Mere Classification Dispute Over Imported Jackets Can’t Justify Invocation Of Extended Limitation Against Myntra: CESTAT

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside a ₹3.47 crore penalty imposed on Myntra Jabong India Pvt Ltd, holding that a mere classification dispute over imported jackets cannot justify invocation of the extended limitation period under the Customs Act in the absence of wilful suppression or intent to evade duty. The Bench of Justice Dilip Gupta (President), and Hemambika R. Priya (Technical Member) has observed that the dispute was purely one of classification and did not involve deliberate misstatement or suppression. It emphasized that classification disputes, particularly those involving interpretation of tariff entries and HSN explanatory notes, do not automatically attract the rigours of the extended limitation period. The appellant/assessee, Myntra Jabong, engaged in the online sale of fashion and lifestyle products through its portal, had imported various categories of men’s polyester and PU-knitted jackets between August 9, 2017 and October 3, 2019. The dispute centered on the tariff classification of these jackets under the Customs Tariff Act, 1975. The Customs (Preventive) Commissionerate initiated an investigation following examination of a Bill of Entry dated August 31, 2019. Authorities alleged that the importer had mis-declared the description of the jackets, particularly by not specifying features such as full front zipper openings, leading to incorrect classification and short payment of Basic Customs Duty (BCD). Three show cause notices were issued invoking Section 28(4) of the Customs Act, 1962, alleging wilful suppression of facts. The adjudicating authority confirmed a differential duty demand of ₹3.47 crore along with interest, appropriated amounts already deposited by the company, held the goods liable to confiscation under Section 111(m), and imposed an equivalent penalty under Section 114A. However, it was undisputed that Myntra had deposited ₹3.50 crore towards differential duty and ₹66.59 lakh towards interest even before issuance of the show cause notices. The central issue before the Tribunal was whether the extended five-year limitation period under Section 28(4) could be invoked. The Tribunal relied on the Supreme Court’s ruling in Uniworth Textiles Ltd. v. Commissioner of Central Excise, Raipur, which clarified that suppression must be wilful and with intent to evade duty. The Court had held that mere non-payment or short payment of duty does not amount to suppression unless accompanied by deliberate intent. The Bench also noted that the earlier Supreme Court decision in Associated Cement Companies Ltd. v. Commissioner of Customs had been considered and distinguished in Uniworth Textiles, reinforcing that “wilful” suppression necessarily imports a mental element and deliberate intent. Quoting extensively from Supreme Court precedents, the Tribunal observed that for extended limitation to apply, the department must demonstrate a “positive act” indicating conscious wrongdoing. In the present case, no such material was brought on record. The Principal Commissioner had reasoned that under the self-assessment regime introduced in 2011, the importer bears heightened responsibility to correctly classify goods. Rejecting this approach, the Tribunal held that self-assessment does not absolve customs officers of their duty to scrutinize returns and Bills of Entry. It observed that treating every incorrect self-assessment as suppression would render the normal limitation period redundant. The Bench underscored that once the department pointed out the classification issue, Myntra accepted the suggested classification and promptly paid the differential duty with interest — conduct inconsistent with any intent to evade. Having held that the extended period was wrongly invoked, the Tribunal ruled that confiscation under Section 111(m) and penalty under Section 114A could not survive. The Bench reiterated that in the absence of wilful misstatement or suppression, goods cleared in the past cannot be branded liable for confiscation, especially when they are no longer physically available. The Tribunal set aside the impugned order in entirety and allowed the appeal. Case Details Case Title: M/s Myntra Jabong India Pvt Ltd Versus Principal Commissioner of Customs ACC Citation: JURISHOUR-141-CESTAT-2026(Del ) Case No.: CUSTOMS APPEAL NO. 55846 OF 2023 Date: 27.02.2026 Counsel For Appellant: Kishore Kunal Counsel For Respondent: Shiv Shankar Click Here To Read Order Read More: India’s Trade Diplomacy Enters a Transformative Era in 2026, Anchored in New-Generation FTAs

Mere Classification Dispute Over Imported Jackets Can’t Justify Invocation Of Extended Limitation Against Myntra: CESTAT

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