2026-VIL-1560-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs - Tariff classification of textile fabrics – Suppression of material facts – Burden of proof on Revenue – Extended period of limitation – Appellant imported and declared goods as mulberry silk fabrics under specified tariff headings - Department obtained Textile Committee test reports from 2008 identifying goods as viscose-silk woven fabric but continued to accept the declared classification - DRI initiated investigation and proposed reclassification alleging deliberate suppression with intent to evade duty and demand for differential customs duty for multiple consignments. Appellant contended that department had prior knowledge through test reports for identical goods from same supplier and hence suppression could not be alleged and extended period of limitation could not be invoked - Whether suppression of material facts for invoking extended period of limitation can be sustained when the department possessed test reports identifying goods and nevertheless accepted declared classification until the DRI investigation commenced – HELD - When material facts are within the knowledge of the Dept through its own test reports and the department has accepted the declared classification on multiple occasions prior to the investigation, the allegation of deliberate suppression with intent to evade payment of duty cannot be sustained - The extended period of limitation cannot be invoked where the relevant material was available to the department and had been generated through its own committees well before the imports in question - Further, demands relating to finally assessed consignments for which test reports existed are time barred and only provisionally assessed consignments can be examined. The classification issue involves bona fide interpretation of tariff and in such cases the appellant cannot be blamed for following the assessment practice as accepted by the department. Demands are limited to seven provisionally assessed consignments and confiscation and penalties are set aside with the matter being remanded to original authority for examination of alternative exemption benefits claimed by the appellant – The appeal is disposed of
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