The Directorate of Revenue Intelligence (DRI) has initiated an investigation into Xiaomi Technology India Private Limited (Xiaomi India), alleging that the smartphone-manufacturing company has evaded customs duty of Rs 653 crores, according to a press release. The 'royalty and licence fee' that Xiaomi India had paid to Qualcomm USA and to Beijing Xiaomi Mobile Software was not added to the transaction value of goods imported by Xiaomi India and its contract manufacturers, the release stated. Chinese smartphone makers and apps have been under the scanner of the Indian government ever since reports alleged that Xiaomi smartphones send data to Chinese service providers and have a built-in capability to censor certain phrases. Violation of Section 14 of the Customs Act: DRI Since neither Xiaomi India nor its contract manufacturers included the royalty amount Xiaomi had paid to the two companies, the DRI said that it was a violation of Section 14 of the Customs Act, 1962 and Customs Valuation (determination of value of imported goods) Rules, 2007. 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 — press release DRI claimed that it had recorded statements of key persons of Xiaomi India and its contract manufacturers. One of the directors allegedly confirmed these royalty payments. MeitY sends notice to Xiaomi India, seeking details…
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DRI launches probe against Xiaomi India over unpaid customs duty worth crores
The decision spells fresh trouble for Xiaomi amid growing security concerns over Chinese smartphones.
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