TaxTMI 
TaxTMI 
2025 (12) TMI 1026
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....le for and on behalf of the respective respondents. The additional affidavit filed by respondent No. 3 as well as the additional affidavit filed by petitioner No. 3 of SCA No. 12493 of 2025 are ordered to be taken on record. Since similar issue is involved, the matters are heard and decided together however, initial facts are taken from SCA No. 12943 of 2025. 1. The present petitions have been filed seeking, more or less, the following similar relief: "2A. The petitioners challenges the seizure memo dated 01. 10. 2025, issued by the Intelligence Officer, DRI, wherein it has been stated that the test report in respect of sample drawn from the imported goods reveals that the sample does meet the requirements of Distillate Oil as per IS 16731: 2019." 2. On the basis of the said report, the Distillate Oil has also been seized, and accordingly, they are praying for directions to set aside the action of the respondent authorities in detaining the imported bulk liquid cargo oil. 3. The petitioners are involved in trading of industrial oil and other allied pursuits and are engaged in importing bulk liquid cargo being Distillate Oil in various quantities from tank ve....
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....llate Oil as per IS 16731: 2019 and also does not meet the requirement of Automotive Diesel Fuel as per IS 1460: 2025 with respect to the parameter at Sr. No. 8. They have submitted that it is further mentioned in the Test Report that the samples have the characteristics of diesel fraction with a small amount of a heavier fraction of hydrocarbons. Learned Senior Advocates, at the outset, have submitted that on the basis of the said Test Report, the cargo has been seized after issuance of the Seizure Memo dated 01. 09. 2025. It is submitted that Test Memo No. 99 of 2025 dated 03. 09. 2025 prepared by the Directorate of Revenue Intelligence ( DRI) was forwarded to the CRCL for the subsequent Test Report in the case of the petitioners, whereas in an identical cargo of Distillate Oil, which was detained at the Custom House, Kandla, the Director of CRCL informed the Assistant Commissioner of Custom House, Kandla, that the Distillate Oil or any other Distillate Oil in reference to fraction of hydrocarbons in the Distillate Marine Fuels or any other Distillate Oil is of no consequence, as all these products are diesel fraction. They have referred to the communication dated 04. 11. 2025 in....
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....ich is apparent from the Test Report, and they do not meet the requirement of Automotive Diesel Fuel as per IS 1460: 2025 with respect to distillation parameters, and the cargo has the characteristics of diesel fraction with a small amount of heavier fraction of hydrocarbons. He has submitted that on the basis of the Test Report, it is established that the imported goods do not conform to the Indian Standards for Distillate Oil and have consequently been mis-declared at the time of import and hence, it cannot be released. He has further placed reliance on the Test Report, more particularly density mentioned at 15°C, which is a parameter expected to be higher for Distillate Marine Fuel and lower for diesel, as specified in Indian Standards. It is submitted that according to the Test Reports, the measured values are 0. 8203 gm/cm³ and 0. 8347 gm/cm³, which fall closer to the typical range for diesel under Indian Standards. 9. Thus, learned Senior Standing Counsel has submitted that in respect of the consignment imported by the petitioners vide vessel MT-Vayu, the report clearly records that the "sample has characteristics of diesel fraction with a small amount of hig....
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....pondents about misuse of the Distillate Oil by the end users in the form of diesel in the vehicles etc. are ill-conceived since petitioner No. 3-One Chemical Company has been importing Distillate Oil for the very first time, and no inquiry or investigation is pending until now. They have further submitted that petitioner No. 2-Sweven Impex has been importing Distillate Oil for around 30 times since September 2023 and no issue whatsoever has come up, and in the past, only once the consignment of Distillate Oil was detained; however, the same was released on payment of requisite duty in July 2024. So far as petitioner No. 1-Noya Infrastructure LLP is concerned, it has been importing the same goods for over 100 times since 2023 and no issue whatsoever has come up until now. In the case of petitioner No. 1-Noya Infrastructure LLP also, once the consignment of Distillate Oil was detained; however, the same was released on payment of duty, and thus, it is submitted that bald allegations have been made against the petitioners in the affidavit-in-reply as mentioned hereinabove. 12. During the course of dictation of this judgement, learned Standing Senior Counsel Mr. Utkarsh Sharma, on b....
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.... we are of the opinion that the respondents have travelled beyond the reasons mentioned in the Test Report. The Test Report definitely concludes by holding that "Based on the above tested parameters, the sample under reference does not meet the requirement of Distillate Oil as per IS 16731: 2019 with respect to parameter at Sr. No. 14. " In Special Civil Application Nos. 14552, 14559 and 14562/2025, the Test Report reveals cloud point as -5. 4°C. Thus, the first reason which disqualifies the cargoes of the petitioners from being declared as Distillate Oil is the parameter/characteristic at Sr. No. 14, i. e. Cloud Point. The Test Report indicates that the Cloud Point of the cargo of the petitioners is -6. 2°C, whereas the specified value of the same is -16°C. The Report of three importers i. e Noya, Sweven and One Chemical of three Special Civil Application No. 12943 of 2025 further reveals that the sample does not meet the requirement of Automotive Diesel Fuel as per IS 1460: 2025 with respect to the parameter at Sr. No. 8. This opinion is missing in Reports of other captioned writ petitions, hence the issue of Automotive diesel will not arise in their case. Unquestiona....
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....hat the samples have the carbon chain similar to Diesel fraction, CRCL New Delhi clarified than the samples under reference have the characteristics of Diesel fraction. Further, it was also clarified that whether the products under reference are deliberately mixed with lighter fraction of hydrocarbons or otherwise could not be ascertained. 3. further, it is to inform that, the term 'Diesel fraction' referred above is a middle distillate oil which included HFHSD (IS 16861), Automotive Diesel Fuel (Is 1460), Gas Oil (IS 17789), Distillate Marine Fuel (IS 16731), Light Diesel Oil (IS 15770). 4. whenever, the sample does not meet the requirement of any of the aforesaid products as per respective Indian standards, it is due to deviation from this limits with respect to one or more parameters. However, the sample can be categorized as Diesel fraction, based on carbon claim, distillation range and other parameters. Further sych sample may have close similarity with any one or more of the above referred Indian Standards as they have overlapping parameter and come under the category of 'diesel fraction' or 'diesel'. 5. In view of the above, whether the sample unde....
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....ship' s design and its intended voyage 5 Further, the standard also states that issues relating to low temperature operability (le deposition of solidified wax in fuel tanks, fuel lines, centrifuges, and filters) can occur with distillate fuels and the pour point requirement as defined in the standard cannot guarantees operability for all ships in all climates. 4. As per the CIMAC Guideline on Cold Flow Properties of Marine Fuel Oils ( CIMAC WOT-Fuels), which is also referred to in IS 16731: "The Cloud point is defined as the temperature at which wax crystals start to visibly form in the fuel and a transparent fuel becomes cloudy cooled. Pour point is the lowest temperature at which the fuel will continue to flow when it is The Cold Filter Plugging Point ( CFPP) provides a relative indication of where filterability problems may begin to occur, potentially restricting fuel flow to the engine. Typically, the difference between each of the above temperatures will be about 2-5 degrees for untreated fuels. A Pour Point of say 12 °C will not cause any problems in warm tropical climates. such as Singapore, lack of attention to ....
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....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. 97.5. 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. 97.6. 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. 97.7. 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 Departmen....
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....o 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 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." 24. Thus, the Apex Court has held that, 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 its case even by applying the test of preponderance of probability merely because the samples conform to certain parameters. It is further held that ....