TaxTMI 
TaxTMI 
2025 (11) TMI 615
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....equirement of kerosene oil as per IS:1459:2016 and hence, the goods were classified under CTH 27101910. 1.2 As per Policy condition 2 of Chapter 27 of ITC (HS) Schedule-1, goods falling under tariff heading 27101910 are restricted and are allowed to be imported only through State Trading Enterprise (STE). The policy condition reads as under: "2. Import of SKO shall be allowed through State Trading Enterprise (STE) i.e. IOC, BPCL, HPCL and IBP for all purpose with STC being nominated as a STE for supplies to Advance Licence holders. STES including STC." Further Para 2.20 of FTP 2015-20 states that: 2.20 State Trading Enterprises (STES) (a) State Trading Enterprises (STEs) are governmental and nongovernmental enterprises, including marketing boards, which deal with goods for export and/or import. Any goods, import or export of which is governed through exclusive or special privilege granted to State Trading Enterprise (STE), may be imported or exported by the concerned STE as per conditions specified in ITC (HS). The list of STEs notified by DGFT is in Appendix-21. (b) Such STE(s) shall make any such purchases or sales involving imports....
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.... MCH/ADC/PSK/63/19-20 dated 06.09.2019 8452266/ 15.10.2018 88,25,810.39 15,00,000 2,00,000 5 MCH/ADC/PSK/62/19-20 dated 06.09.2019 8439324/ 12.10.2018 51,12,226.08 8,50,000 1,15,000 1.5 On appeal against these OIOs, the Commissioner (Appeals), Ahmedabad passed appellate order No. MUN-CUSTOM-000-APP-75 TO 79-20-21 dated 08.09.2020. In appeal, the party submitted that CRCL has not examined sulphur level in the product which is one of the important ingredients to ascertain whether the product in dispute is SKO or not. They further submitted that the adjudicating authority ought not to have imposed heavy amount of redemption fine and penalty as the goods have been ordered for re-export. The Commissioner (Appeals) vide O-I-A, held as under: * The test reports state that "with respect to parameter Flash Point, Distillation Ranges, it matches Petroleum Hydrocarbons Solvent as per IS 1745-1978. However, smoke point, flash point and distillation range obtained for the samples under reference is matching with requirement for kerosene as per 15 1459-2016; that the adjudicating authority has not given any finding about the same in the impugned order....
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...., Max b) Bloom on glass chimney (ii) Colour (Saybolt) (iii) Total, Sulphur, percent by mass, Max. * That in the absence of the evidence that the imported goods meet with all the specifications laid down in supplementary note (c) to chapter 27, for a product to be classified as Kerosene, the impugned orders cannot be sustained". He accordingly set aside the OIOs and allowed the appeals. Aggrieved by the aforesaid order, the Department has now filed the present appeal. 2. Since in the matter, none was appearing from the respondent side, this court appointed Shri Vikas Mehta, Consultant as an Amicus Curiae. Firstly, this Tribunal directed the department to find out if as per the earlier decision of Hon'ble Supreme Court in the case of Gastrade International reported at 2025 (4) TMI 23 (SC) samples were available for retesting, at this stage? Learned Authorised Representative checked up the position and replied in negative vide letter dated 17.09.2025. Learned Amicus Curiae appearing for the respondents states that in this case also, the expression "can be used" in the reports makes them still inconclusive and therefore, report suffers from the sa....
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....d compliance with 14 parameters, though as discussed above in respect of 2 of the aforesaid 14 parameters, namely, flash point and distillation range, the same are not in conformity. Thus, it cannot be said there is substantial compliance with the parameters of IS 1460:2005. (v) Flash point, though may not be the most important parameter, yet, its importance in determining the nature of the Automotive oil cannot be ignored. Flash point being a very important criteria to classify petroleum products, non-compliance of the samples on this parameter would make the classification doubtful. (vi) Evasive answers and non-clarification on certain aspects of the flash point of the samples by the expert Dr. Gobind Singh certainly cast a serious doubt on the samples being identified as that of HSD. The expert himself also has not said that the samples are of HSD except for stating that the samples conform to certain specifications of the IS 1460:2005. (vii) In view of the ambiguity and lack of clarity in the expert opinion/laboratory test results, it would be unsafe to draw the inference that the Department had been able to prove their case even by applying the test ....
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....egree in the test of preponderance of probability is applied, there may be difficulties in the proper classification. However, the said difficulty may be overcome if the test of "most akin" is applied. If the attributes of the imported goods show that the goods are "most akin" to the specified goods amongst an array of other specified goods, these imported goods have to be classified as the specified goods with which these goods bear the most resemblance or most akinness. Thus, in our view, application of the principle of preponderance of probability does not provide an accurate test. The more accurate and precise test will be whether the goods in question are "most akin" or most similar to the specified goods, as provided under Rule 4 referred to above. 84.In the present case, as noticed above, the finding of the High Court is based primarily on applying the test of preponderance of probability which may not necessarily fulfil the "most akin" test. The High Court came to the conclusion based on the incomplete test reports and noncommittal opinion of the expert Dr. Gobind Singh who in categorical terms had not stated that the imported goods are HSD. There was no opinion th....
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....n-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 parameters or at least for those parameters which the Authorities ....