Advance Ruling Voided for Misstatement of Facts: Analysis of In Re Le Mei Plastic Manufacturing Private Limited (CAAR Delhi)

Background and Context

The Customs Authority for Advance Ruling (CAAR), Delhi, in the matter of In Re Le Mei Plastic Manufacturing Private Limited, examined whether Advance Ruling No. CAAR/Del/Le Mei/44/2025 dated 06.08.2025 had been secured by misrepresentation or suppression of material facts within the meaning of Section 28K of the Customs Act, 1962.

The original advance ruling application was filed under Section 28H of the Customs Act, 1962. The assessee sought a ruling on the classification of several imported items claimed to be used in the manufacture of mobile phone structural parts, namely:

• Front Cover
• Back Cover
• Middle Cover

The imported items included aluminium plates, magnesium alloy sheets, heat dissipating films, silicon pads, conductive foams, antenna modules, double-sided tapes and dust-proof papers.

The assessee’s core representation was that these imported items were:

• Essential inputs or components
• Indispensable for the manufacture and completion of the Front Cover, Back Cover and Middle Cover
• Integral constituents of intermediate goods which were then supplied as parts of mobile phones

Relying on this factual premise, CAAR, Delhi passed the advance ruling on 06.08.2025.

Subsequently, the jurisdictional customs authority alleged that this ruling had been obtained by misrepresentation of key facts, triggering proceedings under Section 28K.

Initiation of Proceedings under Section 28K

Reference from Jurisdictional Commissioner

The Principal Commissioner of Customs, ACC (Import), New Delhi, vide communication dated 17.04.2026, informed CAAR that an investigation by Special Intelligence and Investigation Branch (SIIB), ACC (Import) had revealed:

• The advance ruling was obtained on the basis of incorrect/misleading factual representations.
• The imported goods were not mere inputs for manufacturing covers but were finished and functionally distinct parts of mobile phones.

In support, the Commissioner enclosed:

• Statements recorded under Section 108 of the Customs Act, 1962 from:
  • Senior Manager (Operations) of M/s. Le Mei Plastic Manufacturing Private Limited
  • DGM Logistics of M/s. Vivo Mobile India Pvt. Ltd.
• Other documents collected during investigation.

Chartered Engineer’s Opinion

By a further letter dated 22.05.2026, the Principal Commissioner submitted an additional representation enclosing a Chartered Engineer’s Certificate dated 14.05.2026. The expert, after physical inspection, opined that:

• Bare Front Cover, Back Cover, Middle Cover and Support Bracket were independently identifiable structural parts of mobile phones.
• Components affixed on these covers (such as antenna modules, conductive foams, heat dissipating films, silicon pads etc.) retained:
  • Their own independent identity
  • Their specialised and distinct functions, even after assembly on the covers

Notice to the Assessee

On consideration of these materials, CAAR issued a notice dated 29.04.2026 under Section 28K calling upon the assessee to show cause 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 the ruling had been obtained by fraud or misrepresentation of material facts.

The assessee appeared for a personal hearing on 10.06.2026 and filed written submissions in response.

Assessee’s Stand in Section 28K Proceedings

The assessee broadly argued that:

1. Full disclosure claim

   • All material facts relating to:
     • The nature of imported goods
     • Manufacturing process of Front, Back and Middle Covers
     • Use of the imported items
       had already been fully disclosed during the earlier advance ruling proceedings.

2. Re-characterisation argument

   • The jurisdictional authorities were merely reinterpreting or re-characterising the same set of facts placed earlier before CAAR.
   • Therefore, it was not a case of misrepresentation, but at best a change in the Department’s legal view.

3. Violation of natural justice

   • The assessee alleged non-supply of:
     • Statements recorded under Section 108
     • Certain relied upon documents
       and contended that this resulted in denial of natural justice.

4. Wrong provision invoked

   • According to the assessee, if the Department disagreed with the advance ruling, the appropriate remedy was an appeal under Section 28KA of the Customs Act, 1962,
   • and not proceedings under Section 28K.

Additional Investigation Material Before the Authority