Is n-Hexane a Petroleum Oil or a Pure Hydrocarbon? Supreme Court Clarifies
Commissioner of Customs, Kandla, Gujarat vs M/s Reliance Industries Limited
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• 4 min readKey Takeaways
• A court cannot classify n-Hexane as a petroleum oil merely because its flash point is below 25°C.
• Classification under Chapter 27 requires proof that the product is used as a motor spirit, which was not established.
• n-Hexane qualifies as a separate chemically defined compound under Chapter 29 due to its distinct chemical structure.
• The burden of proof lies with the Revenue to demonstrate the correct classification of imported goods.
• HSN Explanatory Notes serve as a guiding framework for tariff classification disputes.
• Policy Circulars from the DGFT are binding and clarify the classification of goods under the Customs Tariff.
Introduction
The Supreme Court of India recently addressed a significant issue regarding the classification of n-Hexane, a chemical compound used in various industrial applications. The case arose from a dispute between the Commissioner of Customs, Kandla, Gujarat, and M/s Reliance Industries Limited, focusing on whether n-Hexane should be classified as a petroleum oil under Chapter 27 of the Customs Tariff or as a pure hydrocarbon under Chapter 29. This ruling has important implications for customs classification and the burden of proof in such disputes.
Case Background
The dispute began when M/s Reliance Industries Limited imported n-Hexane and classified it under Customs Tariff Heading (CTH) 2901.10, asserting it was a pure hydrocarbon. The Commissioner of Customs issued a Show Cause Notice, arguing that n-Hexane should be classified under CTH 2710.00 as a petroleum oil, based on its chemical properties, including a flash point below 25°C. The Assistant Commissioner of Customs initially ruled in favor of the Revenue, classifying n-Hexane under Chapter 27.
However, the Commissioner (Appeals) overturned this decision, citing the Harmonized System Nomenclature (HSN) Notes, which specifically classify n-Hexane under Chapter 29. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld this classification, leading to the Revenue's appeal to the Supreme Court.
What The Lower Authorities Held
The Assistant Commissioner of Customs concluded that n-Hexane was a mixture of hydrocarbons based on its flash point and distillation range, classifying it under Chapter 27. The Commissioner (Appeals) disagreed, emphasizing the importance of the HSN Notes and the specific mention of n-Hexane under Chapter 29. CESTAT further supported this view, highlighting the lack of evidence from the Revenue to classify n-Hexane as a motor spirit.
The Court's Reasoning
The Supreme Court examined the classification criteria under the Customs Tariff and the HSN Notes. It noted that for a product to be classified as a motor spirit under Chapter 27, it must meet three conditions: it must be a hydrocarbon oil, have a flash point below 25°C, and be suitable for use as fuel in spark ignition engines. The Court found that the Revenue failed to provide evidence that n-Hexane was used as a motor spirit, thus failing to meet the necessary criteria for classification under Chapter 27.
The Court also emphasized that n-Hexane is a saturated acyclic hydrocarbon with a distinct chemical structure, qualifying it as a separate chemically defined compound under Chapter 29. The presence of impurities, as argued by the Revenue, did not negate its classification as a pure compound, as these impurities were not deliberately added during the manufacturing process.
Statutory Interpretation
The Supreme Court's interpretation of the Customs Tariff and the HSN Notes was pivotal in this case. The Court highlighted the importance of the HSN Explanatory Notes as a guiding framework for classification disputes, reinforcing their role in ensuring consistency and clarity in tariff classification. The Court also referenced previous judgments that established the burden of proof lies with the Revenue in classification matters, requiring them to provide sufficient evidence to support their claims.
Why This Judgment Matters
This ruling is significant for legal practice as it clarifies the standards for classifying chemical compounds under the Customs Tariff. It underscores the importance of providing concrete evidence to support classification claims, particularly in cases involving complex chemical products. The decision also reinforces the binding nature of DGFT Policy Circulars, which provide essential guidance on classification issues.
Final Outcome
The Supreme Court dismissed the appeal of the Revenue, affirming the CESTAT's decision to classify n-Hexane under Chapter 29 of the Customs Tariff. This ruling not only resolves the specific dispute regarding n-Hexane but also sets a precedent for future classification cases involving chemical compounds.
Case Details
- Case Title: Commissioner of Customs, Kandla, Gujarat vs M/s Reliance Industries Limited
- Citation: 2026 INSC 536
- Court: IN THE SUPREME COURT OF INDIA
- Bench: Justice Aravind Kumar, Justice Prasanna B. Varale
- Date of Judgment: 2026-05-25
