Rs 653 crore import duty evasion notice on Xiaomi

Chinese phone maker Xiaomi’s India unit has been slapped with a Rs 653 crore notice for alleged evasion of import duty, as per an official statement.

A show-cause notice has been slapped on Xiaomi India following recovery of documents during searches on its premises that indicated remittance of royalty and licence fee to US and Chinese firms under contractual obligations, the union finance ministry said on Wednesday.

Xiaomi did not immediately respond. Evidence got during investigations by the Directorate of Revenue Intelligence (DRI) indicated 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.

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, the ministry said. After completion of the investigation by the DRI, three show cause notices have been issued to M/s Xiaomi Technology India for demand and recovery of duty amounting to Rs. 653 cr for the period April 1, 2017 to June 30, 2020, under the provisions of the Customs Act, 1962. Also the royalty and licence fee paid by Xiaomi India to Qualcomm US and to Beijing Xiaomi Mobile Software, China were not being added in the transaction value of the goods imported by the firm and its contract manufacturers.

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