Xiaomi accused of evasion of customs duty of Rs 653 crore, notice issued for recovery

After getting information about evasion of duty through undervaluation, DRI started investigation which revealed about evasion of customs duty

Xiaomi India accused of evasion of customs duty

A case of evasion of customs duty of Rs 653 crore has come to light on Xiaomi India, a smartphone maker named Mi and Redmi. Giving information about this today, the Finance Ministry said that notices have been issued for demand and recovery of fees from the company. This case is from 1 April 2017 to 30 June 2020.

Tax evasion under the guise of undervaluation

The Finance Ministry today informed that an intelligence input revealed that the company was evading customs duty through undervaluation. After the information, the Directorate of Intelligence started the investigation. Documents found by DRI during investigation revealed that Xiaomi India, Qualcomm USA under contract and Xiaomi Mobile Software Co in Beijing. Ltd. royalty and license fee. In this regard, statements of key persons of Xiaomi India and the manufacturers contracting with it were recorded, during which one of the directors of Xiaomi India has confirmed the said payment. During investigation, it was revealed that “royalties and license fees” paid by Xiaomi India were not being added to the transaction value of goods imported by Xiaomi India and its contractor. The investigation conducted by DRI further revealed that Xiaomi India sells MI brand mobile phones and these mobile phones are either imported by Xiaomi India or by importing mobile phone parts and parts by a Xiaomi India contractor. Assembled in India. The Mi brand mobile phones manufactured by the manufacturing manufacturers involved in the contract are sold exclusively to Xiaomi India under the agreement. Evidence collected during investigation by DRI indicates that neither Xiaomi India nor its contractors were adding the royalty being paid to the value of imported goods. Which is a violation of section 14 of the Customs Act 1962 and custom valuation (determination of value of imported goods).

How to evade custom duty

The company was not adding royalty and license fee to the prices of imported goods, due to which the bill of imported goods was being shown low, due to the low bill, the tax liability on the company also reduced, according to the investigation, the company was undervaluation 1 Showing since April 2017. Till 30 June 2020, due to this, the company evaded tax of more than Rs 600 crore, which has been issued a notice to get it back.

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