Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(Guj) 12561

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
A.S. SUPEHIA, PRANAV TRIVEDI, JJ
NOYA INFRASTRUCTURE LLP, THROUGH ITS AUTHORISED SIGNATORY RAJOTTAM SARBOTTAM GANGULY & ORS. – Appellant
Versus
UNION OF INDIA, MINISTRY OF FINANCE & ORS. – Respondent
R/SPECIAL CIVIL APPLICATION NO. 12943 of 2025 | R/SPECIAL CIVIL APPLICATION NO. 14559 of 2025 | R/SPECIAL CIVIL APPLICATION NO. 14552 of 2025 | R/SPECIAL CIVIL APPLICATION NO. 14562 of 2025

Advocates:
For the Appellants/Petitioners: MR S N SOPARKAR, MR AMIR S PATHAN, MR VIRAT G POPAT, MR MIHIR JOSHI, MR KUNAL NANAVATI, MR KAUSTUBH SHRIVASTAV
For the Respondents: MR ANURAG OZA, MR CB GUPTA

The court ruled that the ambiguity in test results requires goods to be classified based on the 'most akin' principle, favoring the petitioners in seizure disputes.

Headnote:(A) Customs Act, 1962 - Seizure of imported goods - The petitioners challenged the seizure of Distillate Oil based on a test report indicating non-compliance with standards - The classification as Distillate Oil versus Diesel is ambiguous - The court noted the lack of definitive conclusions in test results, emphasizing that end-use considerations affect classification. (Paras 14-27)

(B) Classification of Goods - The test of 'most akin' is applicable - No clear determination made regarding cargo classification despite established parameters - Discrimination against the petitioners compared to similar cases - Generic characteristics of diesel fraction cited but inconclusive for classification. (Paras 11-26)

Facts of the case:
Petitioners sought to challenge the seizure of imported bulk liquid cargo alleged not to meet Distillate Oil standards based on disputed test reports. Seizures from other traders with similar characteristics had differing judicial outcomes.

Findings of Court:
The court quashed the seizure memos issued and directed the release of the goods, establishing that the petitioners should not be discriminated based on ambiguous testing results.

Issues: The primary legal question centered on the ambiguity in classification of goods as Distillate Oil or Diesel based on varying interpretations of test results.

Ratio Decidendi: The court concluded that the lack of clear consensus on the nature of the imported goods necessitated their release, applying the 'most akin' test for classification considering varying expert opinions.

Result: The seizure of cargo quashed, and commodities ordered to be released.

COMMON ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

RULE. Learned advocates waive service of notice of rule 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 vessel viz. MT-Vayu, vide Bill of Entry Nos.4161474, 4161518, 4161492, 4161496, 4161500 and 4161512 dated 28.08.2025 at Pipavav Port, Amreli (Gujarat). The petitioners also have a certificate of analysis issued by the company from which they had purchased the material i.e. Chevron General Trading LLC, which showed that the imported product is Distillate Oil. On 01.08.2025, when the liquid was transferred from MT-Vayu into Customs Bonded Storage Tank No. T-307, such cargo was placed under investigation for the alleged mis-declaration, and the officers of the Directorate of Revenue Intelligence (DRI), Delhi Zonal Unit, recorded panchnama and drew representative samples in triplicate from the said Tank No.T-307 in the presence of the petitioners’ representatives, customs brokers, and independent surveyors. On completion of the sample collection process, the cargo was detained under Section 110 of the Customs Act , 1962 on the information of possible mis-declaration, vide a Detention Memo dated 01.09.2025.

4. It is the case of the petitioners that despite completion of discharge operations, as well as drawal of test samples, and despite there being Public Notice No.76/2020 issued by the New Customs House, Mumbai as well as Public Notice No.14/2017 issued by the Office of the Commissioner of Customs, Kandla, the Customs authorities have neither released the cargo nor furnished any test results of the samples drawn on 01.09.2025. It appears that during the pendency of the writ petitions, the Test Report dated 30.09.2025 was declared, and the same mentions that the imported goods do not meet the requirements of Distillate Oil as per IS 16731:2019, and accordingly, Seizure Memo dated 01.10.2025 was issued by the Intelligence Officer, DRI, which is the subject matter of challenge in the present writ petitions.

SUBMISSIONS ON BEHALF OF THE PETITIONERS

5. Learned Senior Advocate Mr.Soparkar as well as learned Senior Advocate Mr.Joshi appearing for the respective petitioner(s) have referred to the Test Report dated 30.09.2025 and have submitted that as per the said Test Report issued by the Central Revenues Control Laboratory at Delhi Zonal Unit (CRCL), out of 14 characteristics / parameters mentioned therein, one of the parameters at Sr. No.14 i.e. Cloud Point, states that the sample under reference does not meet the requirement of Distillate 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 S

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