DRI issues show cause notice against Samsung India for tax evasion: Report

The agency has asked the company on why it should not impose penalty against the management

The Directorate of Revenue Intelligence (DRI) has issued a show cause notice to Samsung India asking why it should not recover Rs 1,728 crore as duty with interest from the company's subsidiary for allegedly evading customs duty, a report in the Economic Times (ET) said. 

It has also asked why a penalty should not be imposed against the management of the company. 

The ET report quoted a person saying that the notice asked why "the impugned goods, having total accessible value of Rs 6,72,821 crore, imported under the bills of entry should not be held liable for confiscation under the provisions of section 111 (m) of the Customs Act, 1962".

It has also asked why the "differential duty (of) Rs 1,728.47 crore in respect of the bills of entry should not be demanded and recovered from them under the provisions of section 28 (4) of the Customs Act, along with interest at the applicable rate".

The main issue relates to the misdeclaration of imports of remote radio head (RRH), a small device enclosed in a small outdoor module and crucial for the 4G telecom system. The DRI said that it is an independent piece of equipment and thus, not exempt from customs duty. The company has said otherwise. 

"It also appears that officials of the indirect tax team of Samsung India were giving evasive replies or giving absurd answers during their statements. For example, Shri Nikhil Aggarwal, GM (indirect taxation) during his statement absurdly/mischievously described the terms 'transmission' and 'reception' i.e., transmitting/receiving signals through air only and not under wired communication. He had further stated that eNodeB consisted of DU, antenna and RRH and since DU could work independently it was being classified under CTI 85176290 whereas RRH was being classified as part of eNodeB as RRH could not function independently," a person aware of the show cause notice told ET. 

However, reports said that the person, handling the company's imports of RRH, has been fired for his lapses.