Samsung India Electronics Ltd, the Indian subsidiary of Samsung Electronics Co of Korea, has managed to save at least 50 per cent of its import costs by paying duties on components at the rate of about 15-20 per cent, almost half of the 40 per cent payable on completely knocked down kits, claim customs officials.
Samsung India Electronics is importing parts for some of its audio models through two separate companies. While customs duty against component imports are paid on these two separate consignments, customs officials contend that the company has resorted to imports through separate companies to avoid paying a higher duty, since these two separate consignments together add up to CKD kits.
According to the export sales contract signed between Samsung Electronics Co, Korea, and Samsung India Electronics a copy of which was made available to Business Standard printed circuit boards (PCBs) are being imported through a Delhi-based clearing agent, P & R Overseas, and other components through Olympia Electronics.
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The contract, valid for audio models like Max 670, MM 26, and other newer models, indicate an import value of $75,000 for a PCB consignment of 500 pieces through P&R Overseas, and of $85,000 for a non-PCB consignment of an equal number through Olympia, to be executed simultaneously.
Customs officials confirmed that in spite of importing two separate consignments through two distinct companies, Samsung India Electronics was liable to pay CKD import duty as it was the common end-user for the two consignments, which comprise a CKD kit.
However, Samsung India Electronics executives denied that the company had entered into any sales contract with the parent company in Korea for audio imports, stating that it does not import any audios itself.
Samsung India Electronics is not violating any government policy on CKD imports for audios since we are purchasing all audio equipment from Olympia Electronics said Sam-sung India managing director B M Park, in response to a faxed questionnaire.
However, a senior executive of Olympia Electronics contested Samsung India Electro-nics contention that it was not involved in any component imports for audio products.
We only import certain important components for Samsung audio products. Samsung India Electronics imports the rest of the components, including PCBs, from Korea ...which we assemble, he explained. The official pleaded lack of information on whether Samsung India Electronics had imported the rest of the components directly or through a clearing agent.
The Olympia executive also contested Samsung India Electronics claim that it did not know the details of the import modalities and clarified that all imports done by Olympia for Samsungs audio products are done only at the behest of Samsung India Electronics.