India issues a notice of INR 6.5 billion to Xiaomi

The Union Ministry of Finance on Wednesday issued a notice of INR 6.5 billion to Chinese phone maker Xiaomi’s India unit for alleged violation of Customs Act. The reason for the notice is that the company did not include royalty and license fee in the value of its imports.
A show-cause notice has also been issued by the union finance ministry to Xiaomi India following the recovery of documents during searches on its premises that indicated remittance of royalty and license fee to US and Chinese firms under contractual obligations.
The Finance Ministry said being the beneficial owner of such imported mobile phones, Xiaomi India was evading customs duty by not adding royalty and license fee in the transaction value.  According to the ministry, the evidence collected during investigations by the Directorate of Revenue Intelligence (DRI) showed that neither Xiaomi India nor its contract manufacturers were including the amount of royalty paid by the firm in the assessable value of the goods imported by the company and its contract manufacturers, which is in violation of the customs law.