Gujarat High Court Orders Release Of Imported Distillate Oil Seized For Not Meeting Criteria, Says Test Didn't Clearly Say If It Was Diesel

The Gujarat High Court recently directed release of imported distillate oil which was earlier seized on the ground that it did not meet the parameters of distillate oil, holding that the test report did not definitively conclude that the Distillate Oil was Diesel, to an extent that it would change the nature of classification from Distillate Oil to Diesel. Distillate oil is a form of liquid fuel which is distilled from crude petroleum. A division bench of Justice AS Supehia and Justice Pranav Trivedi in its order noted:"The facts which are established from the pleadings and from the record are that the cargoes of the petitioners consisting of Distillate Oil have been seized by the Customs authorities. The entire case of the respondents hinges on the Test Report dated 30.09.2025. The sample, which was collected from the cargo, appears to have been sent to Delhi for chemical testing, and accordingly, the report mentions about 14 parameters / characteristics which the sample has to satisfy in order to declare whether the import by the petitioners is Distillate Oil or not...we are of the opinion that the respondents have travelled beyond the reasons mentioned in the Test Report".The court noted that the test report which was used to seize the goods, was not definite that the Distillate Oil is in fact diesel, and the opinion in the report reflected that “it has characteristics of diesel fraction with a small amount of heavier fraction of hydrocarbons.”The good referred to another case where the Customs Officer had provisionally released the seized cargo of Distillate Oil after noting that it could not be said with certainty that the diesel fraction fulfills all parameters of Distillate Marine Fuel.The court thereafter said Supreme Court had held that, in view of the 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. "In the present case, if the “most akin” test is applied, the same would, in fact, be in favour of the petitioners, as the respondents have not definitively concluded that the Distillate Oil imported by the petitioners is, in fact, High Flame High Speed Diesel or a Diesel to an extent that it would change the nature of classification from Distillate Oil to Diesel. The petitioners cannot be discriminated in view of the communication dated 28.10.2025 written by the CRCL, Delhi, to the Assistant Commissioners of Kandla authorities relating to the similar parameters/characteristics which were found in the tests of the samples of Distillate Oil," the bench added.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. On 01.08.2025, when the liquid was transferred from the vessel into Customs Bonded Storage Tank, such cargo was 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 from the said Tank 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 on the information of possible mis-declaration, vide a Detention Memo dated 01.09.2025.The petitioners contended 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.During the pendency of the petition the Test Report dated 30.09.2025 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 dated 01.10.2025 was issued by the Intelligence Officer, DRI, which was challenged before the high court.Allowing the petition the court set aside the seizure Memos issued by the Intelligence Officer of the DRI. The action of the respondent authorities in detaining the imported bulk liquid cargo of Distillate Oil through the respective vessels of the petitioners, presently stored in Customs Bonded Storage at Pipavav Port, Amreli (Gujarat) was quashed and set aside. "We further direct the respondents to release the bulk liquid cargo of Distillate Oil imported through the vessels. We further clarify that, as done in the case of the cargo of Distillate Oil seized by the Kandla Customs authorities, the traders shall file an end-use certificate before the Custom authority," the court added....

Gujarat High Court Orders Release Of Imported Distillate Oil Seized For Not Meeting Criteria, Says Test Didn't Clearly Say If It Was Diesel

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