Delhi High Court To Examine CAAR's Power To Void Customs Advance Rulings

The Delhi High Court has admitted an appeal that will examine when the Customs Authority for Advance Rulings (CAAR) can declare an advance ruling void from the outset on the ground that it was obtained through misrepresentation of material facts.

The appeal arises from the CAAR's exercise of its powers under Section 28K of the Customs Act, 1962, to declare the appellant's August 6, 2025, advance ruling void ab initio.

The Division Bench of Justices Anil Kshetrapal and Shail Jain was hearing an appeal filed by a plastic manufacturing company challenging an order of the CAAR declaring its earlier advance ruling dated August 6, 2025 void ab initio under Section 28K of the Customs Act on the ground that it had allegedly been obtained by misrepresentation of material facts.

Appellant had originally approached the CAAR seeking an advance ruling on the classification of various imported goods, including aluminium plates, magnesium alloy sheets, heat dissipating films, silicon pads, conductive foams, antennas, double-sided tape and dust-proof paper, stated to be used in the manufacture of mobile phone front, middle and back covers.

The CAAR had issued an advance ruling in the appellant's favour on August 6, 2025.

Subsequently, the jurisdictional Commissioner invoked Section 28K of the Customs Act alleging that the advance ruling had been obtained through misrepresentation of material facts.

Accepting the application, the CAAR declared its earlier ruling void ab initio, prompting the present appeal.

The High Court Bench observed that the appeal raises issues requiring detailed consideration, including the scope and applicability of Section 28K of the Customs Act, the circumstances in which an advance ruling may be declared void ab initio, and the procedural safeguards required to be followed while exercising such power.

The matter is listed for final disposal in October 2026.

During the hearing, Appellant also sought an interim stay of the CAAR's order. It argued that the proceedings under Section 28K had been initiated without furnishing all documents relied upon by the Commissioner, thereby depriving it of an effective opportunity to respond.

Appellant further contended that the allegations of misrepresentation were vague and that all relevant facts regarding the imported goods and their usage had already been disclosed during the original advance ruling proceedings, in which the Commissioner had also participated.

The Court, however, declined to grant interim protection, observing that the stay would have the effect of reviving the earlier advance ruling during the pendency of the appeal, despite the CAAR having recorded a finding that the ruling had been obtained by misrepresentation of material facts.

It clarified that whether the CAAR's findings are sustainable, whether the requirements of Section 28K were satisfied, and whether the proceedings suffered from violation of principles of natural justice would be examined at the stage of final hearing.

For Appellant: Senior Advocate Amar Dave, along with Advocates Kumar Visalaksh, Rahul Khurana, Udit Jain, Saurabh Dugar and Ramidi Pavani

For Respondents: Anushree Narain, SSC along with  Advocate Apurv Yadav,