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Legal Case Shots

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Legal Case Shots is a searchable database of Supreme Court of India judgments, each broken down into the case type, the court's key holding, and a practical lesson learnt, with the full judgment available as a PDF for citation or deeper reading.

Tax & Customs LawSupreme Court of India

Commissioner of Customs, Kandla v. M/s Reliance Industries Ltd.

Civil Appeal · 2026 INSC 536Decided 25 May 2026
C.A. No.-000569-000569 - 2012
Justice Aravind Kumar · Justice Prasanna B. Varale

Background

Reliance Industries imported a chemical called "n-Hexane" (also called Exxsol Hexane) and classified it under Customs/Excise Tariff heading 2901, applicable to pure chemical compounds, which attracts a lower rate of duty. The Customs Department disagreed, relying on a chemical test report showing the product's distillation range and flash point, and sought to reclassify it as "Motor Spirit" under heading 2710 (covering mineral/petroleum oils), which attracts higher duty. This classification dispute journeyed through the Assistant Commissioner, the Commissioner (Appeals), and the CESTAT tribunal, all of which ultimately ruled in favour of Reliance, before the Revenue appealed to the Supreme Court.

Decision Breakdown

The Supreme Court dismissed the Revenue's appeal and upheld the CESTAT's ruling that n-Hexane is properly classifiable under Chapter 29 (as a separate chemical compound), not Chapter 27. It held the Revenue failed to discharge its initial burden of proving the product was a "Motor Spirit" mixture, relying only on distillation and flash-point figures without other supporting evidence. The Court applied Rule 3(a) of the General Rules of Interpretation guided by the internationally recognised Harmonized System Notes, which specifically identify Hexane under Chapter 29, and further noted that the impurities found were merely unconverted starting materials, not deliberately added substances. It also gave weight to a binding DGFT Policy Circular that had already clarified Hexane's classification under Chapter 29.

Lesson Learnt

In tax/customs classification disputes, the burden of proof lies on the authority seeking to reclassify goods into a higher-duty category, and it must be discharged with proper evidence: mere reliance on isolated chemical parameters (like flash point) is not enough when internationally recognised classification notes and government policy circulars point the other way.

Commissioner of Customs, Kandla v. M/s Reliance Industries Ltd. – Legal Case Shots | LegalAware