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Date: 22.12.2025
Gujarat High Court Quashes DRI Seizure of Imported Distillate Oil
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.โโโ โ
In a significant ruling, the High Court of Gujarat at Ahmedabad has delivered a judgment in favor of Noya Infrastructure LLP and other petitioners, quashing the seizure memos issued by the Directorate of Revenue Intelligence (DRI) regarding the detention of imported bulk liquid cargo of Distillate Oil. โ The judgment, delivered on December 9, 2025, by Honourable Justice, marks a pivotal moment in the interpretation of Indian Standards for petroleum products and the application of the “most akin” test for classification under the Customs Tariff Act, 1975. โ
Background of the Case
The petitioners, including Noya Infrastructure LLP, Sweven Impex, and One Chemical Company, are engaged in the trading and import of industrial oils, including Distillate Oil. The case arose when the DRI seized their imported cargo of Distillate Oil at Pipavav Port, Amreli, Gujarat, citing a Test Report dated September 30, 2025, which claimed that the samples did not meet the requirements of Distillate Oil as per IS 16731:2019. โ The report also stated that the samples had characteristics of diesel fraction with a small amount of heavier hydrocarbons, leading to allegations of mis-declaration during import. โ
The petitioners challenged the seizure, arguing that the Test Report was inconclusive and that similar cargo detained at Kandla Port had been provisionally released based on expert opinions from the Central Revenues Control Laboratory (CRCL). They contended that the ambiguity in the test results and the lack of definitive conclusions should operate in their favor, as per the “most akin” test established by the Supreme Court in the case of Gastrade International vs. Commissioner of Customs, Kandla. โ
Key Issues in the Case
The court analyzed the following key issues:
- Cloud Point Parameter: The Test Report indicated that the cloud point of the petitioners’ cargo did not meet the specified value of -16ยฐC, as it was recorded at -6.2ยฐC and -5.4ยฐC. โ However, the court noted that the relevance of the cloud point depends on the climatic conditions and the intended use of the fuel, as clarified by the CRCL in a similar case at Kandla Port. โ
- Diesel Fraction Characteristics: The Test Report stated that the samples had characteristics of diesel fraction with a small amount of heavier hydrocarbons. โ However, the court observed that the report did not definitively conclude that the cargo was diesel, and similar findings in the Kandla case had led to the release of the cargo. โ
- Application of the “Most Akin” Test: The court emphasized the importance of the “most akin” test for classification, as established by the Supreme Court. โ It held that the ambiguity in the test results and the lack of definitive conclusions meant that the cargo should be classified as Distillate Oil, as it bore the closest resemblance to this category. โ
The Court’s Decision โ
After a detailed analysis of the facts, test results, and expert opinions, the High Court ruled in favor of the petitioners. The court quashed the seizure memos issued by the DRI and directed the authorities to release the detained cargo of Distillate Oil stored at Pipavav Port. โ The court also instructed the petitioners to file an end-use certificate with the Customs authorities, as was done in the Kandla case. โ
Implications of the Judgment
This landmark judgment has significant implications for the import and classification of petroleum products in India. It reinforces the importance of applying the “most akin” test for classification under the Customs Tariff Act, ensuring that ambiguity in test results does not unfairly penalize importers. โ Additionally, the ruling highlights the need for consistency in the treatment of similar cases across different ports and authorities.
The judgment also underscores the importance of expert opinions and scientific analysis in determining the classification of goods. By relying on the CRCL’s clarification and the Supreme Court’s precedent, the High Court has set a strong example of fair and transparent adjudication in cases involving complex technical parameters.
Conclusion
The High Court of Gujarat’s decision to quash the seizure of Distillate Oil is a victory for the petitioners and a step forward in ensuring fairness in the import and trade of petroleum products. This judgment not only provides relief to the petitioners but also sets a precedent for future cases involving similar disputes. It serves as a reminder that regulatory authorities must base their actions on clear and definitive evidence, and that ambiguity should not lead to unjust penalties for businesses.
Source: Gujarat High Court
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