2026-VIL-1593-CESTAT-AHM-CU
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CUSTOMS CESTAT Cases

Customs - Classification of imported Naphtha - Naphtha versus Natural Gasoline Liquid - Burden of proof on Revenue to establish mis-classification - Applicability of BIS standards and test methodology - The Appellant imported goods declared as Naphtha under CTH 2710 1229 based on contracts, commercial invoices and test reports. The Revenue proposed re-classification as Natural Gasoline Liquid under CTH 2710 1290 alleging mis-classification and demanded differential duty based on prices from a website. The Appellant contended that four independent agencies had certified through comprehensive testing that the goods were Naphtha, that the test reports of Revenue agencies were cryptic and based on incomplete parameters - Whether the Revenue can reject the declared classification of goods as Naphtha and re-classify them as Natural Gasoline Liquid without scientific evidence and laboratory testing and whether valuation can be determined on ad-hoc basis using retail fuel prices - HELD - The Revenue must establish that the classification adopted by the importer is incorrect and mere suspicion of mis-classification is not sufficient. The Department must produce technical evidence, scientific evidence and expert opinion before rejecting the declared classification – While the test reports issued by CRCL Kandla and CRCL Delhi were cryptic, the test reports by IIP Dehradun and Geo Chem were comprehensive and tested all standard parameters prescribed by BIS and independently concluded that the samples were Naphtha. The classification under Chapter 60 depends upon fibre composition, weight, predominance, textile construction and cannot be determined merely from invoice, packing list or visual examination. Natural Gasoline Liquid is a subset of the broader genus of chemicals known as Naphtha and even if the goods were NGL they would be correctly classified under CTH 2710 1229. The assessable value of the imported goods declared based on transaction value cannot be rejected based on an ad-hoc value derived from retail-grade high-octane gasoline prices on a website without proper valuation methodology. The proper officer cannot substitute the transaction value of imports but can only re-determine the assessable value through sequential application of Valuation Rules. The imported goods were correctly classified as Naphtha and no infirmity exists in the import or assessment - On the basis of akinness, as also the consequences when tests are inconclusive, or even on the basis of “common parlance” test of “NGL” being species of “Naphtha”, the department has not been able to authoritatively establish the classification it has sought. In the facts and legality of the matter, therefore the classification of the appellant cannot be allowed to be disturbed - The classification of the impugned goods under the tariff entry as claimed by the Appellant is upheld. The re-classification by the Revenue is rejected. The differential duty demand is not sustainable and is set aside. The penalties imposed are not warranted and are set aside – The appeals are allowed - Electronic evidence certificate - Requirement of Section 138C - Admissibility of WhatsApp chat evidence in Customs proceedings - Reliance on WhatsApp chats, digital material - HELD - Evidence gathered can be allowed even if from the whatsapp chats and even if retrieved from the mobile phone if various conditions are fulfilled – The sub Section (3) of Section 38C provides that information if is carried out by different computers i.e. mobiles over that period then all the computers used i.e. mobiles used for the purposes during that period shall be treated for the purpose of section constituting a single computer and term computer (i.e. mobile) shall be construed accordingly - The adjudication order in this case suffers from the vice of relying on untested facts, unproven documents and uncorroborated statements including the digital evidence, therefore, the findings are jeopardized.
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