"Most Akin" Test Applied as Court Favors Importers in Dispute Over Cargo Classification
In a significant ruling, the Gujarat High Court has quashed the seizure of imported Distillate Oil by Noya Infrastructure LLP and others, addressing the contentious issue of cargo classification under customs law. The court applied the "most akin" test, favoring the importers due to the ambiguity in the test reports concerning the seized goods.
The petitions arose from the seizure of imported bulk liquid cargo identified as Distillate Oil by the Directorate of Revenue Intelligence (DRI) at Pipavav Port, Amreli, Gujarat. The seizure was based on test reports that suggested non-conformity to Indian Standards, particularly concerning the Cloud Point parameter and diesel fraction characteristics.
The petitioners argued that the test report was ambiguous, stating only that the cargo had characteristics similar to diesel fraction but not conclusively identifying it as High Flash High Speed Diesel (HFHSD) or diesel. The court noted that such ambiguity should benefit the importers, especially when the goods do not definitively conform to any single standard due to deviations in parameters.
The court drew parallels with a previous case at Kandla Custom House where similar goods were released provisionally despite similar test report findings. The court highlighted a communication from the Director of CRCL which clarified that when goods have overlapping parameters, they should be classified in favor of the importer if there is no definitive conclusion.
Further, the judgment emphasized the importance of the end-use certificate to ascertain the practical application of parameters like Cloud Point, which vary based on climatic conditions and usage.
The respondents had argued that the goods were mis-declared as Distillate Oil instead of diesel, leading to potential loss of revenue and tax implications. However, the court found that other parameters cited by the respondents were not substantiated by the test report, which focused primarily on Cloud Point and diesel fraction characteristics.
The ruling is a landmark in customs classification disputes, reinforcing the principle that ambiguity in test results should not lead to adverse action against importers without definitive evidence. The court directed the respondents to release the detained goods and ensure compliance with filing an end-use certificate, similar to the precedent set by the Kandla authorities.
Bottom Line:
Customs Law - Seizure of imported goods - Ambiguity in test reports cannot justify seizure - Application of "most akin" test for classification favors the importer when a definitive conclusion is absent.
Statutory provision(s): Customs Act, 1962 Section 110, General Rules for Interpretation of Customs Tariff Act, 1975
Noya Infrastructure LLP v. Union of India, (Gujarat)(DB) : Law Finder Doc Id # 2824243
