New Delhi: The Indian unit of Chinese company Xiaomi is accused of evasion of customs duty. A show cause notice has been issued to mobile handset maker Xiaomi India for allegedly evading custom duty of Rs 653 crore. The Revenue Department had received intelligence that Xiaomi India was evading custom duty through undervaluation, following which an investigation was initiated in the matter.
During the investigation, all the campuses of Xiaomi India were searched by the DRI. The department has reportedly recovered documents indicating that Xiaomi India was remitting royalties and license fees to Qualcomm USA and Beijing Xiaomi Mobile Software Co Ltd under contractual obligations.
A Finance Ministry statement said that Xiaomi India has violated Section 14 of the Customs Act, 1962 and the Customs Valuation (Determination of the Value of Imported Goods) Rules 2007.
The ministry said that by not adding “royalty and license fee” to the transaction value, Xiaomi India was evading customs duty by being the beneficial owner of such imported mobile phones, parts and components.
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“At Xiaomi India, we attach utmost importance to ensuring that we comply with all Indian laws. At present, we are reviewing the notice in detail. As a responsible company, we will co-operate with the authorities with all necessary documents,” said a Xiaomi spokesperson.
The DRI has recorded statements of key individuals from Xiaomi India and its contract manufacturers, during which one of the directors of Xiaomi India confirmed the alleged payment.
The department has issued three show-cause notices to Xiaomi India under the provisions of the Customs Act, 1962 for demand and recovery of duty of Rs 653 crore for the period from 1 April 2017 to 30 June 2020.