Xiaomi India evaded customs duty of Rs 653 crore: DRI

The Directorate of Revenue Intelligence (DRI) has found evasion of customs duty of Rs 653 crore by mobile manufacturer Xiaomi Technology India Private Limited (Xiaomi India.)
 
Xiaomi India sells MI brand mobile phones in India. These mobile phones are either imported by Xiaomi India or assembled in India by importing parts and components of phones by contract manufacturers of Xiaomi India.
 
In a release, DRI said that based upon an intelligence that Xiaomi India was evading customs duty by way of undervaluation, it initiated an investigation against the company and its contract manufacturers.
 
During the investigation, searches were conducted by the DRI at the premises of Xiaomi India, which 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, it said. 

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"Statements of key persons of Xiaomi India and its contract manufactures were recorded, during which one of the directors of Xiaomi India confirmed the said payments," the release said.
 
Besides, 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 Xiaomi India and its contract manufacturers.
 
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 thereof.
 
"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 01.04.2017 to 30.06.2020, under the provisions of the Customs Act, 1962," it added.

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