ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 02.03.2026
CESTAT Delhi- Extended Limitation and Section 114A Penalty Held Unsustainable in Classification Dispute
This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com or on his Mobile +91-9999005379.
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi, recently delivered a significant judgment in the case of M/s Myntra Jabong India Pvt Ltd vs. β Principal Commissioner of Customs ACC (Imports). β This case revolved around the classification of imported goods, the invocation of the extended period of limitation under Section 28(4) of the Customs Act, and the imposition of penalties under Section 114A of the Customs Act. β The judgment, pronounced on February 27, 2026, has set a precedent for similar cases involving disputes over classification and customs duty.
Background of the Case
M/s Myntra Jabong India Pvt Ltd, a leading e-commerce company, imports consumer fashion and lifestyle products, including clothing, footwear, accessories, and beauty products. β Between July 2017 and November 2023, the company paid customs duty amounting to Rs. β 800 crores for its imports. β The dispute in this case pertains to the classification of men’s polyester knitted jackets imported by the company during the period from August 9, 2017, to October 3, 2019.
The Principal Commissioner of Customs alleged that Myntra Jabong had misclassified the imported jackets in the Bills of Entry, leading to short payment of customs duty. β The department issued three show-cause notices in 2021 and 2022, invoking the extended period of limitation under Section 28(4) of the Customs Act. β The notices also proposed confiscation of goods under Section 111(m) and the imposition of penalties under Section 114A of the Customs Act. β
Key Issues in the Case β
The case raised several critical legal questions:
- Invocation of Extended Period of Limitation: The department alleged that Myntra Jabong had willfully suppressed facts and misdeclared the description and classification of the imported goods, justifying the invocation of the extended period of limitation under Section 28(4) of the Customs Act. β
- Liability for Confiscation and Penalty: The department argued that the imported goods were liable for confiscation under Section 111(m) and that penalties under Section 114A were applicable due to the alleged misclassification and suppression of facts. β
- Suo Moto Payment of Differential Duty: Myntra Jabong contended that it had voluntarily paid the differential customs duty along with interest before the issuance of the show-cause notices, and therefore, the extended period of limitation should not have been invoked. β
Arguments Presented
Appellant’s Submissions:
- The company argued that it had made voluntary payments of differential duty and interest before the issuance of the show-cause notices, which negated the claim of suppression. β
- It contended that the extended period of limitation could not be invoked as there was no outstanding duty at the time of the notices. β
- The appellant emphasized that the classification of goods was based on invoices and packing lists provided by the overseas supplier, and there was no deliberate suppression or misstatement. β
- Relying on previous judgments, the appellant argued that disputes over classification do not constitute willful suppression of facts and that penalties under Section 114A were not applicable. β
Respondent’s Submissions:
- The department maintained that the extended period of limitation was correctly invoked due to the appellant’s alleged misdeclaration and suppression of facts. β
- It argued that the appellant’s actions resulted in short payment of customs duty, making the goods liable for confiscation under Section 111(m) and penalties under Section 114A. β
Tribunal’s Observations and Judgment β
The Tribunal carefully examined the arguments and evidence presented by both parties. β It referred to previous judgments, including Benetton India Private Limited vs. Additional Commissioner, Customs (Preventive), New Delhi and Uniworth Textiles Ltd. vs. Commissioner of Central Excise, Raipur, to determine whether the extended period of limitation and penalties were applicable. β
Key Findings:
- Extended Period of Limitation: The Tribunal held that the extended period of limitation under Section 28(4) of the Customs Act could not be invoked in this case. β It emphasized that the appellant had voluntarily paid the differential duty and interest before the issuance of the show-cause notices, and there was no evidence of willful suppression or intent to evade payment of duty. β
- Classification Dispute: The Tribunal noted that classification disputes are often a matter of interpretation and cannot be equated with suppression of facts. β The appellant had disclosed the details of the imported goods in the Bills of Entry, and the department had the opportunity to scrutinize the returns under the self-assessment scheme. β
- Confiscation and Penalty: The Tribunal concluded that the imported goods were not liable for confiscation under Section 111(m) of the Customs Act, nor was the penalty under Section 114A applicable. β It referred to the Benetton India case, which had similar facts and legal issues, to support its decision. β
Final Order:
The Tribunal set aside the impugned order dated August 31, 2023, passed by the Principal Commissioner of Customs and allowed the appeal in favor of M/s Myntra Jabong India Pvt Ltd. β
Implications of the Judgment
This landmark judgment has significant implications for importers and the customs department. β It reinforces the principle that the extended period of limitation under Section 28(4) of the Customs Act can only be invoked in cases of willful suppression or intent to evade payment of duty. β It also clarifies that classification disputes, which are often subjective, cannot be used as grounds for alleging suppression of facts. β
Furthermore, the judgment highlights the importance of the self-assessment scheme introduced in 2011, emphasizing that customs officers have a duty to scrutinize returns and ensure the correctness of duty assessments. β Importers cannot be held solely responsible for errors in classification or description, especially when they have acted in good faith and voluntarily paid any differential duty. β
Conclusion
The decision in the Myntra Jabong case serves as a reminder of the importance of due diligence in customs compliance while also protecting importers from unwarranted penalties and confiscations. It underscores the need for a balanced approach in resolving classification disputes and interpreting the provisions of the Customs Act. This judgment will likely serve as a reference point for similar cases in the future, ensuring fair treatment for importers and upholding the principles of justice in customs law.
Source: CESTAT Delhi
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