Ambiguous Lab Reports Can't Justify Seizure Of Distillate Oil; 'Most Akin' Test Must Apply: Gujarat High Court

The Gujarat High Court has set aside the seizure of imported Distillate Oil by the Directorate of Revenue Intelligence (DRI), holding that ambiguous laboratory test results cannot be the sole basis to treat the goods as diesel and deny release. The Court ruled that in such cases, the “most akin” test, as laid down by the Supreme Court, must be applied. A Division Bench of Justice A.S. Supehia and Justice Pranav Trivedi allowed a batch of writ petitions filed by Noya Infrastructure LLP and others, quashing seizure memos issued by the DRI in respect of bulk liquid cargo imported at Pipavav Port. The cargo had been detained after a CRCL test report stated that the samples failed the Cloud Point requirement under IS 16731:2019 and showed “characteristics of diesel fraction” . The importers argued that except for the Cloud Point parameter, all other prescribed parameters for Distillate Oil were satisfied, and that similar cargo at Kandla Port had been provisionally released by Customs on the basis of clarifications issued by CRCL. They contended that mere reference to 'diesel fraction' does not conclusively establish that the product is automotive diesel. Opposing the plea, the Revenue maintained that the goods were in fact High Speed Diesel / HFHSD, a restricted item under the import policy, and that the test report justified seizure due to non-conformity with Indian Standards. Rejecting the Revenue's stand, the High Court noted that the test report did not definitively conclude that the imported product was diesel, but only observed certain characteristics of a diesel fraction. The Bench relied on CRCL's own clarification issued in similar cases stating that HFHSD, automotive diesel, gas oil and distillate marine fuel all fall within the broader category of “diesel fraction,” and distinctions between them may overlap. Placing reliance on the Supreme Court's decision in Gastrade International vs. Commission of Customs, Kandla (2025) 8 S.C.C. 342, the Bench held that where laboratory reports are inconclusive or ambiguous, the Department cannot proceed merely on probabilities. Instead, authorities must establish that the goods are “most akin” to the restricted product sought to be alleged. The Bench also observed that Cloud Point is usage-specific, becoming relevant only where distillate marine fuel is intended for use in colder climates. It therefore held that cloud point alone cannot justify seizure at the import stage, especially when the end-use may vary. In view of the above, the High Court quashed the seizure memos and directed Customs authorities to release the detained cargo, subject to submission of an end-use certificate, as was done in similar cases at Kandla Port. Case Title: Noya Infrastructure LLP Through Authorised Signatory Rajottam Sarbottam Ganguly & Ors. Vs. Union of India, Ministry of Finance & Ors. Case No.: R/SCA No. 12943 of 2025, R/SCA No. 14559 of 2025, R/SCA No. 14552 of 2025, R/SCA No. 14562 of 2025 APPEARANCE FOR PETITIONERS: MR S N SOPARKAR, SENIOR ADVOCATE WITH MR AMIR S PATHAN WITH MR VIRAT G POPAT(3710) FOR THE PETITIONER(S) NO. 1,2,3 MR MIHIR JOSHI, SENIOR ADVOCATE WITH MR KUNAL NANAVATI WITH MR KAUSTUBH SHRIVASTAV FOR NANAVATI ASSOCIATES(1375) FOR THE PETITIONER(S) NO. 1 (SCA Nos.14552,14559,14562 of 2025) APPEARANCE FOR RESPONDENTS: MR ANURAG OZA, SENIOR STANDING COUNSEL FOR MR PRADIP D BHATE(1523) FOR THE RESPONDENT(S) NO. 1,3 MR CB GUPTA(1685) FOR THE RESPONDENT(S) NO. 2 Click Here To Read/Download Order

Ambiguous Lab Reports Can't Justify Seizure Of Distillate Oil; 'Most Akin' Test Must Apply: Gujarat High Court

Rajnandini Dutta

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