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TMI Blog2025 (4) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Customs, the Adjudicating Authority held vide order dated 03.12.2019 that the said product is not Base Oil, but HSD and accordingly, ordered confiscation of the same apart from levying penalties. On the other hand, the appellate authority, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held the same to be Base Oil and not HSD, thus reversing the decision of the Adjudicating Authority. On being challenged before the High Court of Gujarat, by the Customs Authorities, the High Court reversed the decision of the Appellate Tribunal and affirmed the decision of the Adjudicating Authority holding the imported goods to be HSD. 4. In order to appreciate the issues in proper perspective, a brief reference of the relevant facts may be necessary. Facts in brief 5. The three appellants, M/s Gastrade International, M/s Rajkamal Industrial Pvt Ltd and M/s Divinity lmpex imported the goods from UAE by sea per vessel ''Al Heera" which was docked at Kandla Port. The importers declared the goods as "Base Oil SN 50" seeking clearance of the same under Chapter Heading 27101960, which is for Base Oil. On the basis of the Intelligence Report, the Directorate of Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the appellants on 24.04.2019 alleging improper classification. In the said show cause notices, it was stated that the imported goods are classifiable as HSD under CTH 27101930, that the imported goods were liable to be confiscated under Sections 111(d) and (m) of the Customs Act, 1962 ( for short, "Act") and that penalties are liable to the imposed under Sections 112(a) and (b) of the Act and the Directors of the appellantcompanies were also liable to be imposed penalties under Sections 112(a) and (b), Section 114AA and the Section 117 of the Act. The show cause notices also stated that the earlier imports were liable to be classified as Light Diesel Oil under CTH 27101940 and these were also liable to be confiscated under Sections 111(d) and (m) of the Act and penalty be imposed under Sections 112 (a) and (b) and Section 114AA of the Act. Show cause notice was also issued to the buyer, in respect of the appellant - Gastrade International Pvt. Ltd., of the earlier imported goods stating that the earlier imports were LDO under CTH 27101940 and were liable to be confiscated under Sections 111(d) and (m) of the Act and penalties were liable to be imposed under Section 112(b). S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the statutory definition provided in the Tariff Act which needs to be construed strictly, only such hydrocarbon oil that conforms to the Indian Standard Specification IS1460:2005 can be classified as HSD. As per the said specification, 21/22 parameters have been mentioned and no exception has been provided to the effect that if any or some of the parameters out of 21/22 parameters are not met, even then the product will be determined as HSD. According to CESTAT, only such product that meets all the 21/22 parameters as specified in IS 1460:2005 can be qualified as HSD. The CESTAT held that in the present case, since eight parameters were not tested, it cannot be said that the product is conforming to IS 1460:2005, and if it is not conforming to IS 1460:2005, it does not fall within the definition of HSD as provided under Supplementary Note of Chapter 27. The CESTAT also held that the burden is on the Department to establish the classification of goods as HSD, which conforms to IS 1460:2005, and in the absence of testing of all the parameters, it can be only an assumption of the Department that on the basis of 14 parameters, a product can be classified as HSD. 16. The CESTAT als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 130 of the Act was raised, which was decided in favour of the Department. However, the appellants have not pressed this issue before us and as such we make no observation about the decision, and we confine our consideration only on the issue as to whether the High Court was correct in concluding that the imported oil is not Base Oil as claimed by the appellant-importers and is HSD as classified by the Department. 21. The High Court noted that though it would appear that what had been decided by the Tribunal could be termed as a question of fact, and whether the subject goods fall within one category or the other would essentially be a question of fact, yet while deciding the same, if the Tribunal overlooks certain basic principles of law applicable to the case on hand and records findings which could be termed as perverse, then definitely such a decision of the Tribunal would give rise to a question of law and hence maintainable. The High Court thereafter proceeded to examine the materials on record. 22. Coming to the evidence of Shri Gobind Singh, Manager (Lab), IOCL Central Laboratory, Mumbai, the High Court observed that a plain reading of the statement and cross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed only one thing that the sample showed the characteristics of HSD. The High Court then observed that if the Department was able to lead evidence to this extent, the onus thereafter shifted upon the assessee to establish that these tests cannot be said to be conclusive of the fact that the subject good is HSD. However, no such attempt had been made by the assessees. 26. The High Court further went on to observe that it was not at all convinced with the findings recorded by the Tribunal. The High Court held that the Tribunal could be said to have ignored the material evidence in the form of the three test reports of three different laboratories, certifying the samples to meet the specification IS1460:2005 and assessees have not been able to show anything based on which the High Court can take the view that if all the prescribed 22 tests are not carried out, the report would remain incomplete and would not be admissible in evidence or would not be conclusive of the nature of the sample. 27. The High Court observed that if these 14 tests indicate the sample to be one of the HSD, this evidence could not have been discarded, ignored or overlooked only on the ground that seven other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to them: a) Motor Spirit means any hydrocarbon oil (excluding crude mineral oil) which has its flashpoint below 250C and which either by itself or in admixture with any other substance, is suitable for use as fuel in spark ignition engines. "Special boiling point spirits (subheadings 2710 12 11, 2710 12 12 and 2710 12 13) means light oils, as defined in Chapter Note 4, not containing any anti-knock preparations, and with a difference of not more than 600C between the temperature at which 5% and 90% by volume (including losses) distil; b) "Natural gasoline liquid (NGL)" is a low-boiling liquid petroleum product extracted from Natural Gas; c) "Superior kerosine Oil (SKO)" means any hydrocarbon oil conforming to the Indian Standards Specification of Bureau of Indian Standards IS:1459- 1974 (Reaffirmed 1996); d) "Aviation turbine fuel (ATF)" means any hydrocarbon oil conforming to the Indian Standards Specification of Bureau of Indian Standards IS:1571:1992:2000; e) "High-speed diesel (HSD)" means any hydrocarbon oil conforming to the Indian Standards Specification of Bureau of Indian Standards IS: 1460:2005; f) "Light diesel oil (LDO)" means any hydrocarbon oil confo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /ISO 3405 x) Flash point* : a) Abel, °C, Min 35 [P : 20] b) Pensky Martens closed cup4), °C, Min 66 [P : 21] xi) Kinematic viscosity, cSt, at 40°C 2.0 to 4.5 [P : 25]/ISO 3104 xii) Sediment, percent by mass, Max - [P : 30] xiii) Total contamination, mg/kg, Max 24 EN 12662 xiv) Density at 15°C5), kg/m3 820-845 [P : 16] or [P : 32]6)/D 4052/ ISO 3675 or ISO 12185 xv) Total sulphur7), mg/kg, Max 50 ISO 20846 or ISO 20847 or ISO 20884/ [P : 83]/D 5453/ D 2622/D 4294/[P : 34]8) xvi) Water content, mg/kg, 200 ISO 12937 xvii) Cold Filter Plugging Point (CFPP)3), Max: [P : 110]/D 6371 a) Winter 6°C b) Summer 18°C xviii) Oxidation stability9), g/m3, Max 25 ISO 12205 or ASTM D 22749) xix) Polycyclic Aromatic Hydrocarbon (PAH), percent by mass, Max 11 IP 391 or EN 12916 xx) Lubricity corrected wear scar diameter (wsd 1.4) at 60°C, microns, Max 460 ISO 12156- 1/Cor 1 xxi) Oxygen content10), percent by mass, Max 0.6 Annex B 1) This limit is applicable prior to addition of ig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ASH Content = Nil 3. Acidity= NIL 4. Water Content= NIL 5. Density at 15° = 0,8301 g/ml 6. Distillation recovery a. At 350° = more than 85% b. At 360° = more than 95% 7. Kinetic viscosity at 40° = 3.80 CST 8. Sediment = NIL In view of the above analytical parameter the sample has characteristics of high speed diesel oil/Automotive Fuel Oil confirming to IS: 1460:2005 & amended thereafter in terms of parameters 1 to 8 mentioned above. It is other than base oil Sealed remnant returned Dispatch No. 177 Sd/- Date:11.05.2018 11 .05.2018 Pradeep Maroo Chemical Examiner Grade-II Seen Deepali 02/07/2018 2. Central Revenues Control Laboratory (CRCL), New Delhi. Report dated 03.07.2018. Government of India Ministry of Finance, Department of Revenue Central Board of Indirect Taxes & Customs Central Revenues Control Laboratory Hillside Road, Pusa, New Delhi-110012 Tel.:011-21520123/25843494, Fax: 011-25843495 Email: [email protected] Website: http://crcl.gov.in _______________________________________________________ F.No.-27-Cus/C-05 to 14/2018-19 Dated: 03.07.2018 To The Additional Director, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8451; :unselected: 106°℃ :unselected: 111°℃ Kinematic 40°C, cSI 2.0 to 4.5 3.7 :unselected: 4.4 4.4 4.4 4.0 3.9 3.5 4.1 4.0 4.0 Kinematic Viscosity 37.8℃ - 4.3 4.9 4.8 4.7 4.7 4.3 4.3 4.3 4.3 4.3 Distillation range, ℃ 95 238- 356 234- 358 234- 352 238- 354 240- 356 238- 344 240- 354 240- 350 240- 342 238- 325 Percent v/v Recovered ot 360℃ 356°℃ :unselected: 358℃ :unselected: 352°℃ :unselected: 354℃ :unselected: 356°℃ :unselected: 344℃ :unselected: 354°℃ :unselected: 350°℃ :unselected: 342°℃ :unselected: 325°℃ :unselected: 95% volume recovered at Pour Point, Max 3℃ 15°℃ 8°℃ :unselected: 8°℃ :unselected: 8°℃ :unselected: 8°℃ :unselected: 8°℃ :unselected: 8℃ :unselected: 8°℃ :unselected: 8°℃ :unselected: 8°℃ :unselected: 8°℃ :unselected: a) Winter &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % v/v, recovered at 360"C, Min 95 P:18 95 X Flash Point: 35 P:20 --112 a) Abel°C Min 66 P:21 b) Pensky martens closed cup, °C, Min XI Kinematic viscosity, cSt, at 40 C 2.0 to 4.5 P:25 3.997 XII Sediment, percent by mass, Max - P:30 0.02 XIII Total Contamination, mg/Kg, Max 24 EN 12662 FNA XIV Density at 15°C, kg/m3 820-845 P:16 829.5 XV Total Sulphur, mg/kg, Max 50 D-4294 37 XVI Water content, mg/kg, Max 200 ISO-12937 75 XVII Cold Filter Plugging Point °C (CFPP), Max, (a) Winter/(b) Summer 6°C/18"C P:110 FNA XVIII Oxidation Stability, g/ m3 25 ISO:12205 FNA XIX Policyclic Aromatic Hydrocarbon (PAH), % m, Max 11 IP-391 FNA XX Lubricity Corrected Wear Scar Dia @ 60°C, microns, Max 460 ISO:12156-1 FNA XXI Oxygen Content, % m, Max 0.6 Annex. B- FNA REMARKS: I. FNA: Stands for "Facility Not Available" 2. Flash point test was first done by Abel apparatus but, since it was more than 66°C, it was done by PMCC. 3. As stated in Point no. 6 of your letter No. DR1/AZU/CI/ENQ-l2(INT-02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tested these good only to ascertain whether the parameters prescribed under Indian Standard IS 1460:2005 for High Speed Diesel? A: Yes. Q: As per the letter dated 04.08.2018, you were requested to verify whether the samples were HSD as per IS 1460:2005. Have you followed these instructions? A: Yes. Q: Have you signed the test reports annexed with "Relied upon Documents" as Sr. No.25 to the Show Cause Notice dated 22.04.2019? A: Yes. Q: What does it mean 'reviewed by'? A: The samples were tested by me and checked, supervised and signed by my senior at the lab. Q: Table I of IS 1460:2005 provides total 22 parameters are to be tested for ascertaining whether the sample meets with the criteria of HSD? A: The Sample meets with the specification IS 1460:2005 for the parameters tested at our laboratory which are 14 parameters tested as per our lab capabilities. Q: Does it mean that the other 8 parameters are not important for ascertaining or deciding whether the sample meets with the criteria of HSD? A: Already provided in the report that in the lab the samples were tested as per IS 1406:2005 and there is facility available only for testing of 14 paramete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Say it is an automotive diesel? A: Already written in the lab report and we have tested the samples as per the parameters as per IS 1460:2005." (ii) The cross-examination of Shri Singh at the instance of M/s. Gastrade International is as under: "(Before the Principal Commissioner of Customs, Custom House, Kandla) Cross Examination of Shri Gobind Singh, Manager (Lab), IOCL, Central Laboratory, Mumbai in the matter of SCN F. No. DRI/AZU/CI/ENQ-11(INT-2/2018 dated 24.04.2019 issued to M/s. Gastrade International & Others by Shri Hardik Modh, Advocate. Q: What is your name*? A: Dr. Gobind Singh. Q: Where have you been working and for how long? A: I have been working in IOCL at Sewree at Mumbai since 2012. Q: How many samples have you tested in respect of petroleum products? A: I have tested large number of samples running into hundreds of samples. Q; Are you aware of letter dated 04.08.2018 written by the Assistant Director of DRI whereby it was requested to Mr Vivek W. Sawant, DGM, IOCL to test the samples as requested under test memo in accordance with the parameters prescribed under IS 1460:2005 for "High Speed Diesel" and to categorize the identity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment on ingredients. The minimum temperature for Flash Point 35°C as prescribed in standard. We have submitted the report. Q: What is the maximum and minimum flashpoint for *considering the sample as HSD? A: Only the minimum limit Is talked about that is 35°C and there is no maximum limit prescribed in the standard. Q. If case, the Flash Point exceeds above 100 *c, 150 *c, 200 *c etc., then does it still pertains 10 HSD standard? A: Can't comment as above 35°C whatever the Flash Point is, it does not matter. Q: Point No. I of supplementary note of Chapter 27 of Customs Tariff Act provides that "Jute Batching Oil, "Textile Oil" are Hydrocarbon oils, which have their flash points on and above 93°C. In case flash point exceeds 93°C, what you call It? A: Can't comment. As flashpoint isn't the only parameter. We have tested the samples that were submitted to us as per IS 1460:2005. Q: IOCL supplies HSD to various parties. Have you ever come across any situation in which you have found the Flash Point of all these test reports above 93°C and considered as a HSD? A: Flash Point is not the only parameter which is used to measuring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (emphasis added) 37. Since the findings and conclusions reached by the Adjudicating Authority and Appellate Tribunal merged with the High Court's decision, we will focus our attention on the High Court's analysis and conclusion. 38. The conclusion of the High Court that the questioned imported good is HSD was based on the following premise: (i) Though it is the settled position of law that the burden of showing the correct classification lies on the Revenue, it would suffice if the Revenue is able to establish its case with such a degree of preponderance that the existence of a fact could be said to have been proved, and it is not necessary to establish on a part of the Revenue to prove the fact with mathematical precision. (ii) Once the Revenue has been able to prove the classification on the basis of preponderance of probabilities, the burden would then shift to the assessee to prove its claim. (iii) In the present case, the High Court was satisfied that in respect of the sample, in the third test since 14 out of 21 parameters laid down under the Indian Standards Specification of Bureau of Indian Standards IS1460:2005 relating to HSD were satisfied the sample would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Import Tariff in Part 2 of the Tariff Act (hereinafter referred to as the "Rules") 40. The aforesaid Rules provide the principles on the basis of which the goods in the First Schedule to the Tariff Act are to be classified, which had escaped the attention of all the three forums below and each forum had adopted its own methodology to determine the proper classification of the goods/substance in issue as discussed above dehors the aforesaid rules for interpretation. 41. Rule 1 of the aforesaid Rules lays down that the classification shall be determined on the basis of the terms of the headings and relative Section or Chapter Notes. Rule 2 is to be invoked when it relates to an incomplete or unfinished article or a mixture of substances, with which we are not concerned. Rule 3 is attracted when for certain reasons, the goods are prima facie classifiable under two or more headings. This situation also does not arise in the present case. Rule 4 further provides that goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are "most akin". For better appreciation, relevant portions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. 5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character; (b) Subject to the provisions of (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. Therefore, in respect of flash point it cannot be said that the sample conforms to this specification. The test report mentions that in view of the analytical parameter, "the sample has characteristics of High Speed Diesel/Automotive Fuel Oil" conforming to IS1460:2005 and that it is not Base Oil. However, the said report does not specifically give the opinion that the sample is that of HSD or can be treated as that of HSD. The report merely says that the sample has characteristics of HSD Oil. There is a sea of difference when the opinion says that a sample has characteristics of High Speed Diesel in contradistinction to the other possible opinion that the sample is or can be considered to be High Speed Diesel Oil. If a questioned article bears only certain characteristics of a specified article, can the questioned article be treated to be or equated with the specified article? We are afraid, the answer has to be in the negative, unless the opinion clearly states that because of the salient features in the questioned article (samples), the questioned article and the specified article (HSD in the present case) are substantially similar so as to identify the questioned article w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of two parameters as mentioned above) to the specifications of High Speed Diesel/Automotive Diesel Fuel as per IS 1460:2005. The second test report does not specifically state that because of the characteristics ascertained, the samples can be treated as that of HSD. The second report also avoids giving any such categorical finding or opinion that the samples are of HSD except for stating that these samples conform to the IS specification (though only in respect of 10 out of 21 specifications). 51. Coming to the third test report prepared by the Indian Oil Corporation Limited dated 14.08.2018 upon which much reliance has been placed by the High Court, similar inconclusive opinion has been given. Interestingly, we have also noted that in respect of a parameter namely, flashpoint, the third report mentions that the flash point of the sample is 112 C which is far above the minimum flashpoint mentioned under the IS specification which is 66C. It may be noted that in the first report, the flashpoint of the sample has been shown as above 66C, which itself is quite vague unlike in the second and third reports, which mention very high flash points. Therefore, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of a few parameters and not all, leaving it to the discretion of the Adjudicating Authorities/Tribunal/High Court to determine whether it has been proved based on these tests that the samples are indeed that of the HSD. Thus, this exercise has introduced an element of subjective appraisal and evaluation of the pieces of evidence. 55. In the present case, the evidence/materials on which the High Court based its conclusion are the test reports and the evidence of the expert, Dr. Gobind Singh. Since the test reports are not conclusive as regards all the 21 stipulated parameters under IS 1460:2005 and the evidence of Dr. Gobind Singh is also not definitive, the test report and expert opinion would be required to be assessed properly. 56. Section 45 of the Evidence Act of 1872 deals with expert opinion, which reads as follows: "Section 45. Opinions of experts. When the Court has to form an opinion upon a point of foreign law, or of science or art, or as to identity of handwriting or finger impressions, the opinions upon that point of persons specially skilled in such foreign law, science or art, or in questions as to identity of handwriting or finger-impressions are rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he court is expected to analyse the report, read it in conjunction with the other evidence on record, and then form its final opinion as to whether such report is worthy of reliance or not. It was thus observed as follows: "35. This brings us to an ancillary issue as to how the Court would appreciate the evidence in such cases................... The courts, normally, look at expert evidence with a greater sense of acceptability, but it is equally true that the courts are not absolutely guided by the report of the experts, especially if such reports are perfunctory, unsustainable and are the result of a deliberate attempt to misdirect the prosecution............ xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 39. The Indian law on expert evidence does not proceed on any significantly different footing. The skill and experience of an expert is the ethos of his opinion, which itself should be reasoned and convincing. Not to say that no other view would be possible, but if the view of the expert has to find due weightage in the mind of the court, it has to be well authored and convincing. .................... 40. We really need not reiterate various judgments which have take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ample did not meet the specification). In the absence of fulfilment of the remaining of specifications, can it be said authoritatively that the samples will still qualify as HSD? Interestingly as discussed above, neither the expert nor the test results stated categorically that these samples are indeed that of HSD on fulfilment of some of the parameters. The expert was specifically asked as to whether the sample was automotive diesel, which the expert evaded and did not give a clear answer except for saying that it is already written in the report and the sample has been tested as per the IS 1460: 2005 as evident from the following question and answer. "Q: Can you say it is an automotive diesel? A: Already written in the lab report and we have tested the samples as per the parameters as per IS 1460:2005." 65. It may be noted that in the written report, it was not mentioned that the sample is that of HSD though it mentions that it was tested as per the parameters of IS 1460:2005 and has characteristics of some of the parameters. The Adjudicating Authority as well as the High Court, without there being any such categorical opinion in the report or by the expert, nevertheles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int, as if he was not aware of the importance of flash point in petroleum products. He was evasive as regards nonconformity on this parameter in determining whether the samples are those of HSD. Flash point has been mentioned in the Supplementary Note to Chapter 27 in Appendix-2 to the Customs Tariff Act by stating that it shall be determined following the test prescribed in this behalf in the rules made under the Petroleum Act, 1934. Under Section 2(c) of the Petroleum Act, 1934 flashpoint of any petroleum has been defined as the lowest temperature at which it yields a vapour which will give a momentary flash when ignited, determined in accordance with the provisions of Chapter II and the rules made thereunder. 69. The Petroleum Act classifies petroleum products under three categories, depending on the quantum of flash point, namely, (i) "Petroleum Class A" which means petroleum having a flash-point below twenty-three degrees Centigrade; (ii) "Petroleum Class B" which means petroleum having a flash-point of twenty-three degrees Centigrade and above but below sixty-five degrees Centigrade; (iii) "Petroleum Class C" which means petroleum having a flash-point of sixty-five d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... results categorically and in clearly terms mention that these samples are that of HSD, except for making an ambiguous remark that these samples conform to certain parameters of HSD as per IS 1460:2005. As discussed above, 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. 73. However, as noted above, the High Court, by applying the test of preponderance of probability concluded that the substance in question is HSD. 74. At this juncture it may be apposite to dwell briefly upon the meaning of the expression "preponderance of probability" in contradistinction to "proof beyond reasonable doubt". 75. Under Section 3 of the Evidence Act, 1872, a fact is said to be proved when, after considering the matters before it, the court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists, which clearly indicates that the Evidence Act does not insist upon absolute standard of proof. Evidence Act also nowhere defines as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of that will suffice." ( emphasis supplied ) 721. The law recognises that within the standard of preponderance of probabilities, there could be different degrees of probability. This was succinctly summarised by Denning, LJ in Bater v. Bater [Bater v. Bater, [1951] P. 35 (CA).], where he formulated the principle thus : (p. 37) "... So also, in civil cases, the case must be proved by a preponderance of probability, but there may be degrees of probability within that standard. The degree depends on the subject-matter." 722. The definition of the expression "proved" in Section 3 of the Evidence Act is in the following terms: "3. ... "Proved". - A fact is said to be proved when, after considering the matters before it, the court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists." 723. Proof of a fact depends upon the probability of its existence. The finding of the court must be based on: 723.1 The test of a prudent person, who acts under the supposition that a fact exists. 723.2 In the context and circumstances of a particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mathematically enumerated as to how many of such units constitute proof beyond reasonable doubt. There is an unmistakable subjective element in the evaluation of the degrees of probability and the quantum of proof. Forensic probability must, in the last analysis, rest on a robust common sense and, ultimately, on the trained intuitions of the Judge." 78. What the aforesaid decisions postulate is that there may be varying range in the degree of probabilities. Certainly, where the proceedings involve requirement of fulfilment of technical/scientific parameters with confiscatory and penal consequences, the degree of probability would be of a higher order and not mere probability. 79. In the present case, what we have observed is that the High Court, on the basis of the laboratory tests, more particularly the third test conducted by IOCL, Mumbai Laboratory and the opinion of the expert, namely Dr. Gobind Singh, and by observing that it is not necessary to establish on the part of the Revenue to prove the fact with mathematical precision, held that the Department has been able to establish its case on the basis of preponderance of probability that the imported oil was not Base Oil but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he samples tested to show that these do not conform the specifications and are not HSD does not appear to be reasonable. Thus, shifting of onus to the assesses to prove otherwise appears to be unreasonable and meaningless. (ix) The burden was not on the assessees to demonstrate that non-conformity with the remaining 8 parameters would vitiate the conclusion that the samples were of HSD. 81. The aforesaid difficulties in our opinion can be overcome, if we apply the test of "most akin" as contemplated under Rule 4 of the General Rules for Interpretation referred to above. 82. The real test for classification, according to us, would be as to whether any goods or substance in question is "most akin" or bears the closest resemblance or similarity to any of the specified goods mentioned under the Headings and relative Section or Chapter Notes under the Tariff Act, and not by applying the test of preponderance of probability. 83. By way of illustration, we may explain the position. If an importer classifies the imported goods as "X", which is disputed by the Customs authority and classifies the same as "Y", the test would be whether the goods imported are "most akin" to "X" or "Y" in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct test will be whether the oil/article in issue is most akin to HSD or not for which appropriate scientific evidence in the form of laboratory test reports and opinion of the scientific experts will be of utmost relevance. 86. For the reasons discussed above, as the results of the test are inconclusive, so being the opinion of the expert, we are unable to agree with the conclusion of the High Court. Under the circumstances, the option before this Court is, either to send the imported product again for further tests and obtain the expert opinion atleast to the effect that the imported product is 'most akin' to HSD even if it does not fulfil all the parameters under IS 1460:2005 or give a benefit of doubt to the appellants and close the proceedings against the appellants by quashing the impugned orders, since the Revenue/Customs Authority cannot take action against the appellants based on inconclusive evidence. 87. As far as the first option is concerned, as noted above, though the questioned product was sent for laboratory test in three premier laboratories, these laboratories did not give conclusive finding that the product is indeed HSD and the expert also could not give ..... X X X X Extracts X X X X X X X X Extracts X X X X
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