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Vodafone gets notice for duty evasion of Rs 333 crore

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The Directorate of Revenue Intelligence (DRI) has slapped a show cause notice on Vodafone and its subsidiary companies for alleged anti-dumping duty evasion to the tune of Rs 333 crore.

The notice was served under Section 28 of the Customs Act, 1962, and Section 9a (8) of the Customs Tariff Act, 1975.
dna has a copy of the notice.

DRI has accused Vodafone of importing SDH (synchronisation digital hierarchy)- based transmission equipment from Huawei, China, by declaring them as non-SDH to evade duty.

An e-mail sent to company officials didn't elicit any response.

Anti-dumping duty (ADD) is levied on suspiciously low-priced imports to increase their prices in the importing country, so as to protect the local industry from unfair competition. As per Customs Act, there is a provision to impose anti-dumping duty on SDH equipment, originating in or imported from China and Israel.

Vodafone and other importers had pleaded not guilty. But the anti- dumping authority confirmed an ADD levy on SDH in its final findings.

An inquiry on Vodafone and its subsidiaries has been going on since 2013. It later turned up into a dispute over classification as SDH and non-SDH. But DRI has proven Vodafone wrong in many ways.

According to DRI, it was found that Vodafone suppressed the SDH nature of the goods. The agency alleged that the same goods are SDH as per Huawei, China. In fact, Huawei, while importing the same product, has paid ADD.

The purchase contract between Huawei and Vodafone also shows that they are SDH. Vodafone, in its local sales documents, has shown that the goods are SDH.

Even its Indian manufacturer says they fall under the SDH category. In the import documents, 271 entries have been made between 2011 and 2014. On this, an ADD of 266% has been imposed – meaning nearly 300% duty supposed to be paid on imported goods.

"In anti-dumping duty proceedings, Vodafone strongly opposed ADD, saying that SDH is critical for telecom sector," a DRI source told dna.

The DRI investigation has also revealed the modus operandi of duty evasion: how it was planned and executed by the parent holding company. The notice has also highlighted the role of senior Vodafone officials in the matter.

"There is no question of dispute. Vodafone India (earlier Vodafone-Essar) is the end-user of the SDH equipment that was imported from Huawei," said the DRI official.

Anti-dumping duty on SDH equipment was imposed following a complaint by the local Indian manufacturer Tejas Networks Ltd against cheap imports from China and other countries. DG Anti-Dumping initiated action on the complaint in 2009.

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