Mumbai Customs has seized around 500 parcels of Sino India Etail Pvt. Ltd, the official Indian seller for Chinese apparel and lifestyle e-tailer Shein, and sealed a company warehouse in the city, after officials found it undervaluing and wrongly declaring goods, ET has learnt.
This is part of a crackdown on Chinese e-commerce imports into India by the Mumbai courier terminal against around a dozen companies for allegedly paying much lower customs duties.
The seizure orders, copies of which ET has access to, details the players against whom action has been initiated and the modus operandi of such operators.
These players have become more active after the government took action against Chinese e-commerce sellers who were routing orders through as duty-free “gifts and samples”, Customs officials told ET.
India exempts items valued up to Rs 5,000 from all taxes to allow Non-resident Indians to send gifts to families back home. ET reported on June 13 that the government has begun reviewing changes to the gift norms which might be introduced in the upcoming budget.
"It appears that the packing of goods is of B2C model… but the clearance is being sought for B2B model," the seizure order against Sino India Etail reads.
Apart from Sino India Etail, a smaller number of parcels of Globemax Commerce India have also been seized. Globemax is the local unit of another Chinese e-tailer Club Factory, and lists founder and CEO Vincent Yun Lou, as one of its whole-time directors.
Chinese e-commerce firms employ importers such as Sino India Etail and Globemax to bring in goods ordered by their customers into India in bulk, allowing them to bypass the cumulative 42.08% duty levied on individual imports.
They use the CB-13 low-value consignment route, which calls for very little disclosure.
In an emailed response to ET, Sino India Etail said, “We have always abided by the laws and paid all our taxes correctly and timely.” It also said it assists brands in distribution of clothing and accessories and has been in the business for a few years.
Globemax Commerce India did not respond to ET’s queries.
A top ranking Mumbai customs official told ET that these firms were front organisations for Chinese e-commerce companies and that they evade taxes by undervaluing goods.
The Mumbai terminal has now begun alerting other ports to potential malpractice by uploading the details of such firms on the National Risk Management portal, an alert system for evaders.
“Items are packed and shipped for individual customers, similar to how you get a package from Amazon at home. But these companies act as a bulk purchaser in which the value declared is 300-400% less than the actual value of items,” he said on the condition of anonymity.
Earlier this year, RSS affiliate Swadeshi Jagran Manch and social platform LocalCircles had sent letters to the finance ministry highlighting the issue of Chinese e-commerce players evading taxes. They said this gave Chinese sellers a price advantage over local counterparts.
While there have been calls for stricter enforcement at all of India’s customs ports, similar to the action Mumbai customs has taken, this isn’t a long-term solution, said Sachin Taparia, CEO of LocalCircles.
“A more permanent solution could be having the payment gateways levy a flat customs plus IGST charge for cross-border e-commerce shipments,” said Taparia. “Such a model will make things transparent for consumers and cross-border sellers, and could help minimise evasion.”