Case Details

  • Case Name: Commissioner of Customs, Kandla (Appellant‑Revenue) vs. M/S Reliance Industries Ltd (Respondent‑Assessee)
  • Court: Supreme Court of India, Civil Appellate Jurisdiction
  • Civil Appeal No.: 569 of 2012
  • Date of Judgment: 25 May 2026
  • Underlying Tribunal Order: CESTAT, Ahmedabad, Order No. A/1280/WZB/AHD/2011 dated 15 July 2011 (appeal No. C/588/04)
  • Period of Dispute: Classification of imported n‑Hexane (also called Exxsol Hexane RD/Hydrosol n‑Hexane)

Parties Involved

  • Appellant – Revenue: Commissioner of Customs, Kandla (government authority)
  • Respondent – Assessee: Reliance Industries Ltd (importer of n‑Hexane)
  • Legal Representatives:
  • For Revenue – Mr. S Dwarkanath, Learned Additional Solicitor General (ASG)
  • For Respondent – Mr. Shyam Divan, Learned Senior Counsel
  • Bench: Justice Aravind Kumar, Justice Prasanna B. Varale

Issues / Allegations / Violations

1. Whether the imported product n‑Hexane should be classified under:

  • Chapter 27 of the Customs Tariff (CTH 2710.00) and Central Excise Tariff (CETH 2710.12) as a petroleum oil/motor spirit, or
  • Chapter 29 (CTH 2901.10 and CETH 2901.90) as a pure hydrocarbon separate chemical compound.

2. Whether the Show‑Cause Notice issued by the Revenue (dated 21 March 2001) based solely on flash‑point (< 25 °C) and distillation range (63‑70 °C) was sufficient to re‑classify the product under Chapter 27.

3. Whether the Revenue discharged the statutory burden of proof on classification, including proof that the product is used as a motor spirit in spark‑ignition engines.

4. Interpretation of HSN Explanatory Notes, Rule 3(a) of the General Rules of Interpretation, and the binding DGFT Policy Circular No. 40 (RE‑2003)/2002‑2007 dated 14 July 2004.

Findings & Observations

  • Chemical Test Evidence: SGS Redwood Services report (dated 10 May 2000) showed:
  • Distillation range 67.2 °C (CESTAT) / 68.3 °C (Kirk‑Othmer) – within 63‑70 °C.
  • Flash point below 25 °C (recorded as –23 °C in encyclopedia, < 25 °C in SGS report).
  • Purity of n‑Hexane 63.93 % (SGS) matching 63.91 % in Kirk‑Othmer table.
  • Impurities (e.g., 2,3‑Dimethylbutane 0.05 %, 2‑Methyl Pentane 3.48 %, 3‑Methyl Pentane 9.38 %, Cyclohexane 0.78 %, Benzene 2.81 %) were minor and not deliberately added.
  • HSN Notes: Chapter 29, Sub‑chapter I (29.01) expressly lists Hexane under heading 2901.10 (saturated acyclic hydrocarbons). The notes state that separate chemically defined compounds, even with impurities, belong to Chapter 29.
  • DGFT Circular: Policy Circular dated 14 July 2004 clarified that import of Hexane falls under Chapter 29 of the ITC (HS) classification; the DGFT decision is final and binding under Foreign Trade Policy para 2.3.
  • Burden of Proof: The Court reiterated that the burden rests on the Revenue (citing Union of India v. Garware Nylons Ltd and Gastrade International v. Commissioner of Customs). The Revenue presented only flash‑point evidence and failed to prove that n‑Hexane is used as a motor spirit in spark‑ignition engines.
  • Rule 3(a) Application: The specific heading (Chapter 29) describing a separate chemically defined compound prevails over the more general Chapter 27 description of petroleum oils.
  • CESTAT Decision: The Tribunal correctly upheld the Commissioner of Appeals’ order classifying n‑Hexane under CTH 2901.10 / CETH 2901.90.

Penalties / Settlements / Directions

  • No monetary penalty or disgorgement was imposed. The Supreme Court dismissed the Revenue’s appeal, thereby affirming the CESTAT order and the classification under Chapter 29.

Corrective Actions & Future Obligations

  • Reliance Industries Ltd must continue to import n‑Hexane under Chapter 29 headings, paying the duty rates applicable to CTH 2901.10 / CETH 2901.90.
  • The Revenue must ensure future classification decisions are supported by full evidence of intended use (i.e., motor‑spirit usage) when invoking Chapter 27.
  • All customs and excise authorities are reminded to refer to HSN Notes and DGFT circulars for definitive classification guidance.

Final Ruling & Enforcement

  • The Supreme Court dismissed the appeal of the Commissioner of Customs, Kandla and affirmed the CESTAT order dated 15 July 2011.
  • n‑Hexane is classified under Customs Tariff Heading 2901.10 and Central Excise Tariff Heading 2901.90 (Chapter 29).
  • The Revenue’s claim for re‑classification under Chapter 27 is rejected due to failure to meet the burden of proof.
  • All pending applications, if any, are disposed of.
  • The judgment is final and binding; any future dispute must comply with the HSN Explanatory Notes, DGFT policy, and the burden‑of‑proof principles outlined.

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Judgment signed by Justice Aravind Kumar and Justice Prasanna B. Varale, New Delhi, 25 May 2026.