Xiaomi India accused of evading Rs 653 crore in customs duty

The Finance Ministry has accused Xiaomi Technology India Pvt. of evading customs duty for which it has issued three show cause notices to the smartphone maker demanding recovery of Rs 653 crore.

The amount corresponds to the period between April 1, 2017, and June 30, 2020, according to a ministry statement issued on Wednesday.

The Directorate of Revenue Intelligence acted upon inputs that the Chinese company was evading customs duty through undervaluation. Investigations conducted on the Xiaomi premises led to the recovery of incriminating documents indicating that Xiaomi India was remitting royalty and licence fee to Qualcomm USA and to Beijing Xiaomi Mobile Software Co., the ministry said.

The statement didn’t mention where the premises was in India.

“It further emerged that the ‘royalty and licence fee’ paid by Xiaomi India to Qualcomm USA and to Beijing Xiaomi Mobile Software Co., China (related party of Xiaomi India) were not being added in the transaction value of the goods imported by Xiaomi India and its contract manufacturers,” it said.

As a result, Xiaomi India was “evading customs duty being the beneficial owner of such imported mobile phones, the parts and components thereof”.

At the time of the investigations, the statement said, statements of key persons of Xiaomi India and its contract manufactures were recorded, during which one of the directors of Xiaomi India confirmed the payments.

Xiaomi India didn’t issue any immediate comment. BloombergQuint