Advance Ruling Declared Void for Misrepresentation of Material Facts: CAAR Delhi

In Re Le Mei Plastic Manufacturing Private Limited (CAAR Delhi)

The Customs Authority for Advance Ruling (CAAR), Delhi examined whether Advance Ruling No. CAAR/Del/Le Mei/44/2025 dated 06.08.2025 had been obtained by fraud or misrepresentation of material facts under Section 28K of the Customs Act, 1962. The original advance ruling had been sought under Section 28H of the Customs Act, 1962 on the classification of imported goods, namely aluminium plates, magnesium alloy sheets, heat dissipating films, silicon pads, conductive foams, antenna modules, double-sided tapes and dust-proof papers stated to be used in the manufacture of Front Cover, Back Cover and Middle Cover of mobile phones. The applicant had represented these imported goods as essential inputs or components required for manufacturing the intermediate goods.

Subsequently, the Principal Commissioner of Customs, ACC (Import), New Delhi informed the Authority that an investigation conducted by the Special Intelligence and Investigation Branch (SIIB) revealed that the advance ruling had been obtained through misrepresentation of material facts. The representations relied upon statements recorded under Section 108 of the Customs Act, 1962 from the applicant’s Senior Manager (Operations) and the DGM Logistics of Vivo Mobile India Pvt. Ltd., together with documentary evidence. An additional representation enclosed a Chartered Engineer’s Certificate dated 14.05.2026, which opined that the Front Cover, Back Cover, Middle Cover and Support Bracket were independently identifiable structural parts of mobile phones and that the attached components retained their own identity and specialised functions.

A notice under Section 28K was issued requiring the applicant to explain why the advance ruling should not be declared void ab initio. The applicant contended that all relevant facts regarding the imported goods, manufacturing process and their use had already been disclosed, that the proceedings were based only on a re-characterisation of existing facts, that principles of natural justice had been violated by non-supply of certain documents, and that the appropriate departmental remedy was an appeal under Section 28KA rather than proceedings under Section 28K.

During the proceedings, further material was received, including another statement under Section 108 in which the applicant’s Senior Manager agreed with the Chartered Engineer’s findings and the statement of the DGM Logistics of Vivo Mobile India Pvt. Ltd. He stated that antenna modules, conductive foams, conductive cloth, heat-dissipation films, silicon gel pads, sealing gaskets, NFC sheets, camera dust-proof pads and waterproof PET independently performed their respective functions within the mobile phone and that the applicant’s activities primarily involved positioning and affixing ready-to-use components without changing their identity or essential characteristics.

The Authority observed that the investigation established that the Front Cover, Back Cover, Middle Cover and Support Bracket acquired their complete identity after plastic injection moulding and machining, while subsequent assembly of antenna modules, conductive foams, heat-dissipation films, silicon pads, sealing gaskets and similar items did not alter the identity or essential character of either the covers or the components. The evidence also showed that the imported items were complete and functionally distinct mobile phone parts, separately procured, assigned independent part numbers, maintained separately in inventory and carrying separate cost contributions. Admissions by the applicant’s Senior Manager further recognised that antenna modules fell under Serial No. 6D and conductive foams, conductive cloth, heat-dissipation films, silicon gel pads, sealing gaskets and related items fell under Serial No. 6F of Notification No. 57/2017-Customs dated 30.06.2017.

The Authority concluded that the evidence did not support the applicant’s claim that the imported goods were indispensable inputs for manufacturing the covers. Instead, the materials established that the imported goods were complete, finished and functionally distinct parts of mobile phones, while the covers independently acquired their essential character before assembly. The subsequent attachment of the imported components was held to be a post-manufacturing activity undertaken to satisfy customer-specific requirements and did not constitute manufacture of the covers.

Rejecting the applicant’s argument that the matter involved only a different legal interpretation, the Authority held that the investigation had revealed a materially different factual foundation from that presented in the original application. It distinguished Section 28K from Section 28KA, observing that Section 28KA concerns challenges to the legality or correctness of an advance ruling, whereas Section 28K applies where a ruling has been obtained through fraud or misrepresentation of facts. The availability of an appellate remedy under Section 28KA did not exclude the Authority’s jurisdiction under Section 28K when subsequent investigation disclosed materially inaccurate or incomplete factual representations.

On the cumulative effect of the SIIB investigation, statements recorded under Section 108, and the Chartered Engineer’s opinion, the Authority held that the advance ruling had been obtained through misrepresentation of material facts. Accordingly, in exercise of powers under Section 28K of the Customs Act, 1962, Advance Ruling No. CAAR/Del/Le Mei/44/2025 dated 06.08.2025 was declared void ab initio.

FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI

1. Brief facts of the Case

1.1. M/s. Le Mei Plastic Manufacturing Private Limited (hereinafter referred to as “the applicant”) had filed an application dated 05.03.2025 before this Authority under Section 28H of the Customs Act, 1962 seeking advance ruling on the classification of certain goods, namely aluminium plates, magnesium alloy sheets, heat dissipating films, silicon pads, conductive foams, antenna modules, double-sided tapes and dust-proof papers used in the manufacture of Front Cover, Back Cover and Middle Cover of mobile phones. In the application for advance ruling, the imported goods were projected as essential inputs or components required for manufacture and completion of Front Cover, Back Cover and Middle Cover. The application conveyed that the imported items formed integral constituents of the intermediate goods (Front Cover, Back Cover and Middle Cover) manufactured by the applicant. After considering the submissions made by the applicant and after granting personal hearing on 10.07.2025, this Authority pronounced Advance Ruling No. CAAR/Del/Le Mei/44/2025 dated 06.08.2025.

1.2. Subsequently, this Authority received a communication dated 17.04.2026 from the Principal Commissioner of Customs, ACC (Import), New Delhi, wherein it was represented that investigation conducted by the Special Intelligence and Investigation Branch (SIIB), ACC (Import), had revealed that the aforesaid advance ruling had been obtained by the applicant by misrepresentation of material facts and, therefore, the same was liable to be declared void ab initio under Section 28K of the Customs Act, 1962. In support of the said representation, reliance was placed upon the statements recorded under Section 108 of the Customs Act, 1962 from the Senior Manager (Operations) of the applicant company, and from DGM Logistics, M/s. Vivo Mobile India Pvt. Ltd., along with relevant documents gathered during investigation.

1.3. Thereafter, vide communication dated 22.05.2026, the Principal Commissioner of Customs, ACC (Import), New Delhi, forwarded an additional representation enclosing a Chartered Engineer’s Certificate dated 14.05.2026. In the said report, the Chartered Engineer, after physical examination of the goods, opined that the bare Front & Back Cover, Middle Cover and Support Bracket were independently identifiable structural parts of mobile phones and that the various components affixed thereon retained their independent identity and specialized functions.

1.4. Taking note of the aforesaid representations and the materials placed on record, this Authority issued a Notice dated 29.04.2026 to the applicant under Section 28K of the Customs Act, 1962 calling upon it to explain as to why Advance Ruling No. CAAR/Del/Le Mei/44/2025 dated 06.08.2025 should not be declared void ab initio on the ground that certain material facts relevant to the case were either suppressed or misrepresented at the time of seeking the advance ruling.

1.5. In response to the said notice, the applicant appeared for personal hearing on 10.06.2026 and subsequently filed written submission. The applicant, inter alia, contended that all relevant facts relating to the nature of the goods, manufacturing process and use of the imported items had been fully disclosed before this Authority at the time of the original proceedings and that the present proceedings are based on re-characterization of the facts that were already placed before this Ld. Authority. The applicant further contended that the proceedings suffered from violation of principles of natural justice on account of non-supply of the statements recorded under Section 108 and other relied upon documents and that the proper remedy available to the Department, if aggrieved by the ruling, was under Section 28KA of the Customs Act, 1962.

1.6. During the pendency of the proceedings under Section 28K, this Authority received a further communication dated 17.06.2026 from the Principal Commissioner of Customs, ACC (Import), New Delhi, forwarding certain additional facts gathered during the course of investigation. Along with the said communication, a copy of the statement dated 15.06.2026 of Senior Manager (Operations), M/s. Le Mei Plastic Manufacturing Private Limited, recorded under Section 108 of the Customs Act, 1962, was also furnished for consideration by this Authority. In the aforesaid statement, Senior Manager (Operations) of M/s. Le Mei Plastic Manufacturing Private Limited, inter alia, agreed with the findings contained in the Chartered Engineer’s Certificate dated 14.05.2026 as well as with the statement dated 08.04.2026 of DGM Logistics, M/s. Vivo Mobile India Pvt. Ltd. He further stated that the various components such as antenna modules, conductive foams, conductive cloth, heat-dissipation films, silicon gel pads, sealing gaskets, NFC sheets, camera dust-proof pads and waterproof PET perform their own independent functions in the mobile phone and that such functions are performed by the components themselves and not by the covers or brackets onto which they are assembled. He also admitted that the assembly operations carried out by the applicant primarily consist of positioning and affixing ready-to-use components onto the covers and brackets without altering the essential characteristics or identity of either the components or the covers.

1.7. I have carefully considered the representations made by the jurisdictional Commissionerate, the written and oral submissions advanced on behalf of the applicant, the statements recorded under Section 108 of the Customs Act, 1962, the Chartered Engineer’s Certificate dated 14.05.2026 and all other materials available on record. The matter is accordingly taken up for determination.

Discussion, Findings and Conclusion

2.1. I have carefully considered the inputs received from the Principal Commissioner of Customs, ACC (Import), New Delhi, vide letters dated 17.04.2026, 22.05.2026 and 17.06.2026 and the submissions filed by M/s. Le Mei Plastic Manufacturing Private Limited.

2.2. The issue involved in the present proceedings is whether Advance Ruling No. CAAR/Del/Le Mei/44/2025 dated 06.08.2025 was obtained by fraud or misrepresentation of material facts so as to attract the provisions of Section 28K of the Customs Act, 1962.

2.3. Section 28K empowers this Authority to declare an advance ruling void ab initio where it is found that such ruling had been obtained by fraud or misrepresentation of facts. Section 28K is reproduced as below:

Section 28K. Advance ruling to be void in certain circumstances. –

(1) Where the Authority finds, on a representation made to it by the

Principal Commissioner of Customs or Commissioner of Customs] or otherwise, that an advance ruling pronounced by it under sub-section (6) of section 28-1 has been obtained by the applicant by fraud or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act shall apply

Therefore, what requires examination is whether the factual premise on which the ruling was rendered truly reflected the nature and character of the goods and the manufacturing operations undertaken by the applicant.

2.4. The original application proceeded substantially on the basis that the imported goods, namely aluminium plates, magnesium alloy sheets, heat dissipating films, silicon pads, conductive foams, antenna modules, double-sided tapes and dust-proof papers constituted components or inputs required for manufacture of Battery Cover, Back Cover and Middle Cover, and that the resulting assemblies were classifiable as parts of mobile phones. However, investigation conducted by the jurisdictional customs authorities and the statements recorded under Section 108 disclose a materially different factual position.

2.5. As per inputs from SIIB, ACC (Import), New Delhi, it is observed that the Front Cover, Back Cover, Middle Cover and Support Bracket acquire their complete identity and essential character immediately upon completion of the plastic injection moulding and machining processes. Therefore, as per statements recorded by SIIB, ACC (Import), New Delhi, these items are independently recognizable and identifiable as structural parts of specific mobile phone models even prior to the installation of any additional components. It has further been admitted by Senior Manager (Operations) of M/s. Le Mei Plastic Manufacturing Private Limited and DGM Logistics, M/s. Vivo Mobile India Pvt. Ltd. during investigation that the subsequent fitting or affixing of antenna modules, conductive foams, conductive cloth, heat-dissipation films, silicon pads, sealing gaskets and other similar items is merely an assembly activity undertaken in accordance with the customer’s drawings, Bill of Materials and technical specifications and that such assembly neither alters the identity and essential character of the covers and brackets nor changes the nature and functionality of the individual components. The SIIB, ACC (Import), New Delhi, has informed that the materials on record also establish that bare moulded covers are supplied whenever so required by the customer and that assembly of additional components is carried out only where the customer specifically requires assembled cover units.

Further, as per inputs from the SIIB, ACC (Import), New Delhi, the imported antenna units are complete antennas and that the remaining imported items perform distinct and independent functions within the mobile phone, such as signal transmission, thermal management, electromagnetic shielding, sealing and protection. It has been admitted in the statements that the covers and the individual components are separately procured, assigned independent part numbers, maintained separately in inventory and have separately identifiable cost contributions in the pricing of the assembled products. Significantly, the Senior Manager (Operations) of the applicant has acknowledged that portable antenna modules are covered under 51. No. 6D of Notification  No. 57/2017-Customs, dated the 30^th June, 2017, and that conductive foams, conductive cloth, heat-dissipation films, silicon gel pads, sealing gaskets, NFC sheets, camera dust-proof pads and USB waterproof PET are covered under Sl. No. 6F of Notification No. 57/2017-Customs, dated the 30^th June, 2017. These admissions corroborate the statement of the DGM Logistics of M/s Vivo Mobile India Pvt. Ltd. and the opinion rendered by the Chartered Engineer, thereby establishing a consistent and unambiguous factual position regarding the nature, identity and functionality of the imported goods. The relevant entries of Notification No. 57/2017-Customs, dated the 30^th June, 2017 are as below:

I, therefore, observe that the evidence presented before me does not support the applicant’s contention that the imported goods, namely antennae, conductive cloth, conductive foams, heat-dissipation films, silicon pads, sealing foams and similar items, are inputs indispensable for the manufacture of the front, middle and back covers. On the contrary, the material available on record establishes that these imported goods are complete, finished and functionally distinct parts of mobile phones, while the covers independently attain their essential character upon completion of the moulding and coating processes. The subsequent assembly of such components onto the already manufactured covers is a post-manufacturing activity undertaken solely to satisfy model-specific customer requirements and to facilitate subsequent assembly of the finished mobile phone. Such assembly neither constitutes nor contributes to the manufacture of the covers, and the imported components continue to retain their independent identity and functionality even after being affixed to the covers. Consequently, the imported goods cannot be regarded as inputs or raw materials used in the manufacture of covers but are, in their own right, complete and identifiable parts of mobile phones.

2.6. The SIIB, ACC (Import), New Delhi,’ has submitted that the catalogue submitted by the importer itself clearly indicates that the usage of the ‘products is described in relation to smartphones/mobile phones, highlighting their specific functional roles. There is no indication that these goods are to be used as parts of covers or in the manufacture thereof, thereby contradicting the claims made in the application. The SIIB. ACC (Import), New Delhi, further submitted that examination of purchase orders placed by M/s Vivo on M/s Le Mei shows that the orders are for “Front Cover Component”, “Middle Cover CoMponent” and “Mainboard Support Component”, with the Unit of Measurement (UOM) specified as “Set” rather than numbers/pieces. As per SIIB, ACC (Import). New Delhi, this clearly indicates , that the orders are for pre-assembled units comprising covers along with multiple functional components, and not for bare covers. Therefore, this directly contradicts the claim that imported goods are used in manufacture of covers, and instead establishes that they are assembled with covers as independent parts of mobile phones. This fact also supported by the statement of DGM Logistics of I\4/s. Vivo Mobile India Pvt Ltd. The above submissions put before me by SIIB, ACC (Import), New Delhi, are contrary to the facts submitted by the applicant in their application for advance ruling dated 05.03.2025.

Further, the Chartered Engineer in its report dated 14.05.2026 furnished by SIIB, ACC (Import), New Delhi, ‘after physical examination of the goods, has opined that the bare Front & Back Cover, Middle Cover and Support Bracket are independently identifiable structural parts of mobile phones and that subsequent affixation of antenna modules, conductive foams, heat dissipating films, silicon pads and other similar items does not alter their identity or essential character. The Chartered Engineer further opined that the additional components are not integral structural parts of the covers and retain their separate identity and specialized functions even after assembly.

2.7. Basea on the material placed on record, it can be said that the applicant has sought to characterize complete and functionally independent parts of mobile phones as mere inputs for the manufacture of covers. Such characterization does not accord with the true nature of the imported goods and has the effect of bringing them within the scope of Serial No. 6E of Notification No. 57/2017-Customs, dated the 30^th June, 2017, which grants exemption only to inputs used in the manufacture of specified goods. The investigation conducted by the SIIB, ACC (Import), New Delhi, has established that the imported goods are themselves finished and identifiable parts of mobile phones, each possessing an independent commercial identity and performing a distinct function in the operation of the mobile phone.

2.8. The applicant has contended that the present proceedings merely represent a change in the perception of the Department regarding the classification and characterization of the goods and that the jurisdictional Commissionerate, being dissatisfied with the ruling, ought to have availed the appellate remedy contemplated under Section 28KA of the Customs Act, 1962 instead of seeking invocation of Section 28K. The applicant has further argued that all relevant facts concerning the manufacturing process, usage of the subject goods and their role in the manufacture of Front Cover, Back Cover and Middle Cover had already been disclosed before this Authority and, therefore, the proceedings initiated under Section 28K amount to nothing more than an attempt to revisit the correctness of the earlier ruling.

In my considered view, the argument advanced by the applicant proceeds on the assumption that the present proceedings are founded merely upon a different interpretation of the same set of facts. However, a careful examination of the materials placed on record does not support such a proposition. The communications/inputs received from the jurisdictional Commissionerate, the statements recorded under Section 108 of the Customs Act and the Chartered Engineer’s report collectively reveal that the factual matrix emerging during investigation is materially different from the factual premise on which the advance ruling came to be pronounced.

It is observed that in the application for advance ruling, the imported goods were projected as essential inputs or components required for manufacture and completion of Front Cover, Back Cover, Middle Cover and Support Bracket. The application conveyed that the imported items formed integral constituents of the intermediate goods manufactured by the applicant. It was on the basis of such factual foundation that the issue was examined by this Authority while pronouncing Advance Ruling No. CAAR/Del/Le Mei/44/2025.

But, as detailed in above paras, what emerges from the investigation is not merely an alternative legal interpretation, but the existence of facts which materially alter the very foundation upon which the ruling came to be pronounced. The issue, therefore, cannot be characterized as a simple difference of opinion on classification. Rather, the investigation has brought to light circumstances which demonstrate that the actual nature, identity and role of the imported goods and the intermediate products were not projected before this Authority in their true perspective.

The distinction between Sections 28K and 28KA of the Customs Act assumes importance in this regard. Section 28KA provides a mechanism for challenging the correctness or legality of an advance ruling. On the other hand, Section 28K operates in a completely different field and comes into play where the ruling itself is found to have been obtained by fraud or misrepresentation of facts. Therefore, the existence of an appellate remedy under Section 28KA cannot denude this Authority of its jurisdiction under Section 28K when subsequent investigation reveals that the factual foundation underlying the ruling was materially inaccurate or incomplete.

The contention of the applicant that the present proceedings amount to a substitute for the appellate remedy is therefore devoid of merit. Once material facts affecting the very basis of the ruling are found to have been inaccurately represented, the jurisdiction under Section 28K stands independently attracted. Acceptance of the applicant’s argument would render Section 28K void and defeat the legislative intent behind incorporating a specific provision empowering the Authority to declare an advance ruling void ab initio where fraud or misrepresentation subsequently comes to light.

In the present case, the cumulative effect of the investigation conducted by SIIB, ACC (Import), New Delhi, the statements recorded under Section 108, and the expert opinion establishes that the covers themselves possess independent identity even before assembly and that the imported items continue to retain their own functional identity. These facts strike at the very root of the factual assumptions on which the original ruling proceeded. I therefore hold that the jurisdictional Commissionerate was justified in invoking the provisions of Section 28K.

2.9. Having regard to the entirety of the evidence available on record and for the reasons discussed hereinabove, I am satisfied that Advance Ruling No. CAAR/Del/Le Mei/44/2025 dated 06.08.2025 was obtained on the basis of misrepresentation of material facts within the meaning of Section 28K of the Customs Act, 1962. Accordingly, the said advance ruling is liable to be declared void ab initio.

2.10. In view of the foregoing discussion and findings, and in exercise of powers conferred under Section 28K of the Customs Act, 1962, I hereby hold that Advance Ruling No. CAAR/Del/Le Mei/44/2025 dated 06.08.2025 had been obtained by misrepresentation of material facts. Accordingly, Advance Ruling No. CAAR/Del/Le Mei/44/2025 dated 06.08.2025 is declared void ab initio under Section 28K of the Customs Act, 1962.