New Delhi: The Supreme Courtroom has issued discover to the customs division in an attraction filed by Xiaomi Corp., difficult a tribunal ruling that mentioned the corporate had evaded about $72 million in tariffs by excluding royalty funds from the worth of imported items.
A bench of Justice P. S. Narasimha and Justice Alok Aradhe issued discover to the customs division on 23 February on the plea. The written order is but to be launched.
The bench, in its verbal statement, mentioned, “Let discover be issued. Take directions and file a brief observe explaining what it’s.”
The Chinese language multinational firm has approached the highest courtroom together with its former contract producers, together with Flextronics Applied sciences India Pvt. Ltd., a unit of U.S.-listed Flex, and Bharat FIH, a unit of Taiwan’s Foxconn.
They’re difficult the November 2025 ruling of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, which upheld the inclusion of royalty funds within the assessable worth of imported items and sustained penalties.
Senior advocate Arvind Datar, showing for one of many contract producers, advised the courtroom that the ruling would have “critical penalties” for contract producers working in India. The customs division objected, arguing that if such pleas have been entertained broadly, each contract producer would search related aid.
The dispute stems from a Directorate of Income Intelligence (DRI) investigation into imports made between 1 April 2017 and 30 June 2020 by Xiaomi Expertise India Pvt. Ltd and its 4 contract producers — Rising Star Cell India, Flextronics Applied sciences India, Hello-Pad Expertise India, and DBG Expertise India.
Authorities alleged that Xiaomi India had entered into royalty and licence agreements with Qualcomm Inc., Qualcomm Applied sciences, and Beijing Xiaomi to be used of mental property in manufacturing and promoting cell phones in India.
Whereas royalties have been being paid, they weren’t disclosed to customs authorities nor added to the assessable worth of imported elements, leading to quick fee of obligation.
Three present trigger notices have been issued by the customs division in December 2021, alleging suppression and wilful misstatement.
In opposition to these notices, Xiaomi and its contract producers approached the CESTAT in Chennai, difficult the obligation demand and penalties.
The tribunal redetermined the worth, confirmed the differential obligation with curiosity, and imposed penalties.
CESTAT upheld the division’s case, ruling that royalty funds have been intrinsically linked to the imported items and that Xiaomi India was the “useful proprietor” of the elements.
It rejected the argument that contract producers operated on a principal-to-principal foundation, as an alternative characterising them largely as job employees. The tribunal upheld penalty legal responsibility however remanded the matter for redetermination of quantum.
Whereas the CESTAT order reviewed by Mint doesn’t specify the ultimate penalty quantity, Reuters reported that the alleged obligation evasion stood at about $72 million. Below Indian customs regulation, that determine might exceed $150 million as soon as curiosity and penalties are factored in, if the ruling is finally upheld.
An e mail question despatched to Xiaomi India searching for its response remained unanswered until press time.
Based on the most recent Counterpoint Analysis knowledge on the India smartphone market, Xiaomi’s share has shifted in recent times. In This fall 2025, Xiaomi regained a number one place with about 19% cargo market share in India, narrowly forward of rivals comparable to Vivo and Samsung.