSt, at 40°C 2.0 to 4.5 [P : 25]/ISO 3104 xii) Sediment, percent by mass, Max - [P : 30] xiii) Total contamination, mg/kg, Max 24 EN 12662 xiv) Density at 15°C5), kg/m3 820-845 [P : 16] or [P : 32]6)/D 4052/ ISO 3675 or ISO 12185 xv) Total sulphur7), mg/kg, Max 50 ISO 20846 or ISO 20847 or ISO 20884/ [P : 83]/D 5453/ D 2622/D 4294/[P : 34]8) xvi) Water content, mg/kg, 200 ISO 12937 xvii) Cold Filter Plugging Point (CFPP)3), Max: [P : 110]/D 637....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elds 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. Density 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 = NIL In view of the above analytical parameter the sample has characteristics of high speed diesel oil/Automotive Fuel Oil confirming to IS: 1460:2005 & amended thereafter in terms of parameters 1 to 8 mentioned above. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ort 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 total mg of KOH/g Ash percent by mass 0.01 (max.) Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Carbon residue 0.30 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 (Ramx bottom) on 10% resdue percent by mass (mat.) Density at 15°℃ 0.8200 .8287 .8316 .8310 .8288 .8284 .8286 .8286 .8282 .8284 .8281 0.8450 Flash Point (PMCC) 66° (min.) 113°℃ 115°℃ 93°℃ 88°℃ 98°℃ 100°℃ 95°℃ 78°℃ 106°℃ 111°℃ 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 Viscosi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....RA Sample Drawn By Jointly by Representative of DRI, Ahmedabad 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 Poi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so referred to the evidence of the expert, namely, Dr. Gobind Singh, Manager (Lab), IOCL Central Laboratory, Mumbai, more specifically to his crossexamination, 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. 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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? A: Can't comment. As flashpoint isn't the only parameter. We have tested the sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ether 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. Q: In respect of Flash Point, two methods....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ivinity 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 examinat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aining 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 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sification 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 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 applicatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g 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." 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. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. 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 (minim....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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, 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: "18. An expert is not a witness of fact. His evidence is really of an advisory character. The duty of an expert witness is to furnish the Judge with the necessary scientific criteria for testing the accuracy of the conclusions so as to enable the Judge to form his independent judgment by the application of this criteria to the facts proved by the evidence of the case. The scientific ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n. 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: "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 p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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? 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 lim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....troleum 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 imported oil can be considered to be HSD, even though th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ute 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 been explained by this Court in M. Siddiq (Ram 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 the preponderance is in favour of the existence of the particular fact. It was observed that even in the case of proof by preponderance of probability, there may be degrees of probability within that standard and "the degree depends on the subject-matter." It was h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....udent person, who acts under the supposition that a fact exists. 723.2 In the context and circumstances of a particular case. 724. Analysing this, Y.V. Chandrachud, J. (as the learned Chief Justice then was) in N.G. Dastane v. S. Dastane [N.G. Dastane v. S. Dastane, (1975) 2 SCC 326.] held : (SCC pp. 335-36, para 24) "The belief regarding the existence of a fact may, thus, be founded on a balance of probabilities. A prudent man faced with conflicting probabilities concerning a fact situation will act on the supposition that the fact exists, if on weighing the various probabilities he finds that the preponderance is in favour of the existence of the particular fact. As a prudent man, so the court applies this test for finding whether a fact in issue can be said to be proved. The first step in this process is to fix the probabilities, the second to weigh them, though the two may often intermingle. The impossible is weeded out at the first stage, the improbable at the second. Within the wide range of probabilities the court has often a difficult choice to make but it is this choice which ultimately determines where the preponderance of probabilities lies. Im....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atical precision, held that the Department has been able to establish its case on the basis of preponderance of probability that the imported oil was not Base Oil but HSD, which could not have been imported by the appellants and upheld the order of the Adjudicating Authority. 80. However, this analysis and conclusions arrived at by the High Court are problematic for the following reasons: (i) There was no expert opinion at all that the samples which were tested were indeed of HSD. (ii) The opinion as contained in the test results was merely mentioning about conformity of the samples with certain specifications of IS 1460:2005 and not about conformity with all the 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 p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n, we may explain the position. If an importer classifies the imported goods as "X", which is disputed by the Customs authority and classifies the same as "Y", the test would be whether the goods imported are "most akin" to "X" or "Y" in terms of Rule 4 of the aforesaid Rules. The importer may also claim if he so wishes, that the goods are most akin to "Z", though it may be akin to "Y" also, if such claim is more beneficial to him. Thus, it has to be shown by the Customs Authority that the imported goods bear the most affinity or resemblance or similarity to be "most akin" to the specified goods and not mere similarity or akinness. In other words, the test will be whether the imported goods bear the closest resemblance or similarity with the specified good so that these can be considered to be "most akin" to the specified good. Certainly, the principle of preponderance of probability may fall short of the more heightened test of "most akin" for proper classification. The imported goods may bear resemblance to more than one specified goods, in which event, unless the high degree in the test of preponderance of probability is applied, there may be difficulties in the proper classific....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. 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, ....