Samsung India Offices Raided By Govt Officials: Is Samsung Evading Excise Duty?

Major manufacturer and exporter of electronics components from South Korea, Samsung, (Samsung Electronics, to be precise) is on the Radar of DRI i.e. Directorate of Revenue Intelligence. The sources confirmed that the required steps are being taken if any evasion of customs duty has happened and if so whether it is mala fide.

DRI visits Samsung offices

Even though Samsung has its regional headquarter in Gurugram, DRI officials chose to visit its Mumbai officials first, as a larger part of the business of Samsung happens from Mumbai only. Even though the searches began in Mumbai and Gurugram on, Wednesday, we haven’t yet heard anything about the findings by the DRI, informed sources. When Samsung Electronics was contacted for a comment on the current happenings, they declined to comment.

Samsung is the largest 4G technology vendor in the country with an exclusive supply contract with Reliance Jio Infocomm.

The Context of these searches

Under Free Trade Agreement (FTA) with South Korea and Vietnam, the products produced in these two countries are not levied any customs duty. And benefitting from these agreements, Samsung is not charged a single penny as customs duty, for importing products produced in these two countries. This gives companies an upper hand in competing with the likes of Nokia, Ericson, ZTE, and Huawei which pay 20% duty to the government.

So, now the whole issue is about whether Samsung is playing by the rules or they are finding loopholes in the system and trying to evade taxes. As per the sources, the government seems to have received some information about Samsung electronics routing the products produced in other non- FTA countries through South Korea and Vietnam to skip the taxes.

In addition to customs duty since 2018 Indian Government has increased the import duty to 20% on different types of network equipment. The list of these network equipment includes IP radios, base stations, Ethernet switches, optical transport equipment, VoIP phones, etc.

So this set of various duties might be triggering some players to find out loopholes in the system.

Is Samsung doing anything fishy or it is all cooked up story, we will wait and watch.

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