Court finds ambiguity in classification parameters, directs Customs to release cargo with end-use conditions
In a landmark judgment dated December 9, 2025, the Gujarat High Court has quashed the seizure of imported distillate oil belonging to Aparajita Energy Private Limited. The court directed the customs authorities to immediately release the detained cargo, citing ambiguity in the classification parameters used for seizure.
The case revolved around the import of distillate oil by Aparajita Energy, which was seized by the Directorate of Revenue Intelligence (DRI) on the grounds of non-compliance with Indian Standards IS 16731:2019. The DRI had argued that the oil did not meet the required standards, particularly citing issues with the cloud point and characteristics akin to automotive diesel fuel.
However, the court, presided over by Justices A.S. Supehia and Pranav Trivedi, found the seizure unjustified. It noted that the relevance of the cloud point depends on climatic conditions and intended usage, as clarified by the Central Revenues Control Laboratory (CRCL). Furthermore, the court found the classification of the oil as automotive diesel fuel to be ambiguous and not conclusively supported by laboratory test results.
Referring to a similar case involving the Kandla Customs, where goods with similar parameter infringements were released, the court emphasized that the petitioner could not be discriminated against. It applied the "most akin" test from a Supreme Court judgment in Gastrade International v. Commissioner of Customs, Kandla, which requires the classification of goods based on their closest resemblance to specified standards.
The court's decision underscores the need for precise and unambiguous classification parameters, especially when determining the nature of imported goods. It directed the release of the seized cargo, with the condition that the petitioner provides an end-use certificate, as was required in the Kandla case.
This judgment is expected to have significant implications for the import and classification of petroleum products in India, advocating for clarity and fairness in customs procedures.
Bottom Line:
Customs Act, 1962 - Seizure of imported goods - Parameters for classification of goods - Application of "most akin" test for classification as per Apex Court's judgment in Gastrade International v. Commissioner of Customs, Kandla (2025).
Statutory provision(s): Customs Act, 1962 Section 110
