Gujarat High Court Directs Release Of Imported Distillate Fuel Seized For Infringement Of Cloud Point, Cites Varied Opinions On Parameters

The Gujarat High Court recently directed release of imported Distillate Fuel Oil which was seized by the Directorate of Revenue Intelligence for not meeting the cloud point parameters, observing that respondent authorities had no definite opinions and the opinions vary so far as the parameter of Cloud Point is concerned.

Cloud point refers to the temperature at which paraffin wax or other solid components start to first form in a petroleum product which makes it look cloudy. Distillate oil is a form of liquid fuel which is distilled from crude petroleum.

The petitioner is involved in trading of industrial oil and other allied pursuits and is engaged in importing bulk liquid cargo being Distillate Fuel Oil in various quantities from tank vessel. The petitioner also has valid documents showing genuineness of the material imported issued by the company from which it had purchased the material i.e. Oceanic Oil Power FZC.

The Custom authority collected the samples from the said imported bulk oil cargo for the purpose of chemical examination and samples were sent to the Central Revenues Control Laboratory (CRCL) at Vadodara for analysis. The Test Report opined that the samples under reference meets the requirements of Distillate Marine Fuel as per IS 16731:2019.

Thereafter, the material was transferred and stored in customs bonded tanks. These tanks were placed under investigation for the alleged mis-declaration, and the officers of the Directorate of Revenue Intelligence (DRI), recorded panchnama and drew representative samples in triplicate in the presence of the petitioner' representatives, customs brokers, and independent surveyors for further testing and analysis.

On completion of the sample collection process, the cargo was detained under Section 110 of the Customs Act, on the information of possible mis-declaration.

It is the case of the petitioner that despite completion of discharge operations, as well as drawal of test samples, and despite there being Public Notice issued by the New Customs House, Mumbai as well as Public Notice 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.

During the pendency of the writ petition, the Test Report was declared which stated that the imported goods do not meet the requirements of Distillate Oil as per IS 16731:2019, and accordingly, Seizure Memo was issued by the Intelligence Officer, DRI, which challenged before the high court.

The final opinion mentioned under the Report is that “Based on the above tested parameters, the sample does not meet the requirement of Distillate Oil as per IS 16731:2019, with respect to parameter at sr. no. 14 i.e. Cloud Point, °C, max, the sample has the characteristics of Automative Diesel Fuel as per IS 1460:2025”.

The Test Report indicated that the Cloud Point of the cargo of the petitioners is -4.6°C, whereas the specified value of the same is -16°C.

A division bench of Justice AS Supehia and Justice Pranav Trivedi referred to another case pertaining to "Distillate Marine Fuel" which was collected as a sample by the Kandla Customs authority, the same was also having a Cloud Point below -16 Degree Celsius, i.e. -11°C, whereas in the case of the petitioner the cloud point is -4.6 °C.

The court noted that in the case of Distillate Marine Fuel having a Cloud Point of -11°C was ordered to be released by the Customs authority on the opinion of the Central Revenues Control Laboratory, Vadodara.

"hence, in our opinion, the petitioner cannot be discriminated, since the respondent authorities have no definite opinions and the opinions vary so far as the parameter of Cloud Point is concerned. There is no definite conclusion with regard to the cloud point, and it depends upon the vessel being operated in specific areas. At this stage, we may also refer to the characteristics of Indian Standards for petroleum products relating to Marine Fuel. The table annexed to the pour point/cloud point/cold filter plugging point for vessels operated by Distillate Marine Fuel stipulates that “Pour point cannot guarantee operability for all ships in all climates,” and the purchaser should confirm that the cold flow characteristics (pour point, cloud point, cold filter plugging point) are suitable for the design of the ship and the intended voyage. Thus, the cargo imported by the petitioner cannot be ordered to be seized on the basis of the parameter of cloud point, as it will be relevant only at the place, vessel, and time of use, and will depend on the end user," the bench said.

The court also noted that the Supreme Court had held that in case of ambiguity and lack of clarity in the expert opinion/laboratory test results, it would be unsafe to draw the inference that the Department had been able to prove its case even by applying the test of preponderance of probability merely because the samples conform to certain parameters.

With respect to the other parameter of the sample allegedly having the characteristic of Automative Diesel Fuel, the court said that it was "ambiguous, and uncertain" as it does not mention on what parameters the Distillate oil can be said to be having the characteristic of Diesel fuel.

The court this allowed the petition and directed:

"The impugned Seizure Memo issued by the Intelligence Officer of the DRI is respondent authorities in detaining the imported bulk liquid cargo of Distillate Oil through the respective vessels of the petitioner, which is presently stored in Customs Bonded Storage at Pipavav Port, Amreli (Gujarat) is hereby quashed and set aside. We further direct the respondents to release the bulk liquid cargo of Distillate Oil imported through the vessels".

Case title: APARAJITA ENERGY PRIVATE LIMITED v/s UNION OF INDIA, MINISTRY OF FINANCE & ORS.

R/SPECIAL CIVIL APPLICATION NO. 12944 of 2025

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