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Informist, Wednesday, Feb. 25, 2026

 

NEW DELHI – The Supreme Court has issued notice to the customs department on Xiaomi Technology India Pvt. Ltd.'s plea challenging its demand to pay INR 6.5 billion, with interest and penalty, for alleged evasion of duty. The court will hear the plea on Apr. 6.

 

The case has its genesis from the Directorate of Revenue Intelligence probing Xiaomi Technology and its contract manufacturers following an intelligence input that the company was evading customs duty through undervaluation.

 

The probe agency conducted searches at Xiaomi Technology's premises and recovered documents indicating the company was remitting royalty and a licence fee to Qualcomm USA and to Beijing Xiaomi Mobile Software Co. Ltd., under contractual obligation. It further emerged that the "royalty and licence fee" paid to Qualcomm USA and to Beijing Xiaomi Mobile Software Co. Ltd., China, a related party, were not being added in the transaction value of the goods imported by Xiaomi Technology and its contract manufacturers.

 

As per the probe agency, Xiaomi Technology was selling MI brand mobile phones imported by it or assembled in India by its contract manufacturers using imported components. The MI brand mobile phones assembled by the contract manufacturers were sold exclusively to Xiaomi Technology as per their contract agreement. However, the agency's probe indicated that neither Xiaomi Technology nor its contract manufacturers were including the amount of royalty paid by the company in the assessable value of the goods imported by them, which is a violation of Section 14 of the Customs Act, 1962, and of the Customs Valuation (determination of value of imported goods) Rules 2007.

 

By not adding "royalty and licence fee" into the transaction value, Xiaomi Technology was evading customs duty, being the beneficial owner of such imported mobile phones, the parts and components thereof, the department said. It issued three show-cause notices to Xiaomi Technology for recovery of duty amounting to INR 6.5 billion for the period from Apr. 1, 2017, to Jun. 30, 2020, under provisions of the Customs Act. The notices were later confirmed by the principal commissioner of customs (air cargo), Chennai VII.

 

After failing to get relief from the Customs, Excise and Service Tax Appellate Tribunal, the company moved the Supreme Court. It said the parts and components were not imported on its behalf by third-party contract manufacturers but on their own account to manufacture the mobile phones. Therefore, Xiaomi Technology said, it should not be treated as the beneficial owner of those mobile phones.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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