Xiaomi penalised Rs653 cr for evading import duty

Tribune News Service

New Delhi, January 5

Chinese mobile phone giant Xiaomi has been slapped with a demand of Rs 653 crore by the Department of Revenue Intelligence (DRI) for not including royalty payments in the assessable value of the goods it imported over three years from 2017 to 2020.

The DRI had acted upon intelligence that Xiaomi India was evading customs duty by undervaluation. 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 the Chinese company was remitting royalty and licence fee to Qualcomm, US, and to Beijing Xiaomi Mobile Software.

Violation of Customs Act

• Searches on the premises of Xiaomi India led to the recovery of incriminating documents indicating that it was remitting royalty and licence fee to Qualcomm, US, and to Beijing Xiaomi Mobile Software
• Evidence indicated that neither Xiaomi India nor its contract manufactures were including the amount of royalty paid in the assessable value of the goods they imported

During investigations, it further emerged that the “royalty and licence fee” paid by Xiaomi India to Qualcomm and to Beijing Xiaomi Mobile Software was not being added in the transaction value of the goods imported by Xiaomi India and its contract manufacturers.

Evidence gathered during the investigations indicated that neither Xiaomi India nor its contract manufactures were including the amount of royalty paid in the assessable value of the goods they imported. This is in violation of Section 14 of the Customs Act, 1962 and Customs Valuation (determination of value of imported goods) Rules 2007, said an official statement.

After completion of the investigation, three show-cause notices have been issued to Xiaomi Technology for demand and recovery of duty amounting to Rs 653 crore, said the official statement.