An investigation by India’s Directorate of Revenue Intelligence has found that Chinese smartphone maker Oppo evaded customs duty worth Rs. 4,390 crore, a government statement said on Wednesday.

Indian investigators found evidence that Oppo wrongfully used duty exemptions for items imported for use in mobile phone production, the statement said.

They also allege Oppo made royalty payments which were not added to the transaction value of imported goods, as required by Indian law, it added.

An spokesperson for Oppo, which is owned by China’s BBK Electronics, did not immediately respond to a request for comment.

A notice “has been issued to Oppo India demanding (the) customs duty”, the government said.

The Revenue Intelligence wing has also proposed penalties on Oppo India, its employees and Oppo China, the government statement said, without elaborating.

Many Chinese firms have struggled to do business in India after political tension ramped up following a border clash in 2020. India has cited security concerns in banning more than 300 Chinese apps since, and toughened rules on Chinese investment.

Action against Oppo comes amid growing scrutiny of Chinese smartphone markers in recent weeks.

The federal financial crime agency, the Enforcement Directorate, last week raided 48 locations of Vivo and its related entities, alleging that sale proceeds of Vivo India were transferred out of India to show losses and avoid paying taxes.

India smartphone market leader Xiaomi too has been under investigation, with the agency alleging it made illegal remittances abroad “in the guise of royalty” payments.

Both companies deny any wrongdoing.

© Thomson Reuters 2022