Home / Companies / News /  Vivo gets notice in 2,217 cr customs duty evasion case

NEW DELHI : The Directorate of Revenue Intelligence (DRI) has issued a show cause notice to mobile phone maker Vivo Mobile India Pvt Ltd over customs duty evasion of 2,217 crore.

In a statement on Wednesday, the finance ministry said that during an investigation DRI detected the customs duty evasion by mobile phone maker. Vivo India is a subsidiary company of Vivo Communication Technology Co Ltd, Guangdong, China, and is engaged in the business of manufacturing, assembling, wholesale trading as well as distribution of mobile handsets and accessories. 

“During the course of investigation, searches were conducted by DRI officers at the factory premises of M/s Vivo India, which led to the recovery of incriminating evidence indicating willful misdeclaration in the description of certain items imported by M/s Vivo India, for use in the manufacture of mobile phones," said the statement.

The misdeclaration resulted in wrongful availing of ineligible duty exemption benefits by Vivo India, amounting to 2,217 crore, according to the ministry. DRI has issued the show cause otice under the provisions of the Customs Act, 1962.

Further, Vivo India has voluntarily deposited a sum of 60 crore towards discharge of their differential duty liability.

Queries sent to Vivo India remained unanswered till press time.

Vivo, along with several other handset makers have been on the radar of investigating agencies of late over alleged duty evasion and money laundering. On 5 July, the Enforcement Directorate raided several places across the country in money laundering investigation on Vivo and related firms. 

The searches were carried out under the Prevention of Money Laundering Act (PMLA) in several states, including Delhi, Uttar Pradesh, Meghalaya, and Maharashtra.

ED then blocked nearly 119 bank accounts linked to Vivo’s India business and its associates that were holding 465 crore as part of a probe into alleged money-laundering by the company. On 13 July, Delhi High Court (HC) lifted the freeze on the bank accounts and ordered the company to provide a bank guarantee.

The court asked the company to operate the bank account subject to furnishing bank guarantee of 950 crore and also to maintain balance of 250 crore.

Vivo had filed a writ petition before the high court, seeking the quashing of ED’s 5 July order freezing its bank accounts under the Prevention of Money Laundering Act, 2002. The company submitted to the court that the agency’s decision will cause “grave injustice“ to it, which will also negatively impact its reputation and business operations.

ABOUT THE AUTHOR

Rituraj Baruah

Rituraj Baruah is a senior correspondent at Mint, reporting on housing, urban affairs, small businesses and energy. He has reported on diverse sectors over the last six years including, commodities and stocks market, insolvency and real estate. He has previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.
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