# Gastrade International v. Commissioner of Customs, Kandla

- **Citation:** 2025 INSC 411
- **Court:** Supreme Court of India
- **Decided:** 2025-03-28
- **Case number:** Civil Appeal No. 4475 of 2025
- **Bench:** B.V. Nagarathna, Nongmeikapam Kotiswar Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/gastrade-international-v-commissioner-of-customs-kandla-38333
- **Pages:** 57

## Headnote

Whether, the imported goods is to be treated as Base Oil as claimed
by the appellants or High Speed Diesel (HSD) determined by the
Customs Authorities, which is contested by the appellants. The
High Court had concluded that the Customs Authority had been
able to prove that the imported product is HSD by applying the
test of preponderance of probability. Whether the High Court was
justified, by applying the test of preponderance of probability and
concluding that the substance in question is HSD.
Headnotes†
Customs Act, 1962 - ss.111(d) and (m), 112 (a) and (b), 114AA
and 117 - Customs Tariff Act, 1975 - First and Second
Schedules - First Schedule-Import Tariff in Part 2 of the Tariff
Act - Rule 4 - Petroleum Act, 1934 - s.2(c) - The Adjudicating
Authority held that the product in question was not Base
Oil, but HSD and accordingly, ordered confiscation of the
same apart from levying penalties - However, the Appellate
Authority, the Customs, Excise and Service Tax Appellate
Tribunal (CESTAT) held the same to be Base Oil and not HSD,
thus reversing the decision of the Adjudicating Authority - The
High Court reversed the decision of the Appellate Tribunal and
affirmed the decision of the Adjudicating Authority holding
the imported goods to be HSD - Correctness:
Held: 1. High Speed Diesel (HSD) has been defined as any
hydrocarbon oil conforming to the Indian Standards Specification
of Bureau of Indian Standards IS: 1460:2005 - In the instant
case, based on the three laboratory tests and evidence of the
expert opinion, the High Court had concluded that the Customs
* Author
[2025] 3 S.C.R.
1351
Gastrade International v. Commissioner of Customs, Kandla
Authority had been able to prove that the imported product is
HSD by applying the test of preponderance of probability - The
High Court had not referred to the General Rules in arriving at its
conclusion by invoking the "most akin" test as contemplated under
Rule 4 of General Rules for the interpretation of this Schedule
as provided in the First Schedule-Import Tariff in Part 2 of the
Tariff Act - The first report was prepared by Central Excise and
Customs Laboratory at Vadodara - No clear opinion was given in
the first test result by the expert that the samples are indeed that
of HSD or can be treated to be that of HSD - The first test based
on examination of 8 parameters against 21/22 prescribed cannot
be considered to be a definitive opinion to take the view that the
sample is indeed that of HSD - The second test report furnished
by the Central Revenues Control Laboratory, CRCL, New Delhi
on 03.07.2018, the said report indicates that the sample was
tested in respect of 12 out of 21/22 prescribed parameters and
this Court finds that of the aforesaid 12 parameters, at least on 2
parameters, the sample does not appear to fulfil the requirements
of IS 1460:2005 - The second test report does not specifically
state that because of the characteristics ascertained, the samples
can be treated as that of HSD - The third report prepared by the
Central Laboratory of Indian Oil Corporation Limited also does
not give a clear and categorical opinion that the samples tested
indeed are of HSD - The Expert witness also, who undertook the
tests evaded answering the crucial question as to the importance
of the 8 parameters for deciding whether the sample is of HSD or
not - Neither the expert nor the test results stated categorically
that these samples are indeed that of HSD on fulfilment of some
of the parameters - Because of the evasive and non-committal
answers given by the expert witness, the legitimate conclusion
that can be drawn is that his opinion and also the test results
are inconclusive, unclear and cannot be said to be fully reliable
to determine the oil as HSD - In the instant case, the finding
of the High Court is based primarily on applying the test of
preponderance of probability which may not necessarily fulfil the
"most akin" test - The High Court came to the conclusion based
on the in

## Text

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[2025] 3 S.C.R. 1350 : 2025 INSC 411
Gastrade International
v.
Commissioner of Customs, Kandla
(Civil Appeal No. 4475 of 2025)
28 March 2025
[B.V. Nagarathna and
Nongmeikapam Kotiswar Singh,* JJ.]
Issue for Consideration
Whether, the imported goods is to be treated as Base Oil as claimed
by the appellants or High Speed Diesel (HSD) determined by the
Customs Authorities, which is contested by the appellants. The
High Court had concluded that the Customs Authority had been
able to prove that the imported product is HSD by applying the
test of preponderance of probability. Whether the High Court was
justified, by applying the test of preponderance of probability and
concluding that the substance in question is HSD.
Headnotes†
Customs Act, 1962 - ss.111(d) and (m), 112 (a) and (b), 114AA
and 117 - Customs Tariff Act, 1975 - First and Second
Schedules - First Schedule-Import Tariff in Part 2 of the Tariff
Act - Rule 4 - Petroleum Act, 1934 - s.2(c) - The Adjudicating
Authority held that the product in question was not Base
Oil, but HSD and accordingly, ordered confiscation of the
same apart from levying penalties - However, the Appellate
Authority, the Customs, Excise and Service Tax Appellate
Tribunal (CESTAT) held the same to be Base Oil and not HSD,
thus reversing the decision of the Adjudicating Authority - The
High Court reversed the decision of the Appellate Tribunal and
affirmed the decision of the Adjudicating Authority holding
the imported goods to be HSD - Correctness:
Held: 1. High Speed Diesel (HSD) has been defined as any
hydrocarbon oil conforming to the Indian Standards Specification
of Bureau of Indian Standards IS: 1460:2005 - In the instant
case, based on the three laboratory tests and evidence of the
expert opinion, the High Court had concluded that the Customs
* Author
[2025] 3 S.C.R.
1351
Gastrade International v. Commissioner of Customs, Kandla
Authority had been able to prove that the imported product is
HSD by applying the test of preponderance of probability - The
High Court had not referred to the General Rules in arriving at its
conclusion by invoking the "most akin" test as contemplated under
Rule 4 of General Rules for the interpretation of this Schedule
as provided in the First Schedule-Import Tariff in Part 2 of the
Tariff Act - The first report was prepared by Central Excise and
Customs Laboratory at Vadodara - No clear opinion was given in
the first test result by the expert that the samples are indeed that
of HSD or can be treated to be that of HSD - The first test based
on examination of 8 parameters against 21/22 prescribed cannot
be considered to be a definitive opinion to take the view that the
sample is indeed that of HSD - The second test report furnished
by the Central Revenues Control Laboratory, CRCL, New Delhi
on 03.07.2018, the said report indicates that the sample was
tested in respect of 12 out of 21/22 prescribed parameters and
this Court finds that of the aforesaid 12 parameters, at least on 2
parameters, the sample does not appear to fulfil the requirements
of IS 1460:2005 - The second test report does not specifically
state that because of the characteristics ascertained, the samples
can be treated as that of HSD - The third report prepared by the
Central Laboratory of Indian Oil Corporation Limited also does
not give a clear and categorical opinion that the samples tested
indeed are of HSD - The Expert witness also, who undertook the
tests evaded answering the crucial question as to the importance
of the 8 parameters for deciding whether the sample is of HSD or
not - Neither the expert nor the test results stated categorically
that these samples are indeed that of HSD on fulfilment of some
of the parameters - Because of the evasive and non-committal
answers given by the expert witness, the legitimate conclusion
that can be drawn is that his opinion and also the test results
are inconclusive, unclear and cannot be said to be fully reliable
to determine the oil as HSD - In the instant case, the finding
of the High Court is based primarily on applying the test of
preponderance of probability which may not necessarily fulfil the
"most akin" test - The High Court came to the conclusion based
on the incomplete test reports and non-committal opinion of the
expert who in categorical terms had not stated that the imported
goods are HSD - There was no opinion that the imported goods
are most similar to HSD to satisfy the test of "most akin" - The
definitive opinion and finding that the imported goods are "most
1352
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akin" to HSD is missing in the reports and opinion for classifying
the imported goods as HSD - Therefore, the results of the test
are inconclusive, so being the opinion of the expert, this Court
disagrees with the conclusion of the High Court - Benefit of
doubt given to appellants because of inconclusive evidence.
[Paras 32, 43, 46, 47, 48, 50, 52, 63, 71, 84, 86, 87]
Evidence Act, 1872 - s.45 - Expert Opinion - Discussed:
Held: The opinion of the experts, however weighty they may be,
are not binding on the court and is only relevant for the court
to consider it to come to a final decision on any fact in issue -
However, since courts are not experts in the discipline of science,
they ordinarily accept the scientific report and act upon it - But
where the expert opinion suffers from certain shortcomings or
ambiguities, lack of clarity, or inadequacy, it would be subject
to judicial scrutiny and it would not be safe to rely wholly on the
same under such circumstances. [Para 57]
Petroleum Act, 1934 - s.2(c) - Flash-point - Classification
of petroleum products - Significance of flash point in
determining whether the petroleum product is HSD or not:
Held: Under Section 2(c) of the Petroleum Act, 1934 flashpoint
of any petroleum has been defined as the lowest temperature at
which it yields a vapour which will give a momentary flash when
ignited, determined in accordance with the provisions of Chapter
II and the rules made thereunder - The Petroleum Act classifies
petroleum products under three categories, depending on the
quantum of flash point - Specification regarding flash point is
accordingly of some significance, even if it may not be the most
important parameter in determining whether a petroleum product
is HSD or not. [Paras 68, 69, 70]
Evidence Act, 1872 - s.3 - Different standards of proof -
Preponderance of probability - Beyond reasonable doubt:
Held: Under Section 3 of the Evidence Act, 1872, a fact is said
to be proved when, after considering the matters before it, the
court either believes it to exist, or considers its existence so
probable that a prudent man ought, under the circumstances
of the particular case, to act upon the supposition that it exists,
which clearly indicates that the Evidence Act does not insist
[2025] 3 S.C.R.
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Gastrade International v. Commissioner of Customs, Kandla
upon absolute standard of proof - Evidence Act also nowhere
defines as to the meaning of proof based on "preponderance of
probability" and "beyond reasonable doubt" which are different
standards of proof - Different standards of proof have evolved
in criminal and civil jurisdictions in course of time considering the
differential stakes involved in these proceedings - In a criminal
proceeding, the stakes are higher for a defendant as it involves
precious rights and liberties of the person with a potential to
lose the same if convicted of the offence charged - On the other
hand, civil liability is less blameworthy, and penalty, if any, is less
severe - What the aforesaid decisions postulate is that there may
be varying range in the degree of probabilities - Certainly, where
the proceedings involve requirement of fulfilment of technical/
scientific parameters with confiscatory and penal consequences,
the degree of probability would be of a higher order and not mere
probability. [Paras 75, 76, 78]
Case Law Cited
State of H.P. v. Jai Lal [1999] Supp. 2 SCR 318 : (1999) 7 SCC
280; Dayal Singh v. State of Uttaranchal [2012] 10 SCR 157 :
(2012) 8 SCC 263; M. Siddiq (Ram Janmabhumi Temple-5 J) v.
Suresh Das [2019] 18 SCR 1 : (2020) 1 SCC 1 - relied on.
Collector of Customs, Madras and Others v. D Bhoormall [1974]
3 SCR 833 : AIR 1974 SC 859; A.N. Guha & Co v. Collector
[1996 (86) ELT 333]; R.V.E Venkatachala Gounder v. Arulmigu
Viswesaraswami & V.P, Order dated 08.10.2003 in Civil Appeal
number 10585 of 1996; Durga Oil Company v. State of U.P. [1998]
3 SCR 922 : (1998) 6 SCC 299 - referred to.
List of Acts
Customs Act, 1962; Customs Tariff Act, 1975; Petroleum
Act, 1934.
List of Keywords
The "most akin" test; High Speed Diesel; Base Oil; The principle
of preponderance of probability; Flash point of any petroleum;
Expert Opinion; Standard of proof; Indian Standards Specification
of Bureau of Indian Standards IS: 1460:2005; Classification of
petroleum products; Beyond reasonable doubt.
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Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4475 of 2025
From the Judgment and Order dated 20.01.2022 of the High Court
of Gujarat at Ahmedabad in TA No. 299 of 2021
With
Civil Appeal No(s). 4476 and 4477 of 2025
Appearances for Parties
Advs. for the Appellant:
Arvind P. Datar, Sr. Adv., S. Jaikumar, Kartik Jindal, Anant Gautam,
Aashdeep Kaur, Rajesh Kumar Gautam.
Advs. for the Respondent:
N. Venkataraman, A.S.G., Gurmeet Singh Makker, Rupesh Kumar,
Adit Khorana, Ms. Aakanksha Kaul, Udai Khanna, Navanjay
Mahapatra, Mukesh Kumar Maroria.
Judgment / Order of the Supreme Court
Judgment
Nongmeikapam Kotiswar Singh, J.
Delay condoned in Special Leave Petition arising out of Diary
No.32623 of 2024. Leave granted in all the Special Leave Petitions.
2.
The issue involved in this batch of appeals is, whether, the imported
goods is to be treated as Base Oil as claimed by the appellants or
High Speed Diesel (HSD) as determined by the Customs Authorities,
which is contested by the appellants. If the product is treated as HSD,
it would be a prohibited item that could not have been imported by a
private entity other than a State Trading Enterprise, in which event
it would be liable to be confiscated and penalty be imposed on the
appellant importers.
3.
The Commissioner of Customs, the Adjudicating Authority held
vide order dated 03.12.2019 that the said product is not Base Oil,
but HSD and accordingly, ordered confiscation of the same apart
from levying penalties. On the other hand, the appellate authority,
the Customs, Excise and Service Tax Appellate Tribunal (CESTAT)
[2025] 3 S.C.R.
1355
Gastrade International v. Commissioner of Customs, Kandla
held the same to be Base Oil and not HSD, thus reversing the
decision of the Adjudicating Authority. On being challenged before
the High Court of Gujarat, by the Customs Authorities, the High
Court reversed the decision of the Appellate Tribunal and affirmed
the decision of the Adjudicating Authority holding the imported
goods to be HSD.
4.
In order to appreciate the issues in proper perspective, a brief
reference of the relevant facts may be necessary.
Facts in brief
5.
The three appellants, M/s Gastrade International, M/s Rajkamal
Industrial Pvt Ltd and M/s Divinity lmpex imported the goods from
UAE by sea per vessel ''Al Heera" which was docked at Kandla
Port. The importers declared the goods as "Base Oil SN 50" seeking
clearance of the same under Chapter Heading 27101960, which is for
Base Oil. On the basis of the Intelligence Report, the Directorate of
Revenue Intelligence ("DRI"), classifying the said cargo as HSD under
Chapter Heading 27101930, which is prohibited from being imported
except only by State Trading Enterprises, seized the said cargo. As
per Import Policy ITC (HS), 2017, High Speed Diesel (HSD) and Low
Diesel Oil (LDO) are covered under the EXIM Code 27101930 and
27101940 and in terms of policy as notified under Notification dated
20.05.2015 issued by the DGFT Department of Commerce, these
items could be imported only by the State Trading Enterprises and
thus, not by appellants. The samples of the seized goods were sent
to Central Excise and Customs Laboratory at Vadodara for testing
which returned the report on 11.05.2018 with the finding that the
samples drawn from the seized goods had characteristics of High
Speed Diesel Oil/Automative Fuel Oil conforming to IS 1460: 2005
in respect of 8 parameters and that the samples were "other than
Base Oil". The appellant-importers contested the said test report
and the requested the Customs authorities for retesting the samples
at the Central Revenues Control Laboratory (CRCL), New Delhi or
Indian Institute of Petroleum, Dehradun. Accordingly, the samples
were sent to CRCL.
6.
The Central Revenues Control Laboratory to which the samples were
again sent also submitted a report dated 03.07.2018 with the finding
that the samples conform to the specifications of HSD Oil (Automotive
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Supreme Court Reports
Diesel Fuel) as per IS 1460: 2005 in respect of 10 parameters and
each of the samples is "other than Base Oil".
7.
Not satisfied with the aforesaid results, one of the appellants,
M/s Rajkamal Industrial Pvt. Ltd. approached the High Court of
Gujarat by filing a Special Civil Application No. 10882 of 2018 in
which the High Court passed an interim order on 30.07.2018 directing
the Department to send requisite quantity of samples to the Indian
Oil Corporation Ltd. (IOCL), Mumbai which is one of the notified
laboratories as per the Department's circular dated 16.11.2017.
8.
The samples were accordingly sent to the Central Laboratory, Indian
Oil Corporation Limited in Mumbai which submitted the report dated
14.08.2018 stating that the sample had been tested as per Indian
Standard 1460: 2005 and the sample met 14 parameters as per the
laboratory capability out of prescribed 21 parameters in terms of the
specification IS: 1460: 2005.
9.
The DRI, thereafter, issued show cause notices to the appellants on
24.04.2019 alleging improper classification. In the said show cause
notices, it was stated that the imported goods are classifiable as
HSD under CTH 27101930, that the imported goods were liable to
be confiscated under Sections 111(d) and (m) of the Customs Act,
1962 ( for short, "Act") and that penalties are liable to the imposed
under Sections 112(a) and (b) of the Act and the Directors of the
appellant-companies were also liable to be imposed penalties under
Sections 112(a) and (b), Section 114AA and the Section 117 of the Act.
The show cause notices also stated that the earlier imports were
liable to be classified as Light Diesel Oil under CTH 27101940
and these were also liable to be confiscated under Sections 111(d)
and (m) of the Act and penalty be imposed under Sections 112 (a)
and (b) and Section 114AA of the Act.
Show cause notice was also issued to the buyer, in respect of the
appellant - Gastrade International Pvt. Ltd., of the earlier imported
goods stating that the earlier imports were LDO under CTH 27101940
and were liable to be confiscated under Sections 111(d) and (m)
of the Act and penalties were liable to be imposed under Section
112(b). Show cause notice was also issued to the exporters of the
said goods as to why penalty should not be imposed on them under
Sections 112(a) and (b), 114AA and 117 of the Act.
[2025] 3 S.C.R.
1357
Gastrade International v. Commissioner of Customs, Kandla
Finding by the Adjudicating Authority
10. After considering the replies furnished by the parties and considering
the evidence, both oral and documentary, relied upon, and hearing
the parties, the Adjudicating Authority, the Principal Commissioner
of Customs, Custom House, Kandla passed the Orders-in-Original
No. KND-CUSTM-000-COM-12-2019-20 dated 05.12.2019, KNDCUSTM-000-COM-13-2019-20 dated 05.12.2019, and KND-CUSTM000-COM-14-2019-20 dated 05.12.2019, rejecting the claim of the
appellants and upholding the departmental findings. In the course
of the enquiry and hearing conducted by the Adjudicating Authority,
one of the experts, namely Dr. Gobind Singh, Manager (Lab), IOCL
Central Laboratory, Mumbai was also examined.
11. The Adjudicating Authority concluded that as per the findings of
the three independent laboratories of repute, the samples meet the
parameters specified under IS 1460:2005 prescribed for High-Speed
Diesel, a hydrocarbon oil and the importers could not produce any
authentic or authoritative literature about what is Base Oil SN 50 and
thus failed to prove that the goods imported were Base Oil falling under
Chapter 27101960 of Customs Tariff Act, 1975 (for short, "Tariff Act").
12. The Adjudicating Authority also repelled the contention of the
appellants that since IOCL had tested only 14 out of 22 parameters
for IS 1460:2005, and thus, all the parameters had not been tested,
it cannot be said that the sample is of HSD. It was also held that
the appellants could not point out which of these remaining eight
parameters will not be satisfied if tested.
13. Accordingly, the Adjudicating Authority held that the goods were liable
to confiscation under Sections 111 (d) and (m) of the Act. The Directors
of the appellants were held liable for penalty under Sections 112(a)
and 114AA of the Act. However, granting permission to the appellants
to redeem the confiscated goods for re-export on payment of fine.
14. Being aggrieved by the aforesaid orders in original passed by the
Adjudicating Authority, the appellants preferred appeals before the
Custom Excise Service Tax Appellate Tribunal (CESTAT).
Finding by the Appellate Authority (CESTAT)
15. According to the CESTAT, as per the statutory definition provided
in the Tariff Act which needs to be construed strictly, only such
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hydrocarbon oil that conforms to the Indian Standard Specification
IS1460:2005 can be classified as HSD. As per the said specification,
21/22 parameters have been mentioned and no exception has
been provided to the effect that if any or some of the parameters
out of 21/22 parameters are not met, even then the product will be
determined as HSD. According to CESTAT, only such product that
meets all the 21/22 parameters as specified in IS 1460:2005 can
be qualified as HSD. The CESTAT held that in the present case,
since eight parameters were not tested, it cannot be said that the
product is conforming to IS 1460:2005, and if it is not conforming to
IS 1460:2005, it does not fall within the definition of HSD as provided
under Supplementary Note of Chapter 27.
The CESTAT also held that the burden is on the Department to
establish the classification of goods as HSD, which conforms to IS
1460:2005, and in the absence of testing of all the parameters, it
can be only an assumption of the Department that on the basis of
14 parameters, a product can be classified as HSD.
16. The CESTAT also took the view that the test report of IOCL Laboratory
is not conclusive. The CESTAT was of the opinion that the expert,
Dr. Gobind Singh who was examined had not considered that the
flash point is an important parameter for testing the goods and he
could not give any firm opinion as regards the parameter of flash
point. The CESTAT held that the test conducted by Dr. Gobind Singh
of IOCL cannot be considered to be conclusive to determine that the
product is HSD. The CESTAT was of the view that in the present
case as the flash point tested was above 93°C, the goods cannot be
classified as HSD. The CESTAT also held that the Department had
with a predetermined mind got the goods tested for HSD, whereas
the said goods should have been tested as to whether these are
Base Oil or not, and only when the parameters are not met for Base
Oil then the Department could have resorted to carrying out the test
for classifying the goods either under HSD or any other classification.
17. The CESTAT held that even if the product is not Base oil, since it
was not proved by the Department beyond doubt that the impugned
goods are HSD, the case of the Department would fail.
18. Accordingly, the CESTAT held that the goods are not classifiable as
HSD under CTH 27101930. Consequently, the claim of the appellants
for classification of goods as Base Oil under CTH 271019160 was
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Gastrade International v. Commissioner of Customs, Kandla
maintained and in view of the submission made by the appellants
that irrespective of the decision of the classification, they would seek
permission to re-export, the appellants were allowed to re-export
the goods and the CESTAT set aside the order of confiscation,
imposition of penalty and the redemption fine by the Department
vide a common order dated 28.09.2021 passed in the aforesaid
Customs Appeal No.10240 of 2020, Customs Appeal No.10291 of
2020 and Customs Appeal No.10298 of 2020.
19. Being aggrieved by the aforesaid decision of the CESTAT, the
Department preferred three appeals before the High Court of Gujarat,
which were registered as Revenue Tax Appeal No.297 of 2021,
Revenue Tax Appeal No. 298 of 2021 and Revenue Tax Appeal
No.299 of 2021, which were allowed by a common judgement and
order dated 20.01.2022 passed by the High Court, which is the
subject matter of challenge in this batch of appeals.
Finding by the High Court
20. Before the High Court, the issue of maintainability of the appeals
under Section 130 of the Act was raised, which was decided in favour
of the Department. However, the appellants have not pressed this
issue before us and as such we make no observation about the
decision, and we confine our consideration only on the issue as to
whether the High Court was correct in concluding that the imported
oil is not Base Oil as claimed by the appellant-importers and is HSD
as classified by the Department.
21. The High Court noted that though it would appear that what had
been decided by the Tribunal could be termed as a question of fact,
and whether the subject goods fall within one category or the other
would essentially be a question of fact, yet while deciding the same,
if the Tribunal overlooks certain basic principles of law applicable to
the case on hand and records findings which could be termed as
perverse, then definitely such a decision of the Tribunal would give
rise to a question of law and hence maintainable.
The High Court thereafter proceeded to examine the materials on
record.
22. Coming to the evidence of Shri Gobind Singh, Manager (Lab), IOCL
Central Laboratory, Mumbai, the High Court observed that a plain
reading of the statement and cross-examination of Dr. Gobind Singh
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would indicate that the expert in no uncertain terms had made himself
clear that all the 14 tests which were carried out revealed only one
thing that the sample was of High-Speed Diesel, and not Base Oil
as asserted by the assessees.
The High Court also noted that the expert was honest enough to
admit that the IOC laboratory was equipped to conduct only 14 tests
and it had no facility or means to conduct the remaining seven tests.
The High Court then considered whether the analysis could be said
to be complete or conclusive as regards the nature of the sample
only if all the 21 tests were undertaken, more particularly when the
expert had asserted that all the 14 tests carried out indicated only
one thing that the sample analysed was that of High Speed Diesel.
23. The High Court went on to observe that it is not in dispute that
the onus of establishing that the sample meets the specification
IS1460:2005 lay upon the Customs Authority, and the burden of
proof is on the Authority to show that the particular goods or item in
question is taxable in the manner claimed by them. According to the
High Court, there should be material to enter an appropriate finding
in that regard and the material may be either oral or documentary,
and it is for the Authority to lay evidence on that behalf even before
the Adjudicating Authority.
24. The High Court went on to observe relying on the decisions of
this Court in Collector of Customs, Madras and others Vs.
D Bhoormall, AIR 1974 SC 859; A.N. Guha & Co Vs. Collector
[1996 (86) ELT 333]; R.V.E Venkatachala Gounder Vs. Arulmigu
Viswesaraswami & V.P. [Order dated 08.10.2003 in Civil Appeal
number 10585 of 1996] that the Department is not required to prove
its case with mathematical precision to a demonstrable degree and
legal proof is not necessarily a perfect proof.
25. It was observed by the High Court that so long as the Department has
been able to establish its case with such a degree of preponderance,
the existence of fact could be said to have been proved. The High
Court observed that the only ground on which the Tribunal interfered
with the findings recorded by the Adjudicating Authority was that the
laboratories were not in a position to conduct all 21 tests. According
to the High Court, the Tribunal ignored the fact that all the tests
carried out in three different laboratories revealed only one thing that
the sample showed the characteristics of HSD. The High Court then
[2025] 3 S.C.R.
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Gastrade International v. Commissioner of Customs, Kandla
observed that if the Department was able to lead evidence to this
extent, the onus thereafter shifted upon the assessee to establish
that these tests cannot be said to be conclusive of the fact that the
subject good is HSD. However, no such attempt had been made
by the assessees.
26. The High Court further went on to observe that it was not at all
convinced with the findings recorded by the Tribunal. The High
Court held that the Tribunal could be said to have ignored the
material evidence in the form of the three test reports of three
different laboratories, certifying the samples to meet the specification
IS1460:2005 and assessees have not been able to show anything
based on which the High Court can take the view that if all the
prescribed 22 tests are not carried out, the report would remain
incomplete and would not be admissible in evidence or would not
be conclusive of the nature of the sample.
27. The High Court observed that if these 14 tests indicate the sample
to be one of the HSD, this evidence could not have been discarded,
ignored or overlooked only on the ground that seven other tests
could not be undertaken by the laboratories because of lack of
adequate facility to conduct these seven tests. According to the High
Court, to say so would require the Department to prove its case with
mathematical accuracy and beyond reasonable doubt. Accordingly,
the High Court allowed the appeals preferred by the Department
and set aside the order of the CESTAT.
Consideration by this Court
28. From the above three decisions of the Adjudicating Authority, the
Appellate Authority (CESTAT), and the High Court, it is quite evident
that their decisions primarily hinged upon the reports of the three
laboratories, namely, Central Excise and Customs Laboratory at
Vadodara, Central Revenues Control Laboratory (CRCL), New Delhi
and Central Laboratory, Indian Oil Corporation Limited, Mumbai
where the samples of the questioned goods were sent for testing as
to whether these conformed to the Indian Standards Specification
of Bureau of Indian Standards IS: 1460:2005. All three fora also
referred to the expert evidence of Dr Gobind Singh.
29. Considering the different conclusions arrived at by the three fora
on the same set of the results of the tests conducted by three
1362
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Supreme Court Reports
different laboratories, it would be necessary to examine these tests
to understand how these fora had arrived at their conclusions.
30. Since the reference point of these tests is Indian Standard
Specification of the Bureau of Indian Standards, IS1460:2005, which
prescribes the specifications for HSD under the Tariff Act, it would
be necessary to refer to these parameters before we proceed to
examine the implications of the results of the three tests and arrive
at the correct conclusion.
31. Section 2 of the Tariff Act provides the rates at which duties of
customs shall be levied under the Customs Act as specified in the
First and Second Schedules to the Tariff Act.
Chapter 27 of the First Schedule to the Tariff Act deals with the
rate of duties leviable in respect of mineral fuels, mineral oils, and
products of their distillation; bituminous substances; mineral waxes.
Supplementary Note to Chapter 27 defines various kinds of oils
specifying the attributes to these, including that of HSD. Accordingly,
relevant portions of this Supplementary Note are reproduced
hereunder for easy reference.
"SUPPLEMENTARY NOTES:
In this Chapter the following expressions have the
meanings hereby assigned to them:
a) Motor Spirit means any hydrocarbon oil (excluding
crude mineral oil) which has its flashpoint below 250C
and which either by itself or in admixture with any other
substance, is suitable for use as fuel in spark ignition
engines. "Special boiling point spirits (subheadings 2710
12 11, 2710 12 12 and 2710 12 13) means light oils, as
defined in Chapter Note 4, not containing any anti-knock
preparations, and with a difference of not more than 600C
between the temperature at which 5% and 90% by volume
(including losses) distil;
b) "Natural gasoline liquid (NGL)" is a low-boiling liquid
petroleum product extracted from Natural Gas;
c) "Superior kerosine Oil (SKO)" means any hydrocarbon
oil conforming to the Indian Standards Specification of Bureau of Indian Standards IS:1459-1974 (Reaffirmed 1996);
[2025] 3 S.C.R.
1363
Gastrade International v. Commissioner of Customs, Kandla
d) "Aviation turbine fuel (ATF)" means any hydrocarbon
oil conforming to the Indian Standards Specification of
Bureau of Indian Standards IS:1571:1992:2000;
e) "High-speed diesel (HSD)" means any hydrocarbon oil
conforming to the Indian Standards Specification of Bureau
of Indian Standards IS: 1460:2005;
f) "Light diesel oil (LDO)" means any hydrocarbon oil
conforming to the Indian Standards Specification of Bureau
of Indian Standards IS: 15770:2008;
g) "Fuel oil means any hydrocarbon oils conforming to
the Indian Standards Specification of Bureau of Indian
Standards IS:1593:1982 (Reaffirmed in the year 1997);
h) "Lubricating oil" means any oil, which is ordinarily used,
for lubrication, excluding any hydrocarbon oil, which has
its flash point below 93.30 Centigrade;
i) "Jute batching oil" and "textile oil" are hydrocarbon oils
which have their flash point at or above 93.30C, and is
ordinarily used for the batching of jute or other textile fibres;
j) The expression "petroleum jelly crude" (subheading 2712
10 10) by the ASTM D 1500 method
k) For the purposes of these additional notes, the tests
prescribed have the meaning hereby assigned to them
1) "Flash Point" shall be determined in accordance with
the test prescribed in this behalf in the rules made under
the Petroleum Act, 1934 (30 of 1934);
2) ...........................................................
...............................................................
5) ...........................................................
32. Thus, High Speed Diesel (HSD) has been defined as any hydrocarbon
oil conforming to the Indian Standards Specification of Bureau of
Indian Standards IS: 1460:2005.
33. As regards the Indian Standards Specification of Bureau of
Indian Standards IS1460:2005 relating to High Speed Diesel, the
specifications provided are as follows:
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EURO IV/BHARAT STAGE IV EMISSION NORMS COMPLAINT -
SPECIFICATION FOR AUTOMOTIVE DIESEL FUEL
Sl No.
Characteristics
Requirements
Test Method
[P:] of IS 1448/
ISO/ASTM
(1)
(2)
(3)
(4)
i)
Acidity, inorganic
Nil
[P : 2]
ii)
Acidity, total, mg of
KOH/g, Max
To Report
[P : 2]
iii)
Ash, percent by
mass, Max
0.01
[P : 4]/ISO
6245
iv)
Carbon residue
(Ramsbottom) on
10 percent residue1),
percent by mass,
Max
0.30
[P : 8]/ISO
10370
v)
Cetane number, Min
512)
[P : 9]/ISO
5165
vi)
Cetane index, Min
462)
D 4737/ISO
4264
vii)
Pour point3), Max:
[P : 10]/D 5949
or D 5950 or D
5985
a) Winter
3° C
b) Summer
15 C
viii)
Copper strip
corrosion for 3 h at
50°C
Not worse than
No. 1
 [P : 15]/ISO
2160
ix)
Distillation, percent
v/v, recovered at
360°C, Min
95
 [P : 18]/ISO
3405
x)
Flash point* :
a) Abel, °C, Min
35
 [P : 20]
b) Pensky Martens
closed cup4), °C, Min
66
 [P : 21]
[2025] 3 S.C.R.
1365
Gastrade International v. Commissioner of Customs, Kandla
xi)
Kinematic viscosity,
cSt, at 40°C
2.0 to 4.5
 [P : 25]/ISO
3104
xii)
Sediment, percent
by mass, Max
-
 [P : 30]
xiii)
Total contamination,
mg/kg, Max
24
EN 12662
xiv)
Density at 15°C5),
kg/m3
820-845
 [P : 16] or [P :
32]6)/D 4052/
ISO 3675 or
ISO 12185
xv)
Total sulphur7), mg/
kg, Max
50
ISO 20846 or
ISO 20847 or
ISO 20884/ [P
: 83]/D 5453/ D
2622/D 4294/
[P : 34]8)
xvi)
Water content, mg/
kg,
200
ISO 12937
xvii)
Cold Filter Plugging
Point (CFPP)3), Max:
 [P : 110]/D
6371
a) Winter
6°C
b) Summer
18°C
xviii)
Oxidation stability9),
g/m3, Max
25
ISO 12205 or
ASTM D 22749)
xix)
Polycyclic Aromatic
Hydrocarbon (PAH),
percent by mass,
Max
11
IP 391 or EN
12916
xx)
Lubricity corrected
wear scar diameter
(wsd 1.4) at 60°C,
microns, Max
460
ISO 12156-1/
Cor 1
xxi)
Oxygen content10),
percent by mass,
Max
0.6
Annex B
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1)
This limit is applicable prior to addition of ignition improvers,
if used. In case a value exceeding the limit is obtained on
finished fuels in the market, ASTM D 4046/ISO 13759 shall
be used to establish the presence of nitrate containing
compound. In such case the present limit for carbon
residue cannot be applied. However, the use of ignition
improver does not exempt the manufacturer from meeting
this requirement prior to the addition of additives.
2)
For Fuel processed from Assam crude, Cetane number
and Cetane index is relaxed by 3 units.
3)
Winter shall be the period from November to February in
central and northern plains of India (both months inclusive)
and rest of the months of the year shall be called as
summer.
4)
Applicable for Naval applications and fishing vessels
requiring High Flash Automotive Diesel Fuel.
5)
For fuel processed from Assam crude, the density range
is relaxed to 820-855.
6)
In case of dispute, IS 1448 [P : 32] shall be the referee
test method.
7)
For Automotive Diesel Fuel supplied to Indian Navy, the
limit of sulphur shall be in agreement between the buyer
and the supplier.
8)
In case of dispute, IS 1448 [P : 34] shall be the referee
test method.
9)
This test shall be carried out only at the refinery or
manufacturer's end. In case of dispute, ASTM D 2274
shall be the referee method.
10) Shall be applicable only for Automotive Diesel Fuel blended
with 5 percent (v/v) Bio-diesel conforming to IS 15607 and
the limit shall proportionately vary as and when the different
blending percent of Bio-diesel is permitted.
.....
.....
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Gastrade International v. Commissioner of Customs, Kandla
34. It may be relevant herein to mention that flash point has been defined
under Section 2 (c) of the Petroleum Act, 1934 as follows:
"2 (c) 'Flash-point' of any petroleum means the lowest
temperature at which it yields a vapour which will give a
momentary flash when ignited, determined in accordance
with the provisions of Chapter II and the rules made
thereunder;"
35. We will now examine the results of the three tests conducted by the
three laboratories, which are reproduced as follows:-
1.
Central Excise and Customs Laboratory at
Vadodara.
Report dated 11.05.2018.
Lab No. RCL/AH/DRI/216/07.05.2018
TANK NO. 1
Report
The sample is in the form of light pale yellow colored
liquid. It is composed of mineral hydrocarbon oil having
following characteristics:-
1.
Flash point (PMCC) = Above 66°
2.
ASH Content = Nil
3.
Acidity= NIL
4.
Water Content= NIL
5.
Density at 15° = 0,8301 g/ml
6.
Distillation recovery
a.
At 350° = more than 85%
b.
At 360° = more than 95%
7.
Kinetic viscosity at 40° = 3.80 CST
8.
Sediment = NIL
In view of the above analytical parameter the sample has
characteristics of high speed diesel oil/Automotive Fuel
Oil confirming to IS: 1460:2005 & amended thereafter in
terms of parameters 1 to 8 mentioned above.
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It is other than base oil
Sealed remnant returned
Dispatch No. 177
Sd/-
Date:11.05.2018
11.05.2018
Pradeep Maroo
Chemical Examiner Grade-II
Seen
Deepali
02/07/2018
2.
Central Revenues Control Laboratory (CRCL),
New Delhi.
Report dated 03.07.2018.
Government of India
Ministry of Finance, Department of Revenue Central Board
of Indirect Taxes & Customs Central Revenues Control
Laboratory Hillside Road, Pusa, New Delhi-110012
Tel.:011-21520123/25843494, Fax: 011-25843495
Email: dir.crcl-cbec@nic.in Website: http://crcl.gov.in
 ____________________________________________
F.No.-27-Cus/C-05 to 14/2018-19
Dated: 03.07.2018
To
The Additional Director,
Directorate of Revenue Intelligence,
Ahmedabad Zoal Unit,
No. 15, Magnet Corporate Park,
100 ft Thaltej-Hebatpur Road.
Near Sola Flyover, Thaltej,
Ahmedabad-380054
Sub. : Testing of samples declared as Base Oil
SN 50- reg.
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Gastrade International v. Commissioner of Customs, Kandla
Please refer to your letter F. No. DRIAZU/CI/ENQ-l2/2018
dated 06.06.2018 on the subject cited above forwarding
therewith 10 samples described as Base Oil SN 50
pertaining to B/E No. 6252179, 6251273, 6251276.
6251277, 6251258. 6251267. 6251268, 6252184, 6251270
and 6251278 all dated 04.05.2018 and TM No. 1A to 1OA
dated 06.06.2018 for retesting.
The samples u/r have been registered here under Lab
Nos. CLR-05 to CLR 14 dated 14.06.2018 respectively.
The samples have been analyzed and Test reports are
as under:-
Report:-
Each of the ten samples is in the form of pale yellow
colored liquid. Each is composed of mineral hydrocarbon
oil, having more than 70% mineral hydrocarbon oil and
possesses following characteristics:-
Test Results of the samples
Lab No.
CLR05
CLR06
CLR07
CLR08
CLR09
CLR10
CLR11
CLR12
CLR13
CLR14
TM Mo.
1A
2A
3A
4A
5A
6A
7A
8A
9A
10A
Characteristic
Limit as per
IS 1460:2005
and amended
Acidity. Inorganic
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Acidity, total mg of
KOH/g
To report
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
Ash percent by mass
0.01
(max.)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Carbon residue
(Ramx bottom) on
10% resdue percent
by mass
0.30
(mat.)
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
Density at 15°C
0.8200
0.8450
.8287 .8316 .8310 .8288 .8284 .8286 .8286 .8282 .8284 .8281
Flash Point (PMCC)
66° (min.)
113°C 115°C
93°C
88°C
98°C
100°C
95°C
78°C
106°C 111°C
Kinematic 40°C, cSI
2.0 to 4.5
3.7
4.4
4.4
4.4
4.0
3.9
3.5
4.1
4.0
4.0
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Kinematic Viscosity
37.8°C
-
4.3
4.9
4.8
4.7
4.7
4.3
4.3
4.3
4.3
4.3
Distillation range, °C
95
238356
234358
234352
238354
240356
238344
240354
240350
240342
238325
Percent v/v
Recovered ot 360°C
356°C 358°C 352°C 354°C 356°C 344°C 354°C 350°C 342°C 325°C
95% volume
recovered at
Pour Point, Max
3°C
15°C
8°C
8°C
8°C
8°C
8°C
8°C
8°C
8°C
8°C
8°C
a) Winter
b) Summer
Cetaile Index
46 (min.)
65.7
66.0
65.6
66.2
66.0
66.5
66.6
66.6
67.0
67.7
Water content,
percent v/v mg/kg
200 (max.)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
On the basis of above analytical parameters, each of the
ten samples conforms to the specifications of High Speed
Diesel Oil/ (Automotive Diesel Fuel as per IS 1460:2005
and further amended).
Each is other than Base Oil.
Sealed remnants are returned separately.
Sd/-
03.07:2018
(K. C. Agrawal)
Joint Director
Copy to: The Chemical Examiner Gr-I (I/e) Central Excise
& Customs Laboratory, Vadodara.
3.
Central Laboratory, Indian Oil Corporation
Limited, Mumbai.
Report dated 14.08.2018
Indian Oil Corporation Limited
Central Laboratory
"K" Oil H Installation. Sewri (East), Mumbai-400 015
Telefax 0222416 3062 (D). 022 2292 4761
Marketing Division
[2025] 3 S.C.R.
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Gastrade International v.