The Directorate of Revenue Intelligence (DRI) has slapped a Rs 4,389 crore show cause notice on Chinese smartphone maker Oppo India on July 8 for allegedly evading customs duty by wrongfully availing exemption benefits, the PTI reported.
The Chinese company deals in mobile brands such as Oppo, OnePlus, and Realme.
During an investigation of Oppo Mobiles India Private Limited, a subsidiary of Guangdong Oppo Mobile Telecommunications Corporation Ltd - China (Oppo China), the DRI has detected Customs duty evasion of around Rs 4,389 crore, the Finance Ministry said on Wednesday.
During the probe, searches were conducted by the DRI at the office premises of Oppo India and residences of its key management employees, which led to the recovery of incriminating evidence, indicating wilful misdeclaration in the description of certain items imported by Oppo India for use in the manufacture of mobile phones.
"This misdeclaration resulted in wrongful availment of ineligible duty exemption benefits by Oppo India, amounting to Rs 2,981 crore. Among others, senior management employees and domestic suppliers of Oppo India were questioned, who in their voluntary statements accepted the submission of wrongful description before the Customs Authorities at the time of import,” the ministry said.
The investigation also revealed that Oppo India had remitted/made provisions for payment of 'royalty' and 'licence fee' to various multinational companies, including those based in China, in lieu of the use of proprietary technology/brand/IPR license etc.
The said 'royalty' and 'licence fees' paid by Oppo India were not being added to the transaction value of the goods imported by them, in violation of provisions of the Customs Act. The alleged duty evasion by Oppo India on this account is Rs 1,408 crore.
Oppo India in statement said, "We have a different view on the charges mentioned in the SCN. We believe it's an industry-wide issue many corporates are working on. OPPO India is reviewing the SCN received from DRI, and we are going to reply the notice, presenting our side, and will be working further with the related government departments. OPPO India is a responsible corporate and believes in prudent corporate governance framework. OPPO India will take appropriate steps as may be needed in this regard including any remedies provided under the law.”
Oppo India is engaged in the business of manufacturing, assembling, wholesale trading, distribution of mobile handsets and accessories thereof across India. It deals in various brands of mobile phones, including Oppo, OnePlus and Realme.
An amount of Rs 450 crore has been voluntarily deposited by Oppo India, as partial differential Customs duty short paid by them.
"After completion of the investigation, a show-cause notice has been issued to Oppo India demanding Customs duty amounting to Rs 4,389 crore. The Notice also proposes relevant penalties on Oppo India, its employees and Oppo China, under the provisions of the Customs Act, 1962," the Ministry said. The show cause notice was issued on July 8.