The Directorate of Revenue Intelligence has issued three show-cause notices to Chinese smartphone maker Xiaomi India for demand and recovery of duty amounting to Rs 653 crore under the provisions of the Customs Act, 1962.
During the investigation, searches were conducted at the premises of Xiaomi India, which led to the recovery of ‘incriminating documents’ indicating that Xiaomi India was offering royalty and license fee to Qualcomm USA and to Beijing Xiaomi Mobile Software Co. Ltd., under contractual commitment.
It was further noticed that the "royalty and licence fee" paid by Xiaomi India to Qualcomm USA and to Beijing Xiaomi Mobile Software, China were not being added in the transaction value of the goods imported by Xiaomi India and its contract manufacturers.
The Finance Ministry said, “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.”
It further 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.”
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