NEW DELHI: The directorate of revenue intelligence has alleged a Rs 653 crore customs duty evasion by Xiaomi Technology India and its contract manufacturers and slapped a recovery notice. Following an investigation, DRI has accused the Indian arm of the Chinese company that produces and sells mobile phones and other gadgets in India of “evading customs duty by way of undervaluation”, a statement issued by the finance ministry 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,” a spokesperson for the Chinese company’s Indian arm said. DRI had recently conducted searches at Xiaomi India, which allegedly 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.
The payments were not being added in the transaction value of the goods imported by Xiaomi India and its contract manufacturers. DRI has alleged that not including these in the assessable value is a violation of the Customs Act. “The investigations conducted by the DRI further showed that Xiaomi India is engaged in the sale of MI brand mobile phones and these mobile phones are either imported by Xiaomi India or assembled in India by importing parts and components of mobile phones by contract manufacturers of Xiaomi India. The MI brand mobile phones manufactured by the contract manufacturers are sold exclusively to Xiaomi India, in terms of the contract agreement,” the official statement said.
The tax demand is for the period between April 2017 and June 2020.
In a separate case, last month, the income tax department had conducted raids against Chinese mobile manufacturers Oppo, Vivo and OnePlus.