Rs 4400 cr tax notice to Oppo India; revenue dept raises heat for customs duty evasion

Oppo India is engaged in the business of manufacturing, assembling, wholesale trading, distribution of mobile handsets and accessories thereof, across India.

The Directorate of Revenue Intelligence has raised a tax demand of Rs 4,389 crore on Oppo Mobiles India, raising heat on the Chinese smartphone maker in a case of customs duty evasion, the Ministry of Finance said Wednesday. Oppo India is a subsidiary of Guangdong Oppo Mobile Telecommunications Corp Ltd. Earlier last week, the Enforcement Directorate (ED) had said that another Chinese smartphone maker Vivo illegally transferred Rs 62,476 crore, which is almost 50% of its turnover, to China to avoid paying taxes in India.

Oppo India is engaged in the business of manufacturing, assembling, wholesale trading, distribution of mobile handsets and accessories thereof, across India.

During investigation, DRI conducted searches 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”, finance ministry said in a statement. 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.

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 use of proprietary technology/brand/IPR license 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  Oppo India on this account is Rs. 1,408 crore,”the ministry said.

A sum of Rs 450 crore has been voluntarily deposited by Oppo India, as partial differential customs duty short paid by it. After completion of the investigation, a Show Cause Notice was issued to Oppo India on July 8 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, it added.

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.