The Directorate of Revenue Intelligence (DRI) has slapped a Rs 4,389 crore show cause notice on Oppo India on July 8 for allegedly evading customs duty by wrongfully availing exemption benefits.
Oppo India, the Indian subsidiary of a Chinese firm, deals in various brands of mobile phones, including Oppo, OnePlus and Realme.
During the 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 misdeclaration in the description of certain items imported by Oppo India for use in the manufacture of mobile phones, said the finance ministry in a statement.
"This misdeclaration resulted in wrongful availment of ineligible duty exemption benefits by Oppo India amounting to Rs 2,981 crore," the finance ministry stated on Wednesday.
"The investigation has further revealed that Oppo India had remitted/made provisions for payment of ''royalty'' and ''licence fee'' to various multinational companies, including those based in China, instead of using proprietary technology," it added.
"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. The duty evasion by the mobile maker on this account is Rs 1,408 crore," the ministry said.
Oppo India has voluntarily deposited a sum of Rs 450 crore as partial differential customs duty short paid by them.
After completion of the investigation, a show cause notice has been issued to Oppo India seeking payment of 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 Customs Act, 1962.
Oppo India is engaged in manufacturing, assembling, wholesale trading, and distributing mobile handsets and accessories across India.
"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 noted.
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.
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