{Xiaomi Technology India Pvt. Ltd. V/s Principal Commissioner of Customs Appeal No. 40085/2024 Having Final Order no. 41324-41330/2025}
FACTS:
- DRI found Xiaomi India was not including royalty/licence fees in the assessable value of imported phones and components.
- Royalty was being paid under multiple agreements but not disclosed to Customs/SVB initially.
- Show Cause Notices alleged undervaluation, suppression, and demanded differential duty, confiscation and penalties.
- Xiaomi India and contract manufacturers were all covered by a common adjudication.
ISSUE:
Whether the royalty/licence fees paid by Xiaomi India to Qualcomm and Beijing Xiaomi must be added to the customs value of imported components/phones under Rule 10, and whether extended period, confiscation, interest and penalties were rightly invoked.
HELD:
- Royalty must be added to customs value
- The royalty/licence fee had a direct nexus with the imported goods.
- Payment of royalty was a condition for manufacture/import, so it must be added to transaction value.
- Undervaluation was upheld.
- Extended period applicable
- Non-disclosure of royalty agreements amounted to suppression.
- Therefore, extended limitation for demand was valid.
- IGST – No interest/penalty
- For the earlier period, interest/penalty on IGST cannot be imposed since the law allowing this applies only prospectively.
- Confiscation & Penalty upheld
- Incorrect declaration of value made the goods liable for confiscation, and penalties were maintainable.
