DRI slaps Xiaomi India with Rs. 653 Crore

The Directorate of Revenue Intelligence (DRI) found evasion of customs duty of Rs 653 crore by Chinese mobile manufacturer Xiaomi Technology India Private Limited (Xiaomi India.) A show-cause notice has been issued to Xiaomi India by DRI for the same. DRI received an intelligence that Xiaomi India was evading customs duty by way of undervaluation, following which DRI initiated an investigation against the company and its contract manufacturers. During the investigation, DRI conducted searches at various premises of Xiaomi India which led to the recovery of incriminating documents indicating that Xiaomi India was remitting royalty and licence fee to Qualcomm USA and to Beijing Xiaomi Mobile Software Co. Ltd., under contractual obligation. Evidence gathered during the investigations indicated that “neither Xiaomi India nor its contract manufactures were including the amount of royalty paid by Xiaomi India in the assessable value of the goods imported by Xiaomi India and its contract manufacturers, which is in violation of Section 14 of the Customs Act, 1962 and Customs valuation (determination of value of imported goods) Rules 2007”. By not adding “royalty and licence 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, it added. “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 crores for the period April 1, 2017 to June 30, 2020, under the provisions of the Customs Act, 1962,” the Union Finance Ministry said. On conclusion of the investigation Xiaomi’s spokesperson said, “At Xiaomi India, we give utmost importance to ensuring we comply with all Indian laws. We are currently reviewing the notice in detail. As a responsible company, we will support the authorities with all necessary documentation.” Further developments in the case are awaited.

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