DRI issues notice to Haier India for alleged violation of import norms

The Directorate of Revenue Intelligence has issued a show-cause notice to Haier India, a fully-owned subsidiary of China’s Haier Group, for wrongfully getting import duty exemption on LCD/LED TVs. During the course of the investigation, the company paid a duty of ₹18 crore to the tax department.

A senior Government official told BusinessLine that based on the findings, a show-cause notice has been issued for appropriation of duty and imposition of penalty. The Commerce and Industry Ministry has also been informed about the violation.

The trigger is the India-Thailand Free Trade Agreement (FTA). The agreement provides duty concession for goods with the ‘Made in Thailand’ tag.

It also prescribes the criteria for determining the origin of products not fully manufactured or obtained from Thailand: the local value-added content in such goods should be at least 40 per cent.

If goods falling under this category are imported from Thailand they do not attract basic Customs duty. Taking advantage of this, Haier India used to import LCD/LED televisions from Thailand-based Treeview and sell them in India, said the official.

The official added there are other multinational companies under the Revenue Intelligence department’s radar. He, however, refused to divulge their names as “investigations against these companies are still on”.

The show-case notice has documentary and other evidence proving that ‘Made in China’ stickers were replaced with ‘Made in Thailand’ ones. In some cases, the notice says a ‘Made in Thailand’ label was pasted over the ‘Made in China’ sticker.

The Revenue Intelligence authorities are also said to have proof that Haier India asked its parent to instruct the Thai firm to put ‘Made in Thailand’ labels on all new orders.

One of the key components of the LCD/LED television is the panel, which accounts for nearly 60 per cent of the set’s total cost. DRI officials said that currently, such panels are manufactured only by Chinese, Korean and Taiwanese companies.

Since the Thai company did not possess this manufacturing capability, its exports did not fit the criterion of local value-added content of at least 40 per cent. It was therefore not eligible for any benefits, the official said.

The company has downplayed the issue. In an email, Haier India President Eric Braganza said, “This is an old issue that has been sorted out. We had partnered with a supplier in Thailand, who assured us of compliance under the FTA.

“When we were informed that this supplier was not meeting the norms to claim the benefit, we paid back the Customs duty benefit claimed during the period and stopped transactions with this supplier.”