By fe Bureau
The Indian arm of global IT giant Hewlett-Packard (HP) has been slapped a show-cause notice by the Bangalore unit of the Directorate of Revenue Intelligence (DRI) for alleged customs duty evasion of Rs 1,450 crore. If found true, this would be the single-largest case of evasion the DRI has ever unravelled. The California-based computer maker is already facing a bribery probe in Europe over a 2003 contract.
According to DRI, HP evaded duty by undervaluing products like computers, laptops, notebooks and desktops by Hewlett-Packard India Sales Pvt Ltd from its overseas offices in the past five years.
An HP Asia-Pacific & Japan spokesperson told FE: "HP India has been transparent and has cooperated fully with the DRI in its investigation. HP India refutes the DRI's position and will challenge its claims through the judicial process."
Even as the case is under investigation, HP voluntarily pre-deposited Rs 79.25 crore with the government, a DRI official told FE. Of this sum, Rs 35 crore was paid only last week. HP's Indian sales enjoy the Accredited Client Programme (ACP), under which it has an extended green channel facility for faster imports clearance without routine Customs checks. The company imports products from its parent's offices in the US and Singapore.
DRI says HP did not make proper and full disclosure about the pricing mechanism of imports to the Customs department. HP was allegedly raising two invoices one for the clients and one for its offices that gave it 44-83% discounts. While importing computers, it did not declare these details to the Customs and undervalued imports, a DRI official said. HP would need to reply to the showcause notice within a stipulated time, usually 90 days, after which the tax department can take action as per law.
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