Why did Samsung receive a show cause notice? Inside scoop
Delhi : The Directorate of Revenue Intelligence (DRI) has issued a show cause notice to Samsung India Electronics (SIEL) for alleged customs duty evasion. The notification queries the company as to why the agency should not recover from the corporation Rs 1,728.47 crore in duty and interest. Nhava Sheva Customs issued the notice earlier this week in response to a complaint that DRI had filed. The notice also requests justifications for not penalizing the company's senior executives. The DRI's Mumbai branch is looking into the case.
What's the problem?
The problem relates to an alleged misstatement in the importation of a networking device called a remote radio head (RRH) and SIEL's incorrect classification of it in order to improperly get an excessive exemption from basic customs charge. RRH is a radio-frequency circuitry housed in a compact outdoor module, making it one of the most crucial components of the 4G LTE telecommunication system. The DRI contends that RRH is a standalone piece of equipment and is therefore not eligible for an exemption, whereas SIEL makes the opposite claim.
The notice demanded an explanation as to why "the impugned items, having a total accessible value of Rs 6,72,821 crore, imported under the bills of entry, should not be considered liable for confiscation under the provisions of section 111(m) of the Customs Act, 1962." Further, the agency requested to know why "differential duty (of) Rs 1,728.47 crore in respect of the bills of entry should not be collected and recovered from them under the provisions of section 28 (4) of the Customs Act, along with interest at the relevant rate" (emphasis added). Additionally, it questioned why the department should not credit SIEL's deposit of Rs 300 crore for the payment of differential duty.
PricewaterhouseCoopers Pvt Ltd (PwC), which SIEL hired to classify the network equipment, is also being investigated. PwC and an associate director who was apparently questioned throughout the investigation received a show cause notice from the DRI as well. According to the DRI's investigation, PWC, who SIEL hired three times between 2017 and 2022, reportedly neglected to ask about the equipment's classification.
