CESTAT Ahmedabad Remands Customs Dispute Over Imported Goods' Classification As Thinner Or Solvent

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad, has remanded a customs classification dispute involving imported petrochemical products. It found that the available laboratory reports did not conclusively establish whether the goods were general-purpose paint thinners or restricted petroleum hydrocarbon solvents.

A bench of Judicial Member Dr. Ajaya Krishna Vishvesha and Technical Member Satendra Vikram Singh held that fresh testing was necessary. The bench observed that “correct classification of goods cannot be determined in absence of all the relevant parameters.”

The dispute arose after Bright Petrochem India LLP imported goods declared as “Thinner, General Purpose for Synthetic Paints and Varnishes.” The company classified them under the tariff entry applicable to thinners.

The adjudicating authority disputed this classification. It treated the goods as petroleum hydrocarbon solvent 125/240, whose import is restricted, and ordered confiscation, duty demand, penalty, and other consequential action.

The Revenue challenged the Commissioner (Appeals)' order that had set aside the confiscation and directed release of the goods. It argued that the test reports from CRCL Vadodara were incomplete.

According to the department, the reports simultaneously indicated conformity with standards applicable to both thinners and petroleum hydrocarbon solvents. However, they did not conclusively resolve the classification dispute.

The tribunal noted that the CRCL Vadodara reports suggested the tested parameters matched both standards. The Customs House Laboratory at Visakhapatnam later concluded that the goods were petroleum hydrocarbon solvents and not general-purpose thinners.

However, the bench found that neither laboratory had tested all the parameters prescribed under the competing Indian Standards specifications.

Relying on the Supreme Court's ruling in Gastrade International v Commissioner of Customs, the tribunal quoted “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.”

Holding that the available evidence was inconclusive, the tribunal remanded the matter to the adjudicating authority. It directed fresh testing of the samples on all parameters under both standards to determine the correct classification.

The tribunal also noted that the goods imported in August 2025 had remained in the customs area for months. It said this had caused huge loss to the importer and blocked its capital.

Accordingly, the tribunal permitted the provisional release of the goods. This was subject to execution of a bond for the full value of the goods along with a bank guarantee of ₹30 lakh.

For Revenue: Aakash Singh, Superintendent (AR)

For Respondent: Advocate Manish Jain