Inconclusive Lab Reports Can’t Decide Customs Classification: CESTAT Orders Retesting of Imported “Thinner” Goods

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has remanded a customs classification dispute involving imported chemical goods after finding that the laboratory reports relied upon by the department as well as the importer were inconclusive and did not test all mandatory parameters prescribed under the relevant Indian Standards specifications. The Bench of Dr. Ajaya Krishna Vishvesha (Judicial Member) and Satendra Vikram Singh (Technical Member) observed that the core controversy revolved around competing classifications under CTH 38140019 and CTH 27101920, and whether the test reports conclusively established the exact nature of the imported product. The dispute arose in an appeal filed by the Commissioner of Customs, Mundra against Bright Petrochem India LLP concerning the classification of imported goods declared as “Thinner, General Purpose for Synthetic Paints and Varnishes.” The Revenue alleged that the goods were actually “Petroleum Hydrocarbon Solvent 125/240”, import of which is restricted except through State Trading Enterprises under the Customs Tariff conditions applicable to Chapter 27 goods. According to the Revenue, the initial reports issued by CRCL Vadodara were defective because they failed to examine all mandatory parameters prescribed under IS 14314:1995 and IS 1745:2018. The Department argued that classification as “General Purpose Thinner” required strict compliance with compositional requirements, particularly the presence of aromatic hydrocarbons. It was contended that the laboratory had not quantified aromatic hydrocarbon content and had simultaneously certified conformity with both standards without resolving the contradiction between them. The Department relied heavily on the Supreme Court’s ruling in Gastrade International vs Commissioner of Customs, Kandla, arguing that goods must be tested strictly in accordance with all parameters prescribed under the relevant IS standards before confiscatory action or classification decisions are taken. Subsequently, Customs Laboratory Visakhapatnam tested the samples and reported that the goods contained less than 2% aromatic hydrocarbons and lacked non-hydrocarbon additives such as alcohols, acetates or chlorinated solvents. The Visakhapatnam laboratory concluded that the goods did not satisfy the requirements of “General Purpose Thinner” under IS 14314 and instead met the specifications of “Petroleum Hydrocarbon Solvent 125/240” under IS 1745:2018. The importer, however, argued that the original CRCL Vadodara reports clearly stated that the tested parameters matched both IS standards and that the Department could not disregard its own laboratory reports merely because a different classification attracted higher duty. The importer also relied on previous customs orders passed in similar cases and cited judicial precedents holding that unchallenged departmental laboratory reports must ordinarily be accepted. After examining the rival submissions and the technical standards, the Tribunal found that several parameters under the two IS specifications overlapped, while some critical parameters differed and had not been comprehensively tested. The Bench noted that the CRCL Vadodara reports did not provide complete testing of all prescribed parameters, while even the Visakhapatnam laboratory reports failed to provide values for all mandatory specifications necessary for conclusive classification. The Tribunal observed that proper classification could not be determined in the absence of complete testing under both IS standards. Referring extensively to the Supreme Court’s judgment in Gastrade International, the Bench reiterated that non-examination of goods on all prescribed parameters inevitably leads to uncertainty and doubt, particularly in confiscatory proceedings. Importantly, the Tribunal held that neither the importer’s classification nor the Revenue’s classification could be conclusively sustained on the basis of incomplete laboratory testing. It therefore directed fresh testing of the samples by an appropriate Government laboratory for all parameters prescribed under both IS specifications to determine the correct classification of the goods. At the same time, the Bench took note of the fact that the imported consignment had been lying at the port since August 2025, causing substantial financial hardship and blocking the importer’s capital. Considering the prolonged detention, the Tribunal permitted provisional release of the goods upon execution of a bond for the full value along with a bank guarantee of ₹30 lakh covering possible differential duty, redemption fine and penalties. The Tribunal further directed the adjudicating authority to complete the fresh exercise within 12 weeks and ordered provisional clearance of the goods within two weeks of execution of the required bond and bank guarantee. Case Details Case Title: Commissioner of CUSTOMS - Mundra Customs Versus Bright Petrochem India LLP Citation: JURISHOUR-1244-CES-2026(AHM) Case No.: Customs Appeal No. 10139 of 2026 Date: 13.05.2026 Counsel For Appellant: Aakash Singh, Superintendent (AR) Counsel For Respondent: Manish Jain, Advocate Click Here To Read Order Read More: CESTAT Upholds Excise Duty Demand for Clandestine Clearances Based on Unretracted Confessional Statement

Inconclusive Lab Reports Can’t Decide Customs Classification: CESTAT Orders Retesting of Imported “Thinner” Goods

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