Xiaomi India accused of evading Rs 653 crore in customs duty by finance ministry
The Ministry of Finance claimed that the DRI had begun investigating Xiaomi India and its contract manufacturers for evading customs taxes in a complete press statement.
FollowThe Directorate of Revenue Intelligence (DRI) has issued three show-cause notices to Xiaomi Technology India Private for "demand and collection of customs duty" totalling Rs 653 crore between April 1, 2017, and June 30, 2020. The Ministry of Finance claimed that the DRI had begun investigating Xiaomi India and its contract manufacturers for evading customs taxes in a complete press statement.
According to the company's statement, the DRI conducted searches at Xiaomi India's premises during the investigation, which resulted in the recovery of incriminating documents indicating that Xiaomi India was remitting royalty and licence fees to Qualcomm USA and Beijing Xiaomi Mobile Software Co. Ltd. under contractual obligation. The authorities also stated that one of Xiaomi India's directors verified the payments as mentioned earlier.
The royalties and licence fees paid by Xiaomi India to Qualcomm USA and Beijing Xiaomi Mobile Software Co. Ltd were not included in the transaction value of the devices imported by Xiaomi India and its contract manufacturers, it said.
The evidence acquired during the DRI's inspections indicated that neither Xiaomi India nor its contract manufacturers included the amount of royalty paid by Xiaomi India in the assessable value of the items imported by Xiaomi India and its contract manufacturers, according to the statement. It is a breach of Section 14 of the 1962 Customs Act and the 2007 Customs Valuation Rules.
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