AI Drafter 
TaxTMI 
TaxTMI 
2026 (5) TMI 1448
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....led Bill of Entry (B/E) No. 2393695 dated 12.03.2019 declaring the imported goods which were exported from United Arab Emirates (UAE) as "Industrial Composite Solvent" and by classifying it under Customs Tariff Item (CTI) 3814 0010, for a total quantity of 108.120 MTs in six containers. The said self-assessed B/E was allowed customs clearance under Customs Automated System on the basis of risk evaluation through appropriate selection criteria commonly called as Risk Management System (RMS), without further verification of self-assessment or for examination of the goods. The Central Intelligence Unit (CIU) of JNCH, had collected certain intelligence and on that basis the said imported goods in all six containers were physically examined by them. On such prima-facie examination by the CIU officers under panchanama dated 22.03.2019, it was found that the imported goods are colourless, petroleum smelling liquid and therefore took six representative sealed samples (RSS) and sent for chemical testing by the Deputy Director of Central Revenue Control Laboratory (CRCL) commonly called as DYCC Laboratory on 26.03.2019. On receipt of the test reports of DYCC stating that the imported goods w....
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....9 of the Customs Act, 1962 (for short, referred to as the "Act of 1962"); (v) Penalty should not be imposed under Section 112(a) and 112(b) of the Act of 1962. 3.4 The said SCNs was adjudicated by the learned Additional Commissioner of Customs vide Order-in-Original No. 432/20-21/ADC/NSI/JNCH/CAC dated 23.11.2020 confirming all the proposals made in the SCN. Feeling dissatisfied with the order of original authority, the appellants had filed appeal before the learned Commissioner (Appeals) who in disposing the appeal, upheld the order of the original authority and rejected the appeal filed by the appellants. Being aggrieved with the impugned order dated 25.06.2021, the appellants have filed the appeal being No. C/85761/2022 before the Tribunal. Independent of the above, on the basis of Review Order No. 51/2020-21 dated 22.02.2021, the Department preferred appeal against the order of the original authority dated 23.11.2020 before the Commissioner (Appeals) pleading for imposition of redemption fine equivalent to the market price of the impugned goods redetermined at Rs.42,23,772/-. However, the learned Commissioner (Appeals) had indicated in the order-in-appeal, the refer....
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....he Tribunal's order (ii) Jaymco Polymers Pvt. Limited Vs. Commissioner of Customs (Import) - Final Order No. A/85436-85437/2022 dated 09.05.2022 of CESTAT, Mumbai (iii) M.V.B. Enterprises Vs. Commissioner of Customs, Nhava Sheva-I - Final Order No. A/86236/2023 dated 18.08.2023 of CESTAT, Mumbai (iv) M.M. Trading Company Vs. Commissioner of Customs, Nhava Sheva-I - Final Order No. A/87577/2024 dated 29.11.2024 of CESTAT, Mumbai (v) N.V. Rambabu Vs. Additional Director General (Adjudication), Mumbai - (2026) 41 Centax 7 (Tri.-Bom) upheld by the Hon'ble Supreme Court - (2026) 41 Centax 8 (S.C.) Therefore, he pleaded that the issue is no more res integra and on such basis alone, their appeal shall be allowed. 5. On the other hand, learned Authorised Representative (AR) appearing for Revenue, reiterated the findings made by the learned Commissioner of Customs (Appeal) in the impugned order and stated that on the basis of the detailed investigation and findings made, the impugned order is sustainable. On the test results, he stated that out of 8 parameters for testing as per BIS standards, six parameters have been tested and only sulphur content....
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....rtant for us to see whether the same can be held as valid evidences for coming to a conclusion on the appropriate classification of the goods. 8.2 In order to address the above issue of classification of imported goods, we would like to refer the relevant legal provisions contained in Section 12 of the Customs Act, 1962; the Customs Tariff Act, 1975 and rules framed thereunder for consideration of proper and appropriate classification of the subject goods under dispute. "Section 12. Dutiable goods. - (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government." "Section 1. Short title, extent and commencement. - (1) This Act may be called the Customs Tariff Act, 1975. (2) It extends to the whole of India. (3) It shall co....
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....garded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. 5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, su....
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....ONAL NOTES In this Schedule,- (1)(a) "heading", in respect of goods, means a description in list of tariff provisions accompanied by a four-digit number and includes all subheadings of tariff items the first four-digits of which correspond to that number; (b) "sub-heading", in respect of goods, means a description in the list of tariff provisions accompanied by a six-digit number and includes all tariff items the first six-digits of which correspond to that number; (c) "tariff item" means a description of goods in the list of tariff provisions accompanying eight digit number and the rate of customs duty; (2) the list of tariff provisions is divided into Sections, Chapters and Sub-Chapters; (3) in column (3), the standard unit of quantity is specified for each tariff item to facilitate the collection, comparison and analysis of trade statistics." 8.3 From plain reading of the above legal provisions, it transpires that in order to determine the appropriate duties of customs payable on any imported goods, one has to make an assessment of the imported goods for its correct classification under the First Schedule to Customs Tariff....
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.... Standards refers to the last published version of that standard. Illustration : IS 1459 refers to IS 1459: 2018 and not to IS 1459: 1974. In this Chapter, the following expressions have the meanings hereby assigned to them : (a)..... (c) "superior kerosine oil (SKO)" means any hydrocarbon oil conforming to the Indian Standards Specification of Bureau of Indian Standards IS : 14591974 (Reaffirmed in the year 1996);" In terms of the above requirements of supplementary note (c) for classifying imported goods as SKO and on perusal of the case records, we find that in order to determine the characteristics of imported goods whether these are 'Superior Kerosene Oil (SKO)' or 'other Diesel Oil such as High Speed Diesel (HSD) etc., certain standard of measures as has been prescribed by Bureau of Indian Standards (BIS) which are required to be fulfilled. BIS standards provide for product specifications on the basis of which the same can be classified under a particular entry. The disputed entries in the present case are of ''Superior Kerosene Oil (SKO)' and 'Industrial Composite Solvent'. BIS have prescribed Indian Standard for 'Superior Kerosene Oil (SKO)' as....
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....rganic; (ii) Burning quality, (a) Char value, mg/kg of oil consumed, Max. and (b) Bloom on glass chimney; (iii) Colour (Saybolt), Min.; (iv) Copper strip corrosion for 3 hr. at 50˚C; (v) Distillation: (a) Percent recovered below 200˚C, Min., (b) Final boiling point, ˚C, Max.; (vi) Flash Point (Abel), ˚C, Min.; (vii) Smoke point, mm, Min.; and (viii) Total, sulphur, percent by mass, Max. have been specified, with specific values to be conforming to the maximum or minimum level or standards. These are required to be done for establishing the fact that a product is 'Superior Kerosene Oil/SKO' by matching all the eight specified parameters. However, in the present case all these parameters have not been tested and reported by the Customs Laboratory. Further, two of the determining parameters i.e., Burning quality and Total sulphur content determined as percent by mass has not been conducted. Therefore, we are of the prima facie view that on the basis of test report provided by the JNCH Customs Laboratory or by the CRCL Laboratory, the impugned order upholding the re....
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.... Value, mg/kg of oil consumed and Bloom on glass chimney ii. Color (Sayabolt) iii. Copper strip corrosion for 3h at 50°C iv. Total Sulphur, percent by mass 16.3.5 In view of the aforesaid, inasmuch as the Test Report has not tested and reported the aforesaid 4 mandatory parameters/ properties, the said Test Report is completely inconclusive to hold that the consignment is one of kerosene. In view thereof, the said Test Report, by no stretch of imagination, could have been used as a reliable piece of evidence for seizing the consignment in question or draw any adverse inference/ conclusion against the Appellant. In addition, the Appellant submits that even if Color (Sayabolt) and Burning Quality test is not considered, still the Respondent has failed to show and establish the satisfaction of the other two mandatory parameters rendering the Test Report completely inconclusive and thereby unreliable. The impugned order, thus, deserves to be quashed and set aside. xxx xxx xxx xxx 28. It is admitted position of law that for a product to be classified under CTH 27101944/27101932 as SKO, it has to meet with the specifications in Suppleme....
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....ined by the Customs Authorities, which is contested by the appellants. If the product is treated as HSD, it would be a prohibited item that could not have been imported by a private entity other than a State Trading Enterprise, in which 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. xxx xxx xxx xxx 79. In the present case, what we have observed is that the High Court, on the basis of the laboratory tests, more particularly the third test conducted by IOCL, Mumb....
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.... inference that the Department had been able to prove their case even by applying the test of preponderance of probability merely because the samples conform to certain parameters. (viii) If the Department with all the resources at their command and access to various laboratory facilities could not get the samples tested in respect of all the 21 parameters, expecting the assesses/appellants to get the samples tested to show that these do not conform the specifications and are not HSD does not appear to be reasonable. Thus, shifting of onus to the assesses to prove otherwise appears to be unreasonable and meaningless. (ix) The burden was not on the assessees to demonstrate that nonconformity with the remaining 8 parameters would vitiate the conclusion that the samples were of HSD. 81. The aforesaid difficulties in our opinion can be overcome, if we apply the test of "most akin" as contemplated under Rule 4 of the General Rules for Interpretation referred to above. 82. The real test for classification, according to us, would be as to whether any goods or substance in question is "most akin" or bears the closest resemblance or similarity to any of t....
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....ameters 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 nonavailability 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 consider are of essential character to satisfy the "most akin" test without ....
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....efend the case. Therefore, for these reasons, we consider that the Order-in-Appeal dated 05.10.2023, is ab initio void being contrary to the legal provisions under Section 128A ibid. 11. In view of the foregoing discussions and analysis, and on the basis of the Final order No. A/85436-85437/2022 dated 09.05.2022 passed by the Co-ordinate West Zonal Bench of the Tribunal in the identical facts of the case and on the basis of judgements of the Hon'ble Supreme Court quoted above, we are of the considered view that the impugned orders dated 25.6.2021 and 05.10.2023, revising the classification of imported goods under CTI 2710 1910 and confirmation of adjudged demands, confiscation of goods and imposition of penalties, redemption fine on the appellants does not stand the scrutiny of law. 12. In the result, the impugned orders, upholding/modifying the order passed by the adjudicating authority, passed by the learned Commissioner of Customs (Appeals) are set aside and the appeals filed by the appellants are allowed in their favour, with consequential relief, if any, as per law. (Order pronounced in open court on 12.05.2026) ============= Document 1 IS : 1459 - 1974 2.2 Th....