Samsung appeals $520m India import tax on 4G equipment

Samsung has filed an appeal against a US$520 million tax demand in India, claiming misclassification of imported networking equipment.

The company submitted a petition to the Customs Excise and Service Tax Appellate Tribunal in Mumbai.

Indian tax authorities allege that Samsung avoided paying 10–20% tariffs on imports of “Remote Radio Head” used in 4G telecom systems between 2018 and 2021. The equipment was sold to Reliance Jio.

Authorities also fined seven Samsung employees a total of US$81 million, bringing the total demand to US$601 million.

In its petition, Samsung argued that officials were aware of the classification practice, as Reliance Jio imported similar equipment without tariffs until 2017.

The company said it was not notified of a 2017 tax warning issued to Reliance and criticized the tax authority for making a quick decision without a fair hearing.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Customs classification disputes represent a systemic challenge in India

Samsung’s dispute over the “Remote Radio Head” component illustrates a widespread issue affecting international companies operating in India.

Custom authorities reported numerous cases of significant duty evasion through misclassification, making this a systemic risk area for companies importing technology components 1.

The classification of goods under India’s 8-digit ITC (HS) code system creates compliance complexities, with interpretations that can vary over time or between industries, directly impacting effective duty rates 1.

Samsung’s case highlights how classification determinations can have dramatic financial impacts. The $520 million tax demand represents over half of Samsung’s $955 million net profit in India last year.

This case follows a pattern of high-profile tax disputes with multinational corporations, as evidenced by Volkswagen’s similar challenge of a $1.4 billion demand for alleged component import misclassification.

2️⃣ The telecom sector has become a focal point for India’s tariff enforcement

India’s telecom equipment tariffs have emerged as a point of international contention, with US officials recently targeting India’s 10-20% import duties on telecom products while imposing retaliatory 26% tariffs on Indian exports 2.