NEW DELHI/KOLKATA: The Directorate of
Revenue Intelligence (DRI) has issued show
cause notices to leading camera makers Sony,
Canon and Nikon for 'artificially' restricting
memory of high-end digital cameras to avail
zero duty benefit meant for low-end
equipment.
"Notices have been issued for wrongfully
claiming duty exemption," said a DRI official.
The agency has said that Sony, Canon and
Nikon evaded customs duty to the tune of Rs
129 crore, Rs 161 crore and Rs 105 crore
respectively.
While low-end cameras are exempt from duty,
10% Customs duty is levied on high-end digital
cameras. A low-end camera is defined as a
digital still image or video camera that is not
capable of recording video with minimum
resolution of 800x600 pixels at minimum 23
frames per second for at least 30 minutes in a
single sequence using the maximum storage
(including expanded) capacity.
If any one of the conditions is not satisfied,
the camera will not be exempt from duty. At
the heart of the dispute is the third condition,
as per which, to avail the exemption there are
two qualifiers to the recording time — "in a
single sequence" and "using the maximum
storage." This implies that to avail the
exemption, the camera should utilize its full
storage including the expanded capacity for a
single clip length of not more than 30 minutes.
According to the DRI official, who did not wish
to be named, importers declared that digital
cameras imported by them cannot record more
than 30 minutes in a single sequence. However,
the importers had artificially restricted clip
length to just below 30 minutes by in-built
firmware loaded on the cameras. The fact that
clip length is being artificially restricted
through a software to less than 30 minutes and
clips of less than 30 minutes can be recorded
till the available storage capacity is exhausted
was suppressed in the bill of entry at the time
of import, the official said.
The three camera makers that together control
85% of the Indian market have, however,
contested the allegations of tax evasion. Sony
and Nikon have reached out to the authorities
concerned, with the latter even open to taking
a legal recourse. The companies had attempted
to secure a stay against the notices, but the
court favoured adjudication as per regular
process.
A Sony India spokesman said the exemption
notification issued by customs is pursuant to
the mandate of the Information Technology
Agreement (ITA), to which India is a signatory.
The ITA provides for participant countries to
completely eliminate duties on IT products.
"Sony has correctly has correctly availed the
duty exemptions under the relevant
notification. As we have already filed our
response before the adjudicating authority and
hearing is awaited, we are unable to discuss or
comment on the matter, which is subjudice," he
said.
Nikon India managing director Hiroshi
Takashina said India is the only ITA member
that imposes tariffs on imports of digital
cameras, a claim authorities refute."We
strongly request to remove the import duty,
which custom authorities have put from
February 2014 onwards, to be rolled back to
zero as earlier. Such a sudden change of
putting 10% basic duty on import of digital
camera is discouraging," he said. Takashina
refuted DRI's charges and slammed its intent to
recover duty retrospectively, from March 2012
onwards.
"We tried our best to approach the appropriate
authorities and put our point forward with
explanation; if this situation continues, we are
very much ready to appeal this matter to the
court until we get justice," he said.
Takashina said as per World Customs
Organization, import duty on a multifunctional
product must be classified based on its primary
function. Canon India did not comment on the
matter, saying that its spokesman, president
and CEO Kazutada Kobayashi was travelling.
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