Airtel Reuters

The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has asked Indian telecom company Bharati Airtel to pay over Rs 7 billion fine for evading customs duty by undervaluing hardware imports.

The tribunal last week ordered Bharti Airtel to pay a differential duty liability of Rs 2.1551 billion along with a penalty for a similar amount and a redemption fine of Rs. 1.89 billion, according to a Business Line report.

The report said that Airtel was importing mobile telecom equipment by splitting the value of the equipment into hardware and software components; the hardware was imported first and undervalued to the extent of value of software; that the software imported was dummy and was stored in the warehouse; that hardware comes with the embedded software and is ready to use.

The report said authorities conducted searches at Bharti's Bangalore office in 2004. Bangalore customs had booked the case and last week the order came in its favor. If Airtel wants to appeal, it will have to go to the Supreme Court as with all cases relating to classification and valuation issues, a government official said, according to the Business Line report.

A Bharti spokesman told Reuters that the company was yet to receive a copy of the tribunal order.

In similar cases in the past, Hewlett-Packard's India sales unit was ordered to pay over Rs 200 million and U.S.-based Sun Microsystems was asked to pay about Rs 330 million.