Samsung and its Executives Fined With USD 601 Million by India: Misclassified Imports and Evaded Tariffs
India which is considered to be one of the key markets for the South Korean tech maker – Samsung has asked the brand along with seven of its executives to pay a fine of USD 601 for misclassifying an import good and thereby evading tariffs. The dispute is with regard to the import of Remote Radio Head – for which the brand hasn’t paid any dues from 2018 to 2021.
Read more about the news below.
Samsung and Seven Executives Fined USD 601 Million in India
The investigation against Samsung is said to have begun in 2021, and Indian tax inspectors searched and seized documents, emails, and electronics devices from the brand’s offices in Mumbai and Gurugram. As mentioned above, the issue is with regard to the misclassification of Remote Radio Head at the time of importing it from South Korea and Vietnam, and Indian officials have found out that Samsung hasn’t paid any dues for imports worth USD 784 million from 2018 to 2021. This component which is fitted on Telecom towers and which is used to transmit signals is clearly subjected to a tariff in the country, and even while Samsung rejects this and its working, in the letters from the brand to the Indian government, the component is described as a transceiver.
Sonal Bajaj – a Customs Commissioner stated that Samsung has knowingly and intentionally brought the wrongly classified import documents before the customs, and has violated laws set by the government of India. With a sole motive of increasing its profit, Samsung has disobeyed all industry ethics and business practices, and has been defrauding government exchequer. As can be easily understood from the above mentioned letters, the brand was indeed aware about the right classification, but went forward with the wrong practice to evade tariffs of 10% to 20% on such an import component. [Just to add, it was imported and sold to Mukesh Ambani’s Reliance Jio, via the brand’s Network Division.]
Samsung has been asked to pay USD 520 million (~ INR 44.6 billion) as the unpaid dues and its penalty (of 100%). Seven of the brand’s executives are also fined with 81 million in total, and Sung Beam Hong – Vice President of Network Division, Dong Won Chu – CFO, Sheetal Jain – a General Manager of Finance, and Nikhil Aggarwal – General Manager for Indirect Taxes are among the these seven executives.
It should also be noted that Samsung has started seeking legal assistance on the matter so as to protect itself, but if the brand is in no position to avoid it, a huge chunk of its net profit of 2024 in India (USD 955 million) will be gone.
