Over INR 4,000 crore in tax evasion by Chinese smartphone maker Oppo India

The Indian Department of Revenue Intelligence (DRI) has accused Chinese smartphone maker Oppo Mobiles India Private Limited (Oppo India) of evading customs duty. At Oppo India, a subsidiary of Guangdong Oppo Mobile Telecommunications Corporation Ltd, China (Oppo China), DRI detected customs duty fraud worth INR 4,389 crores. A search of Oppo India’s offices and the residences of its key management employees uncovered incriminating evidence indicating wilful misdeclaration in the description of certain items imported by Oppo India for use in the manufacture of mobile phones.

As a result of this misdeclaration, Oppo India has benefited from ineligible duty exemptions worth INR 2,981 crores. In their voluntary statements, senior management employees and domestic suppliers of Oppo India admitted to having submitted a wrongful description to the Customs Authorities at the time of import.

Besides, Oppo India was found to have paid Royalty and License Fees to various multinational companies, including those based in China, in return for use of proprietary technology/brand/IPR, according to the anti-smuggling arm of the Central Board of Indirect Taxes & Customs. 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, Oppo India’s Royalty and Licence Fees were not included in the transaction value of the goods imported by them. On this account, Oppo India allegedly evaded duty by INR 1,408 crores.

Oppo India voluntarily deposited INR 450 crores as partial differential Customs duty short payments. Oppo India was served with a show cause notice after the investigation was completed, demanding customs duty of INR 4,389 crore. Under the Customs Act, 1962, Oppo India, its employees, and Oppo China are also proposed to pay penalties. Oppo India manufactures, assembles, wholesale trades, and distributes mobile handsets and accessories throughout India. The Oppo India website offers a variety of mobile phone brands, including Oppo, OnePlus, and Realme.