High Court Orders Release of Seized Distillate Oil, Rejects Customs’ Diesel Mis-Classification

Aparajita Energy Private Limited imported bulk liquid cargo declared as Distillate Marine Fuel through Pipavav Port in August 2025. Initial CRCL testing at Vadodara confirmed compliance with IS 16731:2019 standards.

After the cargo was stored in bonded tanks, DRI officers drew fresh samples and seized the goods under Section 110 of the Customs Act, relying on a later CRCL report which noted failure only on the cloud point parameter and vaguely stated that the sample had “characteristics of automotive diesel fuel”.

Issue Raised: Whether Distillate Marine Fuel could be seized and treated as misdeclared automotive diesel solely on the basis of deviation in the cloud point parameter and an inconclusive laboratory remark.

HC Held: The High Court allowed the writ petition and quashed the seizure memo dated 01.10.2025. The Court held that the entire action of the Customs authorities rested on an ambiguous and inconclusive test report which failed to definitively classify the goods as automotive diesel.  The Court further held that cloud point relevance depends on climatic conditions and end use, as clarified by CRCL itself, and cannot be a decisive factor for reclassification.

Applying the “most akin” test laid down by the Supreme Court in Gastrade International, the Court found that the Department had failed to conclusively establish that the goods were automotive diesel. The seizure was therefore held to be unsustainable. The respondents were directed to release the cargo, subject to the furnishing of an end-use certificate and continued cooperation with the investigation.

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