Chinese Haier’s OEM under scanner for excise duty evasion

The Directorate General of Central Excise Intelligence (DGCEI) has registered a case against Noida-based Noble Group’s subsidiary, Sun Industries, the original equipment manufacturer of Haier Appliances (India) Pvt Ltd, in this regard, official sources said on Wednesday.

Directorate General of Central Excise Intelligence officials have seized LED TVs and washing machines worth about Rs 40 crore from various godowns of the original equipment manufacturer and Haier, they said. Sources said that in order to avail excise duty exemption for longer period, the original equipment manufacturer forged papers to show that it has taken over another factory in Hardiwar.

However, during the probe the Directorate General of Central Excise Intelligence claimed that no factory existed at the address given by the group, they said. As per Central Government norms, 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 of rupees by wrongly claiming area-based exemption for a non-existing or ‘ghost’ unit. 

A case has been registered and probe is on, the sources said. The role of China’s Haier Group is also under probe for allegedly not verifying the papers of its original equipment manufacturer, 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 original equipment manufacturer.