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HP India pulled up for customs duty evasion
May, 23rd 2012

Hewlett Packard's (HP) India unit has been ordered to pay over Rs 2,000 crore for alleged customs duty evasion in the country.

This is based on two orders issued by the Commissioner of Customs, Bangalore on April 11 and April 20, this year. This includes (differential) duty liability of Rs 962 crore, the rest being the penalty imposed and a redemption fine for reclaiming confiscated goods.

The US-based computer giant has been accused of evading payment of customs duty by grossly undervaluing the imports made by them, according to documents seen by Business Line.

The parts were imported by HPISPL (HP India Sales Pvt Ltd) from their Singapore and USA entities the prices were different; value being less for the parts originating from Singapore compared to the parts originating from USA, said one order pertaining to the import of laptops, printers and servers by the company. It added that HPISPL had also not obtained any import licence for the refurbished parts/spares, imported by them, as required under the Foreign Trade Policy from September/November 2003 onwards.

The second order pertains to the import of spare parts for local trade and warranty purposes. The orders are based on intelligence gathered by the Directorate of Revenue Intelligence (DRI). Searches were also conducted at various premises of HPISPL and their associates in Bangalore, New Delhi, Mumbai and Gurgaon.

Asked for a response over an emailed query, HP India declined to comment on the matter.

Touted as one of the biggest tax demands in recent times, it pertains to alleged customs duty evasion since around 2005. The DRI investigation was initiated in September 2008 by its branches in Delhi and Bangalore.

Additionally, a penalty has also been imposed on six senior officials and associates of the company, the highest being around Rs 35 lakh.

HPISPL can now appeal against the Customs Department order at the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), a senior Government official said.

Founded over seven decades ago and headquartered in Palo Alto, California, HP operates in more than 170 countries worldwide. In 2011, the company reported revenues of $127.2 billion.

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