2026 (3) TMI 48 - AT - Customs

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 ... Extended period of limitation under section 28(4) of the Customs Act - willful suppression or intent to evade payment of duty - Applicability of the extended period of limitation u/s 28(4) of the Customs Act to the imports in question. Extended period of limitation u/s 28(4) - HELD THAT:- The Tribunal held that invocation of the extended five year limitation under section 28(4) requires a positive finding of wilful misstatement or suppression of facts with an intention to evade duty. Applying settled Supreme Court principles (including Uniworth Textiles [2013 (1) TMI 616 - SUPREME COURT] and authorities construing the proviso to the analogous provision), the court observed that mere difference in classification or an error based on supplier documents does not, by itself, establish the requisite wilfulness. The appellant had paid the entire differential duty with interest before issuance of the show cause notices and advanced a bona fide belief as to classification based on invoices and packing lists. The Tribunal placed reliance on earlier decisions (including the Tribunal and Commissioner orders in Benetton India [2024 (7) TMI 1469 - CESTAT NEW DELHI]) which treated similar facts as simple mis classification where no willful suppression to evade duty was made out. It also noted that under self assessment schemes the duty of scrutiny lies on officers and that routine self assessment errors are not ipso facto proof of willful suppression. In those circumstances, the essential mental element for invoking section 28(4) was absent and the extended period could not be invoked; consequently, it was unnecessary to decide classification, confiscation or penalty issues. [Paras 19, 23, 29, 31, 34] Extended period under section 28(4) could not be invoked as there was no willful suppression or intent to evade duty; impugned order set aside on that ground. Final Conclusion: The Tribunal allowed the appeal, holding that the extended period of limitation under section 28(4) was not invocable on the facts (no wilful suppression/intent to evade), and set aside the Principal Commissioner's order without adjudicating classification, confiscation or penalty. 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.