Officials of state-owned Ceylon Petroleum Storage Ltd (CPSTL) said that routine laboratory tests conducted by them have revealed that the cargo was of sub-quality.
Indian Oil's Lanka chief Subod Dakwale said the shipment in question had came from Singapore.
"The sample tests proved they did not match the expected quality levels. We maintain high standards of quality for all products," Dakwale told PTI.
Sri Lanka's state-owned oil company in the recent years have faced frequent complaints that sub-standard fuel is being imported into the country.
The company was forced to pay compensation to affected motorists and at least two senior petroleum officials are currently facing litigation over the sub-standard fuel supplies.