Samsung rigs spare parts imports to avoid tariffs, government asks for Rs 5154 crore

New Delhi| The Indian government has demanded $601 million (about Rs 5,154 crore) from Samsung and its officials. It is alleged that the company had committed misappropriation to avoid tariffs on imports of major telecom equipment into the country. This demand accounts for the bulk of Samsung’s net profit of $955 million last year in India.

The company imports telecommunication equipment through the network department. The company was warned in 2023 for misclassifying imports to avoid tariffs of 10 or 20 per cent on critical transmission spare parts used in mobile towers. Samsung imported the spare parts and sold them to Jio. Samsung’s investigation began in 2021 when tax inspectors seized documents, emails and equipment in searches of offices in Mumbai and Gurugram.

The company defrauded the government treasury
Samsung has violated laws and presented false documents before the customs authority, Customs Commissioner Sonal Bajaj said in the order. Samsung defrauded the government exchequer to increase profits. The company violated business ethics and industry standards.

This is the spare part controversy
The Samsung controversy focuses on the import of remote radio heads. It is a radio frequency circuit that engages in small outdoor modules. It is the most important part of 4 G telecommunications systems. From 2018 to 2021, Samsung paid no dues on $784 million in spare parts imports from Korea and Vietnam.

After this order, the company said, it has completely followed Indian laws. We are assessing legal options.