Xiaomi India Slapped With Rs. 653-Crore Notice for Alleged Tax Evasion

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Chinese smartphone maker Xiaomi evaded customized obligation to the tune of Rs. 653 crore in India, Finance Ministry stated on Wednesday.

Based upon an intelligence that M/s Xiaomi Technology India Private Limited (Xiaomi India) was evading customs obligation by the use of undervaluation, an investigation was initiated by the Directorate of Revenue Intelligence (DRI) towards Xiaomi India and its contract producers.

Xiaomi supplied Gadgets 360 the next assertion:

At Xiaomi India, we give utmost significance to making sure we adjust to all Indian legal guidelines. We are at present reviewing the discover intimately. As a accountable firm, we are going to help the authorities with all essential documentation.

“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,” Finance Ministry stated in an announcement.

During the investigation, searches had been performed by the DRI on the premises of Xiaomi India, which led to the restoration of incriminating paperwork indicating that Xiaomi India was remitting royalty and licence payment to Qualcomm USA and to Beijing Xiaomi Mobile Software, below contractual obligation.

“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 Finance Ministry stated.

It additional emerged that the “royalty and licence fee” paid by Xiaomi India to Qualcomm USA and to Beijing Xiaomi Mobile Software, China (associated social gathering of Xiaomi India) weren’t being added within the transaction worth of the products imported by Xiaomi India and its contract producers, it added.

The investigations performed by the DRI additional confirmed that Xiaomi India is engaged within the sale of MI model cell phones and these cell phones are both imported by Xiaomi India or assembled in India by importing elements and elements of cell phones by contract producers of Xiaomi India.

The Mi model cell phones manufactured by the contract producers are bought completely to Xiaomi India, by way of the contract settlement.

Evidence gathered in the course of the investigations by the DRI indicated that neither Xiaomi India nor its contract manufactures had been together with the quantity of royalty paid by Xiaomi India within the assessable worth of the products imported by Xiaomi India and its contract producers, which is in violation of Section 14 of the Customs Act, 1962 and Customs valuation (willpower of worth of imported items) Rules 2007.

By not including “royalty and licence fee” into the transaction worth, Xiaomi India was evading Customs obligation being the useful proprietor of such imported cell phones, the elements and elements thereof, the Finance Ministry stated.


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