Not Disclosing Fibre Length in Import of ‘Para-Aramid Pulp’ not Suppression: CESTAT Bars Extended Limitation by Customs [Read Order]
CESTAT held that omitting to declare fibre length in Bills of Entry does not amount to ‘suppression’ under Section 28(4) of the Customs Act, 1962.
Fibre Length in Import - Para-Aramid Pulp - CESTAT Bars Extended - Customs - taxscan
Fibre Length in Import - Para-Aramid Pulp - CESTAT Bars Extended - Customs - taxscan
The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at New Delhi ruled that failure to disclose the length of imported ‘Twaron Para-Aramid Pulp’ fibre does not constitute suppression or wilful misstatement under Section 28(4) of the Customs Act, 1962, and set aside the extended limitation and penalty imposed by the Customs under Section 114A of the Act.
The case arose after the Customs authorities at ICD, Patparganj, New Delhi examined consignments of Twaron Para-Aramid Pulp imported by M/s Leakless Gasket India Pvt. Ltd. during the period between 2018-19.
The goods were initially cleared under self-assessment under CTI 5601 22 00 (as wadding of man-made fibres).
During post-clearance scrutiny, Customs noted that the import product ought to be reclassified as ‘textile flock’ under CTI 5601 30 00 and raised a differential duty demand, which was paid by the importer to obtain clearance.
However, the Department later issued a show cause notice (SCN) on 28 December 2022 roughly three years after the date of imports, proposing to confiscate the goods and alleging suppression of the crucial fact that the fibres were shorter than 5 mm, thereby invoking the extended limitation period under Section 28(4).
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The adjudicating authority confirmed the demand, interest and penalty, all of which were subsequently upheld by the Commissioner (Appeals). The importer thus approached the Tribunal challenging the invocation of the extended period and the penalty component.
Dr. Prabhat Kumar and Pralabh Mathur appeared for the appellant and contended that the goods were always described in commercial and technical terms as “Twaron Para-Aramid Pulp (Industrial Man-Made Fibre)” and all related documents were furnished to Customs.
It was urged that the omission to state fibre length in the Bills of Entry could not be equated with suppression, particularly when Customs had full opportunity to test and verify the product before the assessment.
Mukesh Kumar Shukla, Authorized Representative for the Department submitted that the importer had failed to disclose in the Bills of Entry that the imported Para-Aramid Pulp consisted of fibres shorter than 5 mm - a fact which was crucial in classifying the goods under textile flock (CTI 5601 30 00) rather than wadding of man-made fibres (CTI 5601 22 00).
He contended that this omission amounted to suppression of material facts with an intent to evade proper classification and evade duty, submitting that there was now sufficient justification to invoke extended periods of limitation under section 28(4).
The Bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Member Technical) agreed with the appellant, observing that suppression under Section 28(4) required that deliberate concealment with intent to evade duty be done.
It was noted that the Bill of Entry only required the nature of the goods to be declared and not all the parameters of the test reports. Noting that the assessing officers had the opportunity to determine fibre characteristics during examination, it was observed that such omission could not be treated as suppression by the importer.
Consequently, CESTAT set aside the extended period demand and the penalty imposed under Section 114A.
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