Gastrade International vs Commissioner of Customs, Kandla

Held: 1. High Speed Diesel (HSD) has been defined as any hydrocarbon oil conforming to the Indian Standards Specification of Bureau of Indian Standards IS: 1460:2005 – In the instant case, based on the three laboratory tests and evidence of the expert opinion, the High Court had concluded that the Customs Authority had been able to prove that the imported product is HSD by applying the test of preponderance of probability – The High Court had not referred to the General Rules in arriving at its conclusion by invoking the “most akin” test as contemplated under Rule 4 of General Rules for the interpretation of this Schedule as provided in the First Schedule-Import Tariff in Part 2 of the Tariff Act – The first report was prepared by Central Excise and Customs Laboratory at Vadodara – No clear opinion was given in the first test result by the expert that the samples are indeed that of HSD or can be treated to be that of HSD – The first test based on examination of 8 parameters against 21/22 prescribed cannot be considered to be a definitive opinion to take the view that the sample is indeed that of HSD – The second test report furnished by the Central Revenues Control Laboratory, CRCL, New Delhi on 03.07.2018, the said report indicates that the sample was tested in respect of 12 out of 21/22 prescribed parameters and this Court finds that of the aforesaid 12 parameters, at least on 2 parameters, the sample does not appear to fulfil the requirements of 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 third report prepared by the Central Laboratory of Indian Oil Corporation Limited also does not give a clear and categorical opinion that the samples tested indeed are of HSD – The Expert witness also, who undertook the tests evaded answering the crucial question as to the importance of the 8 parameters for deciding whether the sample is of HSD or not – Neither the expert nor the test results stated categorically that these samples are indeed that of HSD on fulfilment of some of the parameters – Because of the evasive and non-committal answers given by the expert witness, the legitimate conclusion that can be drawn is that his opinion and also the test results are inconclusive, unclear and cannot be said to be fully reliable to determine the oil as HSD – In the instant case, the finding of the High Court is based primarily on applying the test of preponderance of probability which may not necessarily fulfil the “most akin” test – The High Court came to the conclusion based on the incomplete test reports and non-committal opinion of the expert who in categorical terms had not stated that the imported goods are HSD – There was no opinion that the imported goods are most similar to HSD to satisfy the test of “most akin” – The definitive opinion and finding that the imported goods are “most akin” to HSD is missing in the reports and opinion for classifying the imported goods as HSD – Therefore, the results of the test are inconclusive, so being the opinion of the expert, this Court disagrees with the conclusion of the High Court – Benefit of doubt given to appellants because of inconclusive evidence. [Paras 32, 43, 46, 47, 48, 50, 52, 63, 71, 84, 86, 87] Evidence Act, 1872 – s.45 – Expert Opinion – Discussed: Held: The opinion of the experts, however weighty they may be, are not binding on the court and is only relevant for the court to consider it to come to a final decision on any fact in issue – However, since courts are not experts in the discipline of science, they ordinarily accept the scientific report and act upon it – But where the expert opinion suffers from certain shortcomings or ambiguities, lack of clarity, or inadequacy, it would be subject to judicial scrutiny and it would not be safe to rely wholly on the same under such circumstances. [Para 57]

Petroleum Act, 1934 – s.2(c) – Flash-point – Classification of petroleum products – Significance of flash point in determining whether the petroleum product is HSD or not: Held: 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 – The Petroleum Act classifies petroleum products under three categories, depending on the quantum of flash point – Specification regarding flash point is accordingly of some significance, even if it may not be the most important parameter in determining whether a petroleum product is HSD or not. [Paras 68, 69, 70]

Evidence Act, 1872 – s.3 – Different standards of proof – Preponderance of probability – Beyond reasonable doubt: Held: 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 to the meaning of proof based on “preponderance of probability” and “beyond reasonable doubt” which are different standards of proof – Different standards of proof have evolved in criminal and civil jurisdictions in course of time considering the differential stakes involved in these proceedings – In a criminal proceeding, the stakes are higher for a defendant as it involves precious rights and liberties of the person with a potential to lose the same if convicted of the offence charged – On the other hand, civil liability is less blameworthy, and penalty, if any, is less severe – 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. [Paras 75, 76, 78]