ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 08.12.2025
CESTAT Chennai Sets Aside Demand on Grounds of Limitation
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, has delivered a favorable judgment for M/s Jocil Ltd., setting aside the demand for differential duty and penalties imposed by the Commissioner of Customs (Appeals-II), Chennai. The case revolved around the classification of imported goods and the invocation of the extended period of limitation under Section 28 of the Customs Act, 1962. โ
Background of the Case
M/s Jocil Ltd. had imported 23 consignments of โlauric acidโ between March 2012 and August 2012, classifying the goods under tariff item 2915 7090 and availing exemption under Notification No. โ 46/2011-Cus. However, the Revenue contended that the correct classification was under tariff item 2915 9090, which did not qualify for the exemption. โ This led to the issuance of a show cause notice (SCN) on August 8, 2013, demanding differential duty of Rs. โ 22,04,830/- and interest.
The appellant agreed to pay the duty and interest for seven bills of entry within the normal limitation period but contested the demand for the remaining 16 bills of entry, citing the one-year limitation period under Section 28(1)(a) of the Customs Act, 1962. โ Despite this, the Revenue issued a second SCN on August 18, 2014, invoking the extended period of limitation and alleging willful misclassification.
Key Arguments by M/s Jocil Ltd.
The appellant argued that:
- The classification issue was interpretational and did not involve any misdeclaration or suppression of facts. โ
- The second SCN was barred by limitation, as the facts were already known to the authorities when the first SCN was issued. โ
- Reliance on dictionary definitions and HSN explanatory notes without expert evidence was insufficient to substantiate the Revenueโs claims. โ
- The extended period of limitation could not be invoked in cases involving interpretational disputes. โ
CESTATโs Observations and Ruling
The Tribunal, comprising Honโble Member Technical and Honโble โMember โ Judicial, examined the submissions and legal precedents. The key findings were:
- The second SCN was issued more than a year after the first SCN, making it wholly barred by limitation as per the Supreme Courtโs ruling in Nizam Sugar Factory v. Collector of Central Excise. โ
- The classification issue was interpretational, and the appellantโs declaration of goods as โlauric acidโ was accurate. โ Merely claiming a classification under a particular tariff heading does not amount to suppression or misstatement. โ
- The Revenue failed to provide expert evidence to substantiate its claims, relying instead on dictionary definitions and HSN notes, which were deemed insufficient. โ
The Tribunal concluded that the extended period of limitation could not be invoked in this case and set aside the impugned order, allowing the appeal with consequential relief. โ
Implications of the Judgment
This ruling reinforces the principle that extended limitation cannot be invoked in cases involving interpretational disputes or where there is no evidence of willful suppression or misstatement. โ It also highlights the importance of adhering to procedural timelines and the need for robust evidence when challenging the classification of goods.
The decision is a significant win for M/s Jocil Ltd. and sets a precedent for similar cases, ensuring that importers are not unfairly penalized for genuine classification disputes. โ It underscores the importance of legal recourse in protecting the rights of businesses and ensuring fair treatment under the law.
Source: CESTAT Chennai
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