Classification of garments as woven confirms application of woven tariff heading, while extended-period demand and fraud penalty were disallowed.

Physical examination established that the imported jackets were woven, not knitted, so Chapter 62 applies and the goods are classifiable under the tariff description corresponding to woven jackets (Customs Tariff Item 6202 93 90); classification upheld for revenue. The demand based on an extended limitation period and penalty for fraud, collusion or willful misstatement was rejected because the incorrect self-assessment arose from misclassification without evidence of fraudulent intent; reassessment is the statutory remedy and extended-period liability and penalty were set aside, with consequential relief permitted.

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Issues: (i) Whether the imported jackets, declared as knitted, are in fact woven and properly classifiable under Customs Tariff Item 6202 93 90 instead of 6102 30 10; (ii) Whether extended period demand under section 28(4) and penalty under section 114A of the Customs Act, 1962 are sustainable on the facts.

Issue (i): Classification of the imported jackets as woven or knitted and the correct Customs Tariff Item.

Analysis: The garments declared as knitted jackets were physically found to be of woven fabric on inspection and the importer's authorised representative agreed they were woven. Chapter 61 covers knitted or crocheted articles; Chapter 62 covers articles not knitted or crocheted. Given the woven nature, Chapter 62 applies and the entry under Customs Tariff Item 6202 93 90 is the appropriate classification for the goods as described.

Conclusion: Classification upheld in favour of Revenue; the jackets are classifiable under Customs Tariff Item 6202 93 90.

Issue (ii): Sustenance of demand under extended period (section 28(4)) and penalty under section 114A for fraud, collusion or willful mis-statement.

Analysis: The mis-classification arose from self-assessment and possible misunderstanding of the nature of the fabric. Re-assessment is the statutory remedy for incorrect self-assessment. The facts do not establish the requisite elements of fraud, collusion or willful mis-statement necessary to invoke the extended period of limitation under section 28(4) or to sustain penalty under section 114A.

Conclusion: Extended period demand and penalty set aside in favour of the assessee.

Final Conclusion: The appeal is partly allowed: the classification and associated duty under the appropriate tariff item are sustained, while demands beyond the normal period of limitation and the penalty under section 114A are set aside, with entitlement to consequential relief if any.

Ratio Decidendi: Where imported garments are found on physical examination to be woven and not knitted, they fall under Chapter 62 (including Customs Tariff Item 6202 93 90), and an incorrect self-assessment of classification does not, without evidence of fraud, collusion or willful mis-statement, justify invocation of extended limitation or penalty under sections 28(4) and 114A of the Customs Act, 1962.

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