The Directorate of Revenue Intelligence (DRI) has conducted searches at the premises of mobile company Oppo India and unearthed a customs duty evasion of Rs 4,389 crore by the company, according to an official statement on Wednesday. Oppo India is a subsidiary company of China-based Guangdong Oppo Mobile Telecommunications Corporation Ltd.
The searches come days after the Enforcement Directorate (ED) conducted raids against Chinese smartphone manufacturer Vivo and related firms at more than 40 places across India in a money-laundering investigation. The ED said the company’s Indian arm “remitted” almost 50 per cent of its turnover, which is Rs 62,476 crore to China to avoid taxes here.
“During an investigation pertaining to M/s Oppo Mobiles India Private Limited (hereinafter referred to as Oppo India), a subsidiary company of Guangdong Oppo Mobile Telecommunications Corporation Ltd, China (hereinafter referred to as Oppo China), the Directorate of Revenue Intelligence (DRI) has detected customs duty evasion of around Rs 4,389 crore,” the finance ministry said in a statement on Wednesday.
Oppo India is engaged in the business of manufacturing, assembling, wholesale trading, distribution of mobile handsets and accessories thereof, across India. Oppo India deals in various brands of mobile phones, including Oppo, OnePlus and Realme.
“During the course of investigation, searches were conducted by 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 mis-declaration in the description of certain items imported by Oppo India for use in the manufacture of mobile phones. This mis-declaration resulted in wrongful availment of ineligible duty exemption benefits by Oppo India amounting to Rs 2,981 crore,” according to the statement.
It added that 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.
When contacted, an Oppo India spokesperson 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,” he further mentioned.
The finance ministry also said 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 licence, etc.
“The said ‘Royalty’ and ‘Licence Fees’ paid by Oppo India were not being added in the transaction value of the goods imported by them, in violation of Section 14 of the Customs Act, 1962, read with Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules 2007. The alleged duty evasion by M/s Oppo India on this account is Rs. 1,408 crore,” it added.
A sum of Rs 450 crore has been voluntarily deposited by Oppo India, as partial differential Customs duty short paid by them, the statement said.
It also said that 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 said Notice also proposes relevant penalties on Oppo India, its employees and Oppo China, under the provisions of the Customs Act, 1962.
The Directorate of Revenue Intelligence (DRI), under the Central Board of Indirect Taxes and Customs (CBIC), is an intelligence and enforcement agency of the Government of India on anti-smuggling matters.
Premises of Xiaomi, Oppo and Vivo, among other Chinese smartphone companies, and their distributors and linked associates were also raided in India by the income tax department in December last year. The department claimed to have detected alleged unaccounted income worth over Rs 6,500 crore due to the violation of the Indian tax law and regulations.
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