'n-Hexane' Not 'Motor Spirt' For Customs Duty : Supreme Court Dismisses Revenue Appeal Against Reliance Industries

The Supreme Court has observed that the imported product 'n-hexane', mainly used in making chemicals or extracting vegetable oils, could not be classified as a petroleum product/motor fuel, to attract lower duty, merely because it has a low flash point.

Dismissing the Custom Department's appeal, a bench of Justice Aravind Kumar and Justice Prasanna B. Varale granted relief to Reliance Industries Ltd. while upholding the Customs Excise and Service Tax Appellate Tribunal (CESTAT) decision to classify 'n-hexane' as a solvent compound, not 'motor fuel'. Thus, the Court held that the imported 'n-hexane' would fall under Chapter 29 of the Customs Tariff, which attracts a lower duty.

The dispute centered on the classification of n-Hexane, a saturated acyclic hydrocarbon with the chemical formula C₆H₁₄, imported by Reliance Industries. While the assessee classified the product under Chapter 29 (CTH 2901.10/CETH 2901.90), the Customs Department sought to classify it under Chapter 27 as “Motor Spirit,” attracting a higher duty liability.

Rejecting the Revenue's contention, the judgment authored by Justice Aravind Kumar held that the Department had failed to discharge its burden of proving that n-Hexane satisfied all the statutory conditions necessary for classification as “Motor Spirit.”

The Court reiterated that for classification under Chapter 27 as “Motor Spirit,” three cumulative conditions must be established: first, the product must be a hydrocarbon oil; second, it must have a flash point below 25°C; and third, it must be suitable for use as fuel in spark ignition engines.

While the Revenue succeeded in establishing that n-Hexane had a flash point below 25°C, the Court found that no evidence had been placed on record to show that the imported product was suitable for use as fuel in spark ignition engines.

“Apart from contending that the flash point of n-hexane is below 25°C, nothing has been placed on record to conclusively arrive at a finding that n-hexane imported by Respondent-Assessee was used as Motor Spirit, which is suitable for use as fuel in spark ignition engines. The SGS Chemical Test report only records that the flash point of n-Hexane is below 25°C but as already discussed supra, it was the bounden duty of the Appellant-Revenue to provide cogent evidence to indicate the use of the imported product as a Motor Spirit.”, the court observed.

..".n-Hexane is rightly classifiable under Chapter 29, more particularly under CTH 2901.10 and CETH 2901.90.", the court observed.

The Court also relied on a Directorate General of Foreign Trade (DGFT) Policy Circular dated July 14, 2004, which had clarified that Hexane falls under Chapter 29 of the ITC (HS) Classification. The bench held that such classification clarifications issued by the DGFT are binding on authorities.

In terms of the aforesaid, the appeal was dismissed.

Cause Title: COMMISSIONER OF CUSTOMS, KANDLA, GUJARAT VERSUS M/S RELIANCE INDUSTRIES LIMITED

Citation : 2026 LiveLaw (SC) 544

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Appearance:

For Appellant(s) : Mr. S Dwarkanath, A.S.G. Mr. Arijit Prasad, Adv. Mr. Abhyudey Kabra, Adv. Mr. Gurmeet Singh Makker, AOR Ms. Rajeshwari Shankar, Adv. Mr. Navanjay Mahapatra, Adv.

For Respondent(s) : Mr. Shyam Divan, Sr. Adv. Mr. K. R. Sasiprabhu, AOR Mr. Jaydeep Patel, Adv. Mr. Vipin Jain, Adv. Ms. Shilpa Balani, Adv. Mr. Vishnu Sharma A S, Adv. Mr. Arpit Jacob Varaprasad, Adv. Mr. Adit Deshmukh, Adv. Ms. Namrata Saraogi, Adv. M/S. Khaitan & Co., AOR Mrs. Vanita Bhargava, Adv. Mr. Ajay Bhargava, Adv. Ms. Nandini Chauhan, Adv. Mr. Abhay Agnihotri, Adv. Ms. Tijil Thakur, Adv.