Mr. Divan, the SGS report shows that the product contains only 63.93% n-Hexane. The rest are other hydrocarbons, including isomers. How can this be a 'separately chemically defined compound'?

My Lord, Chapter Note 1(a) to Chapter 29 explicitly allows a 'separately chemically defined compound' to contain impurities. The term 'impurities' includes unconverted starting materials, impurities in starting materials, reagents, and by-products. The other hydrocarbons in the product — 2-Methyl Pentane, 3-Methyl Pentane, Methyl cyclopentane — are unconverted starting materials from the fractional distillation process. They are not deliberately added. The purity of 63.93% for n-Hexane matches the Kirk-Othmer Encyclopedia (63.91%). This is commercially pure hexane. The law does not require 100% purity. As long as the impurities are not deliberately added to render the product suitable for a specific use, the product remains a 'separately chemically defined compound' under Chapter 29.

The GAIL judgment requires the Revenue to prove all three conditions for Motor Spirit classification. But does the Revenue have to prove actual use, or is the chemical analysis sufficient to prove 'suitability'?

My Lord, GAIL requires proof of 'suitability for use as fuel in spark ignition engines'. This is not a matter of inference from chemical parameters alone. The Revenue must produce some evidence — technical literature, marketing materials, or expert testimony — to show that the product is actually suitable for that use. The SGS report only gives chemical parameters. The Revenue has produced no evidence that n-Hexane is used as a motor spirit anywhere in the world. In fact, n-Hexane is well-documented as a solvent. The Kirk-Othmer Encyclopedia, which the CESTAT relied upon, describes n-Hexane as a solvent. The Revenue cannot simply assert suitability; they must prove it.

The DGFT circular relates to ITC (HS) classification for import licensing. Does it bind the customs authorities for duty classification?

My Lord, under Paragraph 2.3 of the Foreign Trade Policy, the DGFT's decision on classification under ITC (HS) is 'final and binding'. This Court in Atul Commodities held that this provision applies to classification for all purposes under the Foreign Trade Policy, including customs clearance. While the primary purpose is licensing, the classification cannot be different for duty assessment because the same goods cannot have two different classifications under the same Tariff. The customs authorities are bound by the DGFT's decision. If the DGFT says Hexane is under Chapter 29, the customs authorities cannot classify it under Chapter 27.

The Revenue argues that Chapter Note 1(b) to Chapter 29 excludes 'mixtures of acyclic hydrocarbon isomers' from Chapter 29. Is the imported product not a mixture of isomers?

My Lord, the imported product is not a 'mixture of isomers' in the sense intended by Note 1(b). Note 1(b) applies to products that are deliberately blended mixtures of isomers. Here, the presence of other hydrocarbons is not deliberate; they are impurities arising from the manufacturing process. The product is manufactured to maximize n-Hexane content. The other hydrocarbons are by-products of the fractional distillation process. If Note 1(b) were interpreted to exclude any product containing more than one isomer, then almost every commercial chemical product would be excluded from Chapter 29 because 100% purity is impossible. The HSN Explanatory Notes themselves clarify that impurities are allowed. Note 1(b) is intended to cover deliberate mixtures, not manufacturing residues.

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n-Hexane Is Separate Chemically Defined Compound Under Chapter 29 — (2026) INSC 536

n-Hexane is a saturated acyclic hydrocarbon with a definitive linear structural diagram, specifically enumerated under Chapter 29 of the HSN Explanatory Notes.

Commissioner of Customs, Kandla v. M/s Reliance Industries Limited — (2026) INSC 536

Core Argument

n-Hexane is a saturated acyclic hydrocarbon with a definitive linear structural diagram, specifically enumerated under Chapter 29 of the HSN Explanatory Notes. The presence of impurities (unconverted starting materials) does not disqualify it. The Revenue failed to prove that it satisfies all three conditions for classification as 'Motor Spirit' under Chapter 27. The DGFT circular bindingly classifies Hexane under Chapter 29.

Key Precedents

CCE v. GAIL (India) 2022 SCC OnLine SC 2130 — Held that all three conditions must be satisfied for classification as 'Motor Spirit' under Chapter 27; the Revenue failed to prove the third condition.
Atul Commodities Private Limited v. Commissioner of Customs (2009) 5 SCC 46 — Held that the DGFT's decision on classification under ITC (HS) is final and binding under the Foreign Trade Policy.
CCE v. Wood Craft Products Ltd. (1995) 3 SCC 454 — Held that HSN Explanatory Notes are a safe guide for resolving tariff classification disputes.

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