ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 12.03.2026
CESTAT Delhi Quashes βΉ1.73 Crore Customs Duty Demand
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 & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, recently delivered a significant judgment in the case of Motherson Sumi Wiring India Limited vs. Commissioner of Customs, Patparganj. β The case revolved around the classification of imported goods and the invocation of the extended period of limitation under Section 28(4) of the Customs Act, 1962. β The Tribunal ruled in favor of the appellant, setting aside the demand for customs duty, interest, and penalty imposed by the Commissioner of Customs, Inland Container Depot, Patparganj.
Background of the Case
Motherson Sumi Wiring India Limited, a manufacturer of automotive wiring harnesses, had imported various plastic components such as clamps, clips, covers, stoppers, brackets, protectors, and adaptors between August 24, 2017, and May 31, 2019. β These goods were classified under Customs Tariff Item (CTI) 3926 90 99 and cleared for home consumption. β However, the Commissioner of Customs issued a Show Cause Notice (SCN) on July 14, 2021, proposing a reclassification of the goods under CTI 8708 99 00, which would attract a higher customs duty and Integrated Goods and Services Tax (IGST). β The Commissioner confirmed the demand for differential duty amounting to βΉ1,73,58,467, along with interest under Section 28AA and an equal penalty under Section 114A of the Customs Act, invoking the extended period of limitation under Section 28(4). β
Key Issues in the Case β
The case primarily revolved around two key issues:
- Classification of Goods: The appellant argued that the imported goods were correctly classified under CTI 3926 90 99, while the department contended that they should be classified under CTI 8708 99 00, based on the goods’ principal use in automobiles. β
- Invocation of Extended Period of Limitation: The appellant challenged the invocation of the extended period of limitation, arguing that it was not justified as there was no collusion, willful misstatement, or suppression of facts. β
Arguments Presented
Appellant’s Submissions β
The appellant contended that the imported goods were correctly classified under CTI 3926 90 99, as they were plastic parts used in the manufacture of wiring harnesses for automobiles. β The appellant argued that the dispute was purely a matter of interpretation of the customs tariff and did not involve any deliberate misstatement or suppression of facts. β Therefore, the extended period of limitation under Section 28(4) could not be invoked. β
Respondent’s Submissions β
The department argued that the classification of similar goods had already been decided by the Tribunal in the case of Commissioner of Central Excise, Chennai vs. Besmark Components Private Limited, where the goods were classified under CTI 8708. β The department further alleged that the appellant had suppressed facts by not providing complete declarations in its Bills of Entry, thereby justifying the invocation of the extended period of limitation.
Tribunal’s Observations and Decision β
The Tribunal carefully examined the submissions and the records. β It noted that the demand for duty under Section 28 can only be raised within the normal period of limitation unless there is evidence of collusion, willful misstatement, or suppression of facts. β The Tribunal found that none of these factors were alleged or established in the impugned order. β The dispute was purely a matter of interpretation of the customs tariff, and the appellant had not engaged in any deliberate wrongdoing. β
The Tribunal emphasized that the entire period of demand was beyond the normal limitation period of two years. β As a result, the invocation of the extended period of limitation was deemed unjustified. β Consequently, the Tribunal set aside the impugned order solely on the ground of limitation, without delving into the merits of the classification dispute. β
Conclusion
The Tribunal’s decision in favor of Motherson Sumi Wiring India Limited underscores the importance of adhering to the principles of natural justice and the legal requirements for invoking the extended period of limitation under the Customs Act. The ruling highlights that disputes over tariff classification should not automatically lead to allegations of suppression or misstatement unless supported by concrete evidence. β
This judgment serves as a reminder to both importers and the customs authorities to ensure transparency and compliance with the law while addressing classification disputes. It also reinforces the need for a clear and fair application of the extended period of limitation provisions under the Customs Act. β The appeal was allowed, and the impugned order was set aside, granting consequential relief to the appellant. β The Tribunal left the question of classification open for determination in future cases, ensuring that the matter could be revisited if necessary.
Source: CESTAT Delhi
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