Samsung Offices Come Under Scrutiny Of Revenue Intel On Suspicion Of Customs Duty Evasion

Directorate of Revenue Intelligence officials carried out “searches” at its offices over suspected evasion of duty on import of network equipment.

New Delhi: South Korean firm Samsung Electronics has come under the scrutiny of the Directorate of Revenue Intelligence (DRI) as the officials carried out “searches” at its offices over suspected evasion of duty on import of network equipment.

According to the business publication Economic Times, the searches were conducted in its Delhi and Mumbai offices on Wednesday. However, the sources of the publication said there is not much known about the DRI’s findings.

Samsung Electronics is seen as the largest 4G vendor in India in terms of volume and it remains an exclusive 4G equipment provider to Reliance Jio Infocomm.

Under the free trade agreement (FTA), the company enjoys the provision of zero duty on import of telecom products from its manufacturing base in its home country and in Vietnam as opposed to Europe’s Ericsson and Nokia and China’s Huawei and ZTE who pay 20 percent duty.

 Why did officials have a suspicion?

The DRI officials had suspicion regarding the import of network gear. Officials undertook the search in Mumbai because the networking operations are based in the city. Also, Gurgaon is the company’s regional headquarters so they had doubts with that office, too, said the sources of the publication. “The officials will take requisite steps to ascertain whether evasion of customs duty has taken place and if so, whether it's malafide,” the report quoted its source as saying.

According to an industry expert, there must be some inputs that the equipment was actually made in a non-FTA country and was routed through South Korea or Vietnam with low-value addition in those geographies. This could have led to suspicion and questioning by the authorities as the imported equipment which do not adhere to the local value addition mandate face the liability of paying duty.

In October 2018, the import duty was doubled to 20 percent on several types of network equipment including ethernet switches, IP radios, base stations, media gateways, optical transport equipment, MIMO/4G LTE gear, gateway controllers, VoIP phones, packet transport nodes, and optical transport product or switches. The government had also imposed a 10 percent customs duty on products like printed circuit boards.