Extended limitation under Section 28(4) requires wilful suppression; mere misclassification without intent precludes extended liability.

Extended limitation under Section 28(4) applies only where non-levy or short-levy results from collusion or deliberate wilful suppression intended to evade duty; mere misclassification, bona fide belief in tariff classification based on supplier documents, or payment of differential duty before show cause notices does not establish such intent. Self-assessment obligations do not automatically convert classification disputes into willful suppression because officers must also scrutinize declarations. On these facts there was insufficient material of deliberate suppression; therefore invocation of the extended period and consequent confiscation and penalty were unsustainable and set aside, with the appeal allowed.

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Issues: (i) Whether the extended period of limitation under Section 28(4) of the Customs Act, 1962 could be invoked in respect of the imported knitted jackets.

Analysis: Section 28(4) applies where non-levy or short-levy of duty is by reason of collusion or any wilful misstatement or suppression of facts; the element of wilfulness requires a deliberate intention to evade payment of duty. Mere difference in classification or a bona fide belief as to tariff classification, and disclosure based on supplier documents, do not ipso facto establish willful suppression. The circumstance that differential duty was paid before issuance of show cause notices and that the misclassification arose from interpretation of tariff entries and product description militates against finding an intent to evade. Reliance on self-assessment obligations does not automatically convert a classification dispute into willful suppression; officers have a concurrent duty to scrutinize declared information. Prior decisions treating similar jacket classifications as simple misclassification where differential duty was accepted and paid are persuasive on these facts.

Conclusion: The extended period under Section 28(4) of the Customs Act, 1962 could not be invoked because there is no sufficient material of deliberate or willful suppression with intent to evade duty; consequently the impugned order invoking Section 28(4) and confirming confiscation and penalty is unsustainable and is set aside; the appeal is allowed.

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