New Delhi: The Enforcement Directorate (ED) on Friday stated that the Adjudicating Authority has issued show-cause notices to Xiaomi Technology India Private Limited, its officers, and three banks below the related provision of the Foreign Exchange Management Act (FEMA) on the idea of a grievance filed by the probe company in reference to unlawful remittances made by the corporate to the tune of Rs 5,551.27 crore.
“The showcause notices have been issued to the company along with Manu Kumar Jain, ex-Managing Director, and Sameer B. Rao, the current Director and Chief Financial Officer of the company. The Adjudicating Authority has also issued show cause notices to three banks, CITI Bank, HSBC Bank, and Deutsche Bank AG for contravention of Section 10(4) and 10(5) of FEMA and directions issued by RBI by allowing foreign outward remittances in the name of royalty through the banks without conducting due diligence and without obtaining any underlying Technical Collaboration Agreement from the company,” stated the ED.
The ED had earlier frozen Rs 5,551.27 crore of Xiaomi Technology India Private Limited mendacity in its financial institution accounts below the provisions of the Foreign Exchange Management Act for unauthorised remittance of this quantity within the guise of royalties overseas by the corporate.
“The competent authority also observed that payment of royalties is nothing but a tool to transfer foreign exchange out of India and the same is in blatant violation of provisions of FEMA,” the official stated.
The ED initiated a PMLA investigation in reference to the unlawful remittances made by the corporate final yr.
During investigation, it was discovered by the ED that the corporate remitted international forex equal to Rs 5,551.27 crore to a few foreign-based entities which embody one Xiaomi group entity within the guise of royalty, in violation of Section 4 of the FEMA.
