AMN / WEB DESK
Directorate of Revenue Intelligence (DRI has issued show-cause notices to mobile handset manufacturer Xiaomi Technology India Private Limited for demand and recovery of duty amounting to ₹653 crore.
The company is known for mobile handset brant MI, and it has a significant market share. DRI raided initiated an investigation against the company some time back.
According to a statement by the Finance Ministry, evidence gathered during the investigations by the DRI indicated that neither Xiaomi India nor its contract manufacturers included the amount of royalty paid by Xiaomi India in the assessable value of the goods imported by Xiaomi India and its contract manufacturers. This violates of Section 14 of the Customs Act, 1962 and Customs valuation (determination of the value of imported goods) Rules 2007. By not adding “royalty and licence fee” into the transaction value, Xiaomi India was evading Customs duty being the beneficial owner of such imported mobile phones, the parts and components,” the Ministry said.
Evidence gathered during investigations by the Directorate of Revenue Intelligence (DRI) indicated that neither Xiaomi India nor its contract manufacturers were including the amount of royalty paid by the firm in the assessable value of the goods imported by the company and its contract manufacturers, which is in violation of the customs law, the ministry said.
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 crore for the period April 1, 2017 to June 30, 2020, under the provisions of the Customs Act, 1962,” the finance ministry said.
During the investigations, it further emerged that the “royalty and licence fee” paid by Xiaomi India to Qualcomm USA and to Beijing Xiaomi Mobile Software Co Ltd, China (related party of Xiaomi India) were not being added in the transaction value of the goods imported by the firm and its contract manufacturers.
Investigations further showed that Xiaomi India is engaged in the sale of MI brand mobile phones and these mobile phones are either imported by the company or assembled in India by importing components of mobile phones by contract manufacturers of Xiaomi India.