Haier's OEM under scanner for excise duty evasion

DGCEI officials seize LED TVs and washing machines worth Rs 40 cr from various godowns of the OEM and Haier

A company designated as Original Equipment Manufacturer (OEM) for Chinese consumer appliances maker Haier has come under the scanner for alleged excise duty evasion to the tune of Rs 10 crore by claiming tax exemption on a 'ghost unit'.

The Directorate General of Central Excise Intelligence (DGCEI) has registered a case against Noida-based Noble Group's subsidiary, Sun Industries, OEM of Haier Appliances (India) Pvt Ltd, in this regard, official sources said today.

The DGCEI officials have seized LED TVs and washing machines worth about Rs 40 crore from various godowns of the OEM and Haier, they said.

Sources said that in order to avail excise duty exemption for longer period, the OEM forged papers to show that it has taken over another factory in Hardiwar.

However, during the probe the DGCEI claimed that no factory existed at the address given by the group, they said.

As per the central government norms, the area-based exemption for new industrial units of firms in Uttarakhand provide full exemption from excise duty for specified goods for a period of 10 years. But for availing the benefit, the unit should have been established before March 2010.

The Noble Group through its subsidiaries has evaded central excise duty payment worth crores by wrongly claiming area based exemption for a non-existing or a 'ghost' unit. A case has been registered and probe is on, the sources said.

The role of Haier group is also under probe for allegedly not verifying the papers of its OEM, they said.

The estimated duty evasion in the case is over Rs 10 crore, the sources said.

Haier, in its statement, has denied any wrongdoing by it and said the issue is with its OEM.

"M/s Sun Industries is one of the OEMs supplying certain models of washing machine and LEDs to us. They have furnished all documents and have signed agreement with us representing that they have got excise exemptions with them.

"DGCEI is currently investigating their claims and their documents. As on date the issue is with OEM and not Haier," the company's spokesperson said in an email response.

Calls and emails to Noble Group in the matter did not elicit any response.

Sources claimed that investigation so far found that there has been no transfer of plant and machinery by the Noble Group. Further, many of the agreements and paper work done to camouflage the fraudulent transactions are found to contain forged signatures, they said.

Sources claimed that the promoters of the Noida-based group and others have colluded to evade central excise duty and cheat the exchequer.