Xiaomi India evaded customs duty of Rs.653 crore by undervaluation of imports
The Directorate of Revenue Intelligence (DRI) has said that the Chinese mobile manufacturer Xiaomi has evaded customs duty of Rs.653 crore via undervaluation of imports.
Based upon intelligence that M/s Xiaomi Technology India Private Limited (Xiaomi India) was evading customs duty by way of undervaluation, an investigation was initiated by the Directorate of Revenue Intelligence (DRI) against Xiaomi India and its contract manufacturers.
On receiving the intel inputs searches were conducted by the DRI at the premises of Xiaomi India. Incriminating documents were recovered in the searches, indicating that Xiaomi India was remitting royalty and license fees to Qualcomm USA and to Beijing Xiaomi Mobile Software Co. Ltd., under contractual obligation.
Statements of key persons of Xiaomi India and its contract manufactures were recorded, during which one of the directors of Xiaomi India confirmed the said payments. After completion of the investigation, the DRI has slapped Xiaomi India with three show-cause notices following recovery of documents.
Evidence gathered during investigations by the Directorate of Revenue Intelligence (DRI) indicated that neither Xiaomi India nor its contract manufacturers were including the amount of royalty paid by the firm in the assessable value of the goods imported by the company and its contract manufacturers, which is in violation of the customs law.
The Ministry said that by not adding “royalty and license fee” in the transaction value, Xiaomi India was evading customs duty, being the beneficial owner of such imported mobile phones, the parts, and components thereof.
“After completion of the investigation by the DRI, three show-cause notices have been issued to M/s Xiaomi Technology India Private Limited for demand and recovery of duty amounting to Rs.653 crore for the period April 1, 2017, to June 30, 2020, under the provisions of the Customs Act, 1962,” the Finance Ministry said.
Xiaomi Technology India Private Limited has been demanded with the recovery of duty amounting to Rs.653 crore for the period April 1, 2017, to June 30, 2020, under the provisions of the Customs Act, 1962, by the DRI.
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