According to the news agency, the Finance Ministry has accused Xiaomi India of tax evasion of Rs 653 crore, and has issued a notice to the company regarding this. The company is accused of evading customs duty through undervaluation. Let us tell you, an investigation was also started by the Directorate of Revenue Intelligence (DRI) against the company and its manufacturers.
Issuing the statement, the ministry said “After completion of investigation by DRI, three show cause notices to M/s Xiaomi Technology India Pvt Ltd for demand and recovery of duty of Rs.653 crore during the period from 01.04.2017 to 30.06.2020.” (Show cause notices) have been issued.”
As we mentioned, searches were conducted by the DRI at the offices of Xiaomi India located in several cities of the country, in which, according to the directorate, several incriminating documents have been recovered. According to the information, it has been learned that Xiaomi India was remitting royalties and license fees to Qualcomm US and Beijing-based Xiaomi Mobile Software under contractual obligation.
The investigation conducted by DRI further revealed that Xiaomi India is involved in the sale of ‘MI’ brand mobile phones and these mobile phones are either imported by Xiaomi India or by contract manufacturers of Xiaomi India for mobile phone parts. And the components are imported and assembled in India. The MI brand mobile phones made by these manufacturers are sold exclusively to Xiaomi India through contract agreements.
Evidence found during investigation by DRI indicated that Xiaomi India and its contract manufacturer were not including the amount of royalty paid by Xiaomi India in the assessable value of goods imported by Xiaomi India and the contract makers, which That is in contravention of section 14 of the Customs Act, 1962 and the Custom Valuation (Determination of Value of Imported Goods) Rules, 2007.
In a statement to Gadgets 360, a Xiaomi India spokesperson said, “We ensure that we comply with all Indian laws. At the moment we are reviewing the notice in detail. As a responsible company, we all Will support the authorities with necessary documents.”