Oppo India served notice for import duty evasion worth Rs 4,389 crore

NEW DELHI: The Finance Ministry on Wednesday said it has issued a notice to Chinese phone maker Oppo's Indian unit for allegedly evading import duties worth Rs 4,389 crore.

On July 8, Oppo India was slapped with a Show Cause Notice (SCN) after documents were recovered which indicated willful misdeclaration in the description of certain imports, royalty and license fees to several MNCs including some of them based in China.

In a Directorate of Revenue Intelligence (DRI) investigation of Oppo Mobiles India Pvt Ltd, a subsidiary of Guangdong Oppo Mobile Telecommunications Corporation Ltd, it had detected customs duty evasion of around Rs 4,389 crore, the ministry said in a statement.

Reacting to the development, Oppo India said it has a "different view" on the charges mentioned in the SCN and will take appropriate steps, including legal remedies.

"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 to the notice, presenting our side, and will be working further with the related government departments.

Oppo India is a responsible corporate and believes in the 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 said in an email response.

Oppo India is engaged in manufacturing, assembling, wholesaling and distribution of mobile handsets and accessories across India. It deals in various brands of mobile phones including Oppo, OnePlus and Realme.

In the course of the investigation the DRI conducted raids at the Oppo India office premises 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 for use in the manufacture of mobile phones".

As a result of this misdeclaration, Oppo India wrongly availed ineligible duty exemption benefits of Rs 2,981 crore.

The Ministry said that Oppo India's senior management staff and domestic suppliers, when questioned by DRI officials, admitted that they had submitted false declarations before the customs authorities at the time of importation.

The investigation also found that Oppo India has remitted/made payments of 'royalties' and 'license fees' to various China-based MNCs, among others in return for use of proprietary technology/brand/IPR license etc.

The said that in violation of the provisions of the Customs Act, 'royalty' and 'licence fees' paid by Oppo India were not being added to the transaction value of the goods imported by them.

It is alleged that Oppo India evaded tax of Rs 1,408 crore in this account. Oppo India voluntarily deposited Rs 450 crore as partial differential customs duty short paid by them, the ministry said.

"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.

In December last year, the Income Tax Department had also conducted searches against Chinese handset manufacturing companies including Oppo and their associated persons and claimed to have found unaccounted income due to violating Indian tax laws and regulations.

With PTI inputs