Gujarat High Court Upholds DRI Seizure Of Imported Industrial Oil, Says Product Most Akin To Restricted Diesel Fuel

The Gujarat High Court has upheld the seizure of imported consignments declared as “industrial oil," holding that the product was most akin to Automotive Diesel Fuel (ADF) / High Flash High Speed Diesel (HFHSD), which are restricted commodities importable only through State Trading Enterprises under the import policy.

The Division Bench comprising Justice A. S. Supehia and Justice Pranav Trivedi dismissed multiple writ petitions filed by importers, including Deep International (petitioner), challenging the seizure of consignments under Section 110 of the Customs Act, 1962.

The petitioners had imported consignments declared as “industrial oil” under Customs Tariff Heading 2710 1990 through Mundra Port. After arrival of the goods, the DRI drew samples and sent them for testing to the Central Revenues Control Laboratory (CRCL), Visakhapatnam.

The importers contended that a private laboratory report obtained earlier showed no adverse findings and argued that the seizure was illegal.

Relying on the Supreme Court's decision in Gastrade International vs. Commissioner of Customs, Kandla, 2025 INSC 411, they submitted that the laboratory reports were vague and did not conclusively establish that the product was High Speed Diesel or Automotive Diesel Fuel.

They also argued that even if the product fell within the diesel fraction category, it would not attract adverse consequences because various petroleum products share overlapping parameters.

The DRI opposed the petitions and submitted that the goods were in fact restricted diesel fuel deliberately adulterated to circumvent import restrictions. According to the Department, the CRCL report indicated that the sample consisted of more than 95% diesel fraction and was “most akin to HFHSD,” though the flash point had been lowered through mixing with lighter hydrocarbons.

During the pendency of the petitions, samples were also tested at Mangalore Refinery and Petrochemicals Limited (MRPL) for additional parameters. The combined test reports covered all 21 parameters required under the applicable Indian Standards and indicated that the product substantially corresponded with the parameters of ADF and HFHSD.

The High Court noted that the laboratory reports clearly indicated that the imported product was mainly composed of diesel fraction and had been adulterated with lighter hydrocarbons to reduce the flash point.

The bench stated that "the test result further records that the sample is mainly composed of diesel fraction (more than 95%, less than 98%) and is adulterated with lighter hydrocarbons. It has been opined that “the sample is most akin to HFHSD (IS 16861) / adulterated HFHSD”. Thus, CRCL, Visakhapatnam has opined that the sample is most akin to HFHSD / adulterated HFHSD and meets all the characteristic parameters of HFHSD as mentioned in IS 16861, except the flash point and the MRPL in its Test Report dated 26.12.2025, has analyzed the sample for 11 parameters."

Applying the “most akin” test and relying upon the cases of Om Prakash Bhatia vs. Commissioner of Customs, 2003 (155) ELT 423 (SC), and Union of India vs. Rajgrow Impex LLP, 2021 (377) ELT the Bench concluded that the product declared as industrial oil was most closely similar to Automotive Diesel Fuel / HFHSD, both of which are restricted commodities importable only through State Trading Enterprises.

The Court further observed that the petitioners had not challenged the sampling procedure or the test results and that testing in multiple laboratories could not invalidate the findings, particularly when different laboratories were required to examine all relevant parameters.

The bench stated that "we do not agree to the submissions advanced on behalf of the petitioners that the laboratory test results are liable to be discarded merely because the samples are tested in two different laboratories. The petitioners have not questioned the collection of the samples. Once the samples of the same commodity are duly collected, they can be tested in different laboratories, particularly when one laboratory may not be fully equipped to undertake testing of all 21 parameters."

Considering the environmental impact of releasing adulterated diesel fuel and the clear findings of the laboratory reports, the Bench held that the seizure action taken by the DRI was justified.

The bench opined that "the product imported by the petitioners, if released, will have a direct environmental impact affecting society at large. In such circumstances, having regard to the nature of the product, the test reports cannot be discarded merely because different parameters were tested in two different laboratories."

Accordingly, the Court dismissed all the writ petitions and discharged the rule. However, it clarified that the petitioners may apply for re-export of the seized goods, and the DRI shall consider such applications in accordance with the law.

For Petitioner: Advocate Pradip D Bhate

For Respondent: Addl. Solocitor General, N. Venkataraman with Advocate, Utkarsh R Sharma