CESTAT Sets Aside Confiscation of Mixed Hydrocarbon Oil, Upholds Scientific Evidence

CESTAT Sets Aside Confiscation of Mixed Hydrocarbon Oil, Upholds Scientific Evidence

Introduction

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has set aside the confiscation of a consignment of mixed hydrocarbon oil, holding that a laboratory test report conclusively proving the goods were not automotive diesel fuel cannot be overruled by a so-called confession.

Factual Background

Victory Trading Company had imported a consignment declared as ‘Mixed Hydrocarbon Oil’ and classified it under Customs Tariff Item (CTI) 27011990. The Nhava Sheva Preventive Unit suspected the goods were mis-declared automotive diesel oil, a restricted item, and seized the consignment. Samples were sent to the Central Revenue Control Laboratory (CRCL) for testing.

Procedural Background

The CRCL test report stated that the sample was a "mixture of mineral hydrocarbon oil mainly containing diesel fraction" but did not meet the requirements of IS standards for Automotive Diesel Fuel (IS:1460). Despite this, the department re-classified the goods as ‘Automotive Diesel Fuel’ under a restricted tariff item, based on statements recorded from the importer’s partner and internet-sourced information.

Contentions of Parties

Importer: The importer argued that the goods were correctly declared as Mixed Hydrocarbon Oil and that the CRCL test report supported this classification.

Revenue: The revenue authorities contended that the goods were actually automotive diesel fuel, based on the statements recorded from the importer’s partner and internet-sourced information.

Reasoning and Analysis

The bench comprising S.K. Mohanty, Member (Judicial), and M.M. Parthiban, Member (Technical) thoroughly examined the legal framework for classification and emphasized that goods under Chapter 27 of the Customs Tariff must conform to specific Bureau of Indian Standards (BIS) to be classified under dedicated headings. The bench noted that the CRCL report was unequivocal and that the goods failed to meet the 21 parameters required by IS 1460:2005 to be classified as Automotive Diesel Fuel.

The tribunal strongly criticized the lower authorities for ignoring the definitive lab report in favor of statements and internet material. It reaffirmed the settled legal principle that the burden of proof for re-classification lies squarely on the revenue department, which it failed to discharge.

Decision

The CESTAT allowed the importer’s appeal, setting aside the confiscation order and affirming that the goods were correctly declared. The tribunal upheld the supremacy of scientific evidence in classification matters.