India slaps notice on Oppo for Rs 4,389 cr import duty evasion

Chinese phone maker Oppo’s India unit has been slapped with a notice for alleged Rs 4,389 crore import duty evasion, the Finance Ministry said on Wednesday.

A show-cause notice has been slapped on Oppo India on July 8 after the recovery of documents during searches on its premises that indicated wilful misdeclaration in the description of some imports and remittance of royalty and license fees to various MNCs, including those based in China.

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

Oppo did not immediately respond to queries sent to the company regarding the story.

Oppo India is engaged in the business of manufacturing, assembling, wholesale trading, and distributing of mobile handsets and accessories thereof across India. It deals in various brands of mobile phones, including Oppo, OnePlus, and Realme.

During the investigation, searches were conducted by the 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 for use in the manufacture of mobile phones”. This misdeclaration resulted in the wrongful availment of ineligible duty exemption benefits by Oppo India, amounting to Rs 2,981 crore.

Senior management employees and domestic suppliers of Oppo India questioned by the DRI officers accepted the submission of wrongful description before the customs authorities at the time of import, the ministry said.

The investigation also revealed that Oppo India had remitted/made provisions for payment of ‘royalty’ and ‘license fee’ to various multinational companies, including those based in China, instead of the use of proprietary technology/brand/IPR license, etc.

The said ‘royalty’ and ‘license fees’ paid by Oppo India were not being added to the transaction value of the goods imported by them, in violation of provisions of the Customs Act. The alleged duty evasion by Oppo India on this account is Rs 1,408 crore.

The ministry further said that Oppo India has voluntarily deposited 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 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 too had conducted searches against Chinese handset manufacturing companies, including Oppo, and their linked persons and claimed to have detected alleged unaccounted income due to violation of the Indian tax law and regulations.