TaxTMI 
TaxTMI 
2026 (3) TMI 48
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....interest was to be recovered from the appellant; the goods have been held to be liable to confiscation under section 111(m) of the Customs Act but no redemption fine has been imposed as the goods were not physically available; and penalty has been imposed upon the appellant under section 114A of the Customs Act. 2. The appellant is engaged inter alia in the business of selling various consumers goods, electronic items and fashion apparels to end customers by listing the same on electronic commerce portal www.myntra.com. For this purpose, the appellant imports consumer fashion and lifestyle products, including clothing, footwear, accessories and beauty products. According to the appellant from July 2017 to November 2023, it paid customs duty for import of such items amounting to Rs. 800 crores. 3. The relevant period in the present appeal is from 09.08.2017 to 03.10.2019. The impugned order adjudicates three show cause notices dated 20.09.2021, 24.12.2021 and 29.03.20212. The duty that has been confirmed under section 28(4) of the Customs Act is for Rs. 3,47,37,530/- with interest under section 28AA of the Customs Act. The amount that was paid by the appellant towards differen....
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.... of goods under section 111(m) of the Customs Act and imposition of penalty under section 114A of the Customs Act. 8. The appellant submitted replies to the show cause notices. Apart from contending on merits, the appellant also contended that the extended period of limitation could not have been invoked. The Principal Commissioner, however, held that the extended period of limitation under section 28(4) of the Customs Act was correctly invoked. The Principal Commissioner also imposed a penalty of Rs. 3,47,37,550/- under section 114A of the Customs Act and also held that the imported goods were liable to confiscation under section 111(m) of the Customs Act. 9. Shri Kishore Kunal, learned counsel for the appellant assisted by Ms. Ankita Prakash and Shri Anuj Kumar made the following submissions: (i) The appellant had made suo moto payments of the differential duty alongwith interest before issuance of the show cause notice and had also informed the Principal Commissioner of this fact. Section 28 of the Customs Act, therefore, could not have been invoked; (ii) The extended period of limitation could not have been invoked in the present case as there was no out....
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....nvocation of the extended period of limitation stands satisfied, penalty under section 114A of the Customs Act could not have been imposed; and (ix) The goods were not liable to confiscation under section 111(m) of the Customs Act. 10. Shri Shiv Shankar, learned authorized representative appearing for the department, however, supported the impugned order and submitted that the extended period of limitation was correctly invoked. Learned authorized representative also submitted that the Principal Commissioner was justified in holding that the goods were liable to confiscation under section 111(m) of the Customs Act and that penalty was also correctly imposed upon the appellant under section 114A of the Customs Act. Learned authorized representative pointed out that the appellant had deliberately mis-declared the description and classification of the imported goods in the Bills of Entry and this resulted in short payment of customs duty and, therefore, section 111(m) of the Customs Act for confiscation of goods was clearly applicable. 11. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the depart....
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....the department to show that there was willful mis-statement and suppression of facts; and (iii) Section 28(4) is not applicable when allegation of suppression of facts came to light by detailed investigation of the records submitted by the appellant. 15. The Principal Commissioner, however, held that the extended period of limitation was correctly invoked and the findings are as follows: (i) The appellant paid differential duty and interest for the past Bills of Entry not suo moto but only after issuance of summons by the Customs Officers; (ii) The introduction of the self-assessment scheme since 2011 mandates that due diligence has to be exercised by an importer in filing the Bill of Entry. Therefore, under the self-assessment scheme larger responsibility is cast upon the importer. Had the Preventive Commissionerate not intercepted the import consignment, the payment of short duty would have remained undetected. The submission of the appellant that short levy/short payment arose due to mistake on the part of the overseas supplier cannot be accepted as it is a matter of record that there was an element of suppression of correct description of goods imp....
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....was issued invoking the provision of section 28(4) of the Customs Act and an order confirming the demand was passed by the Additional Commissioner, which order was assailed before the Commissioner (Appeals) but the appeal was dismissed. The submissions made by the learned counsel for Benetton India were considered by the Tribunal in the following manner: "7. Shri Ayush A. Mehrotra, learned counsel for the appellant assisted by Shri Upkar Aggarwal submitted that in the facts and circumstances of the case, the provisions of section 28 (4) of the Customs Act could not have been invoked. Elaborating this submission, learned counsel pointed out that the error in the classification of subject goods was a bonafide mistake and as soon as this was pointed, the appellant accepted the classification suggested by the department and paid the differential duty amount. To support this contention that the provisions of section 28 (4) of the Customs Act could not have been invoked, learned counsel relied upon an order passed by the Commissioner in respect of a similar matter where a categorical finding has been recorded that the provisions of section 28 (4) of the Customs Act could not hav....
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.... the HSN Notes, the impugned goods merit reclassification under CTH 6101, instead of 6103 and 6104, as was done during the self-assessment. The noticee has accepted the proposed re-classification. 43. As highlighted earlier, the critical factor resulting in the proposed reclassification is the fact of the impugned jackets having full front opening with a closure of slide fastening (zipper). It is a fact that the presence of the zipper was not mentioned in the bills of entry filed by the noticee. However, it has been submitted by the notice that the Company's error in classification of goods was inadvertent and technical in nature in light of the Explanatory Notes to the HSN classification issued by World Customs Organization, which do not form part of the First Schedule to the Tariff Act and was without any intention to evade the payment of Customs duty. I find merit in the submission made by the noticee, that there is nothing available on file to suggest that the presence of zipper was required to be disclosed by the noticee, and failure to do so could be considered as willful suppression of fact, required to invoke extended period under section 28 (4). In coming to t....
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....pper. The Commissioner noted that there was nothing to suggest that the presence of zipper was required to be disclosed by the noticee and failure to do so would be considered as willful suppression of facts required for invoking the extended period of limitation under section 28(4) of the Customs Act. The Commissioner also noticed that since this was a simple case of misdeclaration there was no willful suppression of facts with intent to evade duty and the goods could not be held liable for confiscation. This finding of the Commissioner was accepted by the Tribunal. 23. In the present appeal, the Principal Commissioner also noted that since the appellant did not disclose the zipper length, there was misdescription of goods and so the extended period of limitation could be invoked. This position was not accepted by the Commissioner in the order passed for the earlier period and this finding was accepted by the Tribunal. The appellant also deposited the entire differential duty before the issuance of the show cause notice when this fact was pointed out to the appellant by the department. Thus, there was no mis-description of imported goods by the appellant. 24. The Principal C....
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.... of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary call for such records and documents from the assessee, but that was not done. It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that the appellant should have filed a proper assessment return under rule 6 of the Rules. 25. Departmental instructions to officers also emphasise upon the duty of officers to scrutinize the returns. The instructions issued by the Central Board of Excise & Customs on December 24, 2008 deal with "duties, functions and responsibilities of Range Officers and Sector Officers". It has a table enumerating the duties, functions and responsibilities and the relevant portion of the table is reproduced below: ***** 26. The Central Excise Manual published by CBEC on May 17, 2005, which is available on the websit....
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....tions of the judgment are reproduced below: "12. We have heard both sides, Mr. R.P. Bhatt, learned senior counsel, appearing on behalf of the appellant, and Mr. Mukul Gupta, learned senior counsel appearing on behalf of the Revenue. We are not convinced by the reasoning of the Tribunal. The conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of non-payment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or willful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso. 13. This Court, in Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay - 1995 S....
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....ty in relation to extended period is mentioned in the proviso to section 11A(1). Under that proviso, in cases where excise duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded on account of fraud, collusion or wilful mis-statement or suppression of facts, or in contravention of any provision of the Act or Rules with the intent to evade payment of duty, demand can be made within five years from the relevant date. In the present case, we are concerned with the proviso to section 11A(1). 24. In the case of Cosmic Dye Chemical v. Collector of Central Excise, Bombay (1995) 6 SCC 117, this Court held that intention to evade duty must be proved for invoking the proviso to section 11A(1) for extended period of limitation. It has been further held that intent to evade duty is built into the expression "fraud and collusion" but misstatement and suppression is qualified by the preceding word "wilful". Therefore, it is not correct to say that there can be suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for invoking the proviso to section 11A. 25. In case of Pushpam Pharmaceuticals Com....
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....n the manner indicated in the proviso to Section 11A of the Act." 16. In Collector of Central Excise v. H.M.M. Ltd. - 1995 Supp (3) SCC 322 = 1995 (76) E.L.T. 497 (S.C.), this Court held that mere non-disclosure of certain items assessable to duty does not tantamount to the mala fides elucidated in the proviso to Section 11A(1) of the Central Excise Act, 1944. It enunciated the principle in the following way :- "The mere non-declaration of the waste/by-product in their classification list cannot establish any wilful withholding of vital information for the purpose of evasion of excise duty due on the said product. There could be, counsel contended, bona fide belief on the part of the assessee that the said waste or by-product did not attract excise duty and hence it may not have been included in their classification list. But that per se cannot go to prove that there was the intention to evade payment of duty or that the assessee was guilty of fraud, collusion, misconduct or suppression to attract the proviso to Section 11A(1) of the Act. There is considerable force in this contention." Therefore, if non-disclosure of certain items assessable to duty does....
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....ntention to evade payment of duty must be shown. This has been clearly brought out in Cosmic Dye Chemical case where the Tribunal had held that so far as fraud, suppression or misstatement of facts was concerned the question of intent was immaterial. While disagreeing with the aforesaid interpretation this Court at p. 119 observed as follows : (SCC para 6) '6. Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as misstatement or suppression of facts are concerned, they are clearly qualified by the word 'wilful' preceding the words 'misstatement or suppression of facts' which means with intent to evade duty. The next set of words 'contravention of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intent to evade payment of duty'. It is, therefore, not correct to say that there can be a suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11-A. Misstatement or suppression of fact must be wilful.' The aforesaid observations ....
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.... facts. So far as "misstatement or suppression of facts" are concerned, they are qualified by the word "willful". The word "willful" preceding the words "misstatement or suppression of facts" clearly spells out that there has to be an intention on the part of the assessee to evade the duty." ***** 22. We are not persuaded to agree that this observation by the Commissioner, unfounded on any material fact or evidence, points to a finding of collusion or suppression or misstatement. The use of the word "willful" introduces a mental element and hence, requires looking into the mind of the appellant by gauging its actions, which is an indication of one's state of mind. Black's Law Dictionary, Sixth Edition (pp 1599) defines "willful" in the following manner :- "Willful. Proceeding from a conscious motion of the will; voluntary; knowingly; deliberate. Intending the result which actually comes to pass... An act or omission is "willfully" done, if done voluntarily and intentionally and with the specific intent to do something the law forbids, or with the specific intent to fail to do something the law requires to be done..." (emphasis supplied) ....