After Vivo, Oppo India Comes Under DRI Radar For Tax Evasion

| Updated: 13 July, 2022 2:50 pm IST

NEW DELHI: Days after the Enforcement Directorate tightened the noose around Vivo India, a Chinese phone maker, now the DRI has swung into action and found that another Chinese phone maker Oppo evaded duty evasion to the tune of Rs 4,389 crore and issued a show cause notice to the company.

The Directorate of Revenue Intelligence (DRI) said, “During an investigation pertaining to Oppo Mobiles India Private Limited (herein referred to as Oppo India) a subsidiary company of Guangdong Telecommunications Corporation Ltd based in China (hereinafter referred to as ‘Oppo China’), the DRI has detected customs duty evasion of around Rs 4,389 crore.”

Oppo India, who was also a former sponsor of Indian cricket team, is engaged in the business of manufacturing, assembling, wholesale trading, and distributing mobile handsets and accessories thereof, across India and deals in various brands of mobile phones, including Oppo, OnePlus and Realme.

The DRI officials said that during the course of the investigation, searches were conducted by the agency 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.

“This misdeclaration resulted in wrongful availment of ineligible duty exemption benefits by Oppo India amounting to Rs 2,981 crore,” the official said.

The official said: “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 investigation also revealed that Oppo India had remitted and 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 or brand or IPR license etc.

According to DRI officials, the said Royalty and Licence Fees paid by Oppo India were not being added to the transaction value of the goods imported by them, in violation of the Customs Act.

“The alleged duty evasion by Oppo India on this account is Rs 1,408 crore. A sum of Rs 450 crore has been voluntarily deposited by Oppo India, as partial differential Customs duty short paid by them,” the official said.

He 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 SCN issued to Oppo India also proposed penalties on the company, its employees and Oppo China under the provisions of the Customs Act.

Last week, the ED carried out searches at over 48 locations linked to Chinese phone maker Vivo and 23 other companies associated with it, including GPICPL, whose directors have fled India.

The ED said that Vivo India remitted Rs 62,476 crores out of Rs 1,25,185 crores mainly to China, in order to disclose huge losses in Indian incorporated companies to avoid payment of taxes in India.

Following the searches at premises of several companies including Vivo India, the financial probe agency seized 119 bank accounts of various entities with a gross balance to the tune of Rs 465 crore including FDs to the tune of Rs 66 crores of Vivo India, 2kg gold bars, and cash amount to the tune of approximately Rs 73 lakhs under the provisions of Prevention of Money Laundering Act (PMLA).

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