Interpretation, Not Evasion: CESTAT Delhi Sets Aside ₹3.47 Crore Demand on Myntra Jabong, Rejects Extended Limitation
Interpretation, Not Evasion: CESTAT Delhi Sets Aside ₹3.47 Crore Demand on Myntra Jabong, Rejects Extended Limitation
Introduction
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT Delhi) has set aside a customs duty demand of ₹3.47 crore against Myntra Jabong India Pvt Ltd, holding that the extended limitation period under Section 28(4) of the Customs Act, 1962 could not be invoked in a classification dispute. The Tribunal ruled that mere omission to mention certain product features, in the absence of intent to evade duty, does not amount to wilful suppression.
Factual Background
Myntra Jabong India Pvt Ltd, an online fashion and lifestyle retailer, imported knitted men’s jackets between August 2017 and October 2019. The company classified the goods under tariff entries attracting basic customs duty at 20 percent.
Customs authorities proposed reclassification under different tariff items within Chapter 61 of the Customs Tariff, contending that the jackets had full front openings with slide-fastening zippers—an aspect allegedly not mentioned in the Bills of Entry. According to the department, this feature was relevant for determining the appropriate classification and resulted in a differential duty demand of ₹3,47,37,530. The Principal Commissioner confirmed the demand under Section 28(4), held the goods liable for confiscation under Section 111(m), and imposed penalty under Section 114A. Prior to issuance of the show cause notice, however, Myntra Jabong had deposited the entire differential duty along with applicable interest.
Procedural Background
Aggrieved by the confirmation of demand, confiscation, and penalty, Myntra Jabong filed an appeal before the CESTAT Delhi. The matter was heard by a coram comprising Judicial Member Binu Tamta and Technical Member Hemambika R. Priya. The Tribunal examined whether the extended five-year limitation period under Section 28(4) had been validly invoked and whether the ingredients of wilful suppression with intent to evade duty were satisfied.
Issues
1. Whether the extended limitation period under Section 28(4) of the Customs Act could be invoked in a tariff classification dispute.
2. Whether omission to mention zipper length or full front opening in the Bills of Entry amounted to wilful suppression of material facts.
3. Whether confiscation under Section 111(m) and penalty under Section 114A were sustainable.
Contentions of the Parties
The department contended that the imported garments were misclassified and required reclassification based on their design features, particularly full front openings with slide-fastening zippers. It alleged wilful suppression of material facts in the Bills of Entry and invoked the extended five-year limitation period under Section 28(4).
Myntra Jabong argued that the dispute was purely interpretative in nature and related to tariff classification. It submitted that the goods had been physically examined by Customs authorities and that there was no deliberate concealment. The appellant emphasised that it had voluntarily deposited the entire differential duty with interest prior to issuance of the show cause notice, demonstrating absence of intent to evade duty.
Reasoning and Analysis
The Tribunal observed that classification of goods is a matter of interpretation and belief. A mere difference of opinion between the importer and the department regarding the appropriate tariff entry cannot automatically amount to suppression of facts. It noted that the appellant had deposited the entire differential duty along with interest before issuance of the show cause notice. This conduct, according to the Tribunal, militated against any allegation of intention to evade duty.
The Bench held that invocation of the extended limitation period under Section 28(4) requires wilful misstatement or suppression involving a deliberate act aimed at evading duty. Mere misclassification or omission in description, without evidence of intent, would not meet this threshold. The Tribunal also relied on settled Supreme Court principles requiring proof of intent for invoking the extended period and followed its earlier decision in a similar classification dispute involving Benetton India, where extended limitation had been held inapplicable in interpretative matters.
In the present case, the Tribunal concluded that the dispute was interpretative and not a case of deliberate concealment.
Decision
Holding that the extended limitation period was wrongly invoked, the CESTAT Delhi set aside the differential duty demand of ₹3.47 crore. It also quashed the confiscation under Section 111(m) and the penalty imposed under Section 114A. The appeal filed by Myntra Jabong India Pvt Ltd was accordingly allowed.
In this case the appellant was represented by Advocates Kishore Kunal, Ankita Prakash and Anuj Kumar. Meanwhile the respondent was represented by Mr. Shiv Shankar, Advocate.
