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DRI Issues Notices to Xiaomi India for Recovery of Rs. 653 crore

The Directorate of Revenue Intelligence (DRI) has issued three show cause notices to Chinese smartphone marker Xiaomi India for demand and recovery of duty amounting to Rs. 653 crores for the period April 1, 2017 to June 30, 2020 under the provisions of the Customs Act, 1962, according to an official statement.

“Based upon an intelligence (tip) that M/s Xiaomi Technology India Private Limited (Xiaomi India) was evading customs duty by way of undervaluation, an investigation was initiated by the DRI against Xiaomi India and its contract manufactures,” according to a Press Information Bureau statement.

During the investigation, searches were conducted by the anti-smuggling agency at the premises of Xiaomi India, which led to the recovery of incriminating documents indicating that the company was remitting royalty and license fee to Qualcomm USA and to Beijing Xiaomi Mobile Software Co under contractual obligation, as per the statement.

The DRI had also searched factories of Foxconn’s India unit, Bharat FIH, and Dixon Technologies in South India. Bharat FIH and Dixon are contract manufacturers for Xiaomi.

The Income Tax Department had also conducted searches at Oppo and its partners’ premises across various states. The department last week said two companies can be fined Rs. 1,000 crores for non-compliance with the law pertaining to non-disclosure of related-party transactions, among other violations. It had not named the two firms, but sources had said they were Xiaomi and Oppo. S-ET

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