2025-VIL-17-SC-CU
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CUSTOMS Supreme Court Cases

Customs - Classification, Inconclusive test report, Burden of proof - Base Oil as claimed by the importer-appellants or High Speed Diesel as determined by the Customs Authorities - Whether the imported goods are to be treated as Base Oil as claimed by the appellants or High Speed Diesel (HSD) as determined by the Customs Authorities – HELD - The Customs Authorities and the appellate forums had relied primarily on the test reports of three independent laboratories and the expert opinion to conclude that the imported goods were HSD. However, the test reports and expert opinion were not conclusive in establishing that the imported goods were HSD - the burden of proof as regards the classification of any goods of importation is upon the Revenue/Customs authority and the standard of proof in proceedings under the Tariff Act is not “beyond reasonable doubt” - The test reports showed non-compliance with certain parameters specified under IS 1460:2005 for HSD, particularly the flash point, which was a crucial parameter. The expert's evasive answers on the importance of the untested parameters and the significance of the flash point further cast doubt on the classification of the goods as HSD - by mere conformation to certain parameters of HSD, the samples cannot be equated with HSD. The expert opinion and the test results are as vague as these can be qua classification of the oil as HSD - in the absence of clear and conclusive evidence that the imported goods were "most akin" to HSD, the principle of "preponderance of probability" adopted by the High Court was not the appropriate test for classification under the Customs Act. The correct test would be whether the imported goods were "most akin" to HSD or any other specified goods under the Tariff Act, as provided under Rule 4 of the General Rules for Interpretation – the Customs Authority could not take action against the appellants based on the inconclusive evidence - it would be more appropriate to give the benefit of doubt to the appellants because of the inconclusive evidence, rather than directing for a fresh testing and seeking fresh expert opinion - the impugned judgement of the High Court is set aside and the proceedings against the appellants are quashed – the appeals are allowed - Non-availability of testing facilities - non-examination of any product/article/goods on all the parameters laid down by the customs authority will always lead to uncertainty and doubt, which are required to be removed when dealing with confiscatory proceedings. The genesis of the prolonged litigation lies in the non-availability of adequate facilities for testing all the parameters provided under Bureau of Indian Standard Specifications. Such a dispute could have been avoided had the testing facilities for all the parameters been available. Since the Authorities themselves had laid down the specific parameters for classification of goods, as in the present case by referring to classification under IS 1460:2005, it is incumbent upon the Authorities to ensure that necessary facilities are made available for testing of any disputed article on all these parameters as otherwise, laying down such parameters would be meaningless. Hence, to avoid these difficulties, doubts and uncertainties in future, the respondents are directed to ensure that proper facilities are made available in the appropriate laboratories for undertaking tests for all these parameters or at least for those parameters which the Authorities consider are of essential character to satisfy the “most akin” test without which the article in issue cannot be properly classified.
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