The Directorate of Revenue Intelligence (DRI) has detected duty evasion of over Rs 100 crore by at least eight digital cable distribution and DTH firms across the country, since 2012, when the government first introduced cable digitisation in India according to official sources.
The prominent firms which are now under the DRI scanner for allegedly evading customs duty on import of at least over 3 crore set top boxes include—Hathway Cable &Datacom Ltd, Den Networks Ltd, GTPL Hathway Pvt Ltd and Kerala Communicators Cable Ltd among others. Both Hathway Cable & Datacom and Den Networks are listed on the BSE Ltd.
Emails and phone calls to all the four companies did not elicit any response.
The DRI has found that the firms have allegedly undervalued the set top boxes embedded with conditional access system (CAS). Conditional access system allows transmission of pre-determined TV channels to consumers and ensures that channels are only transmitted to consumers who have set top boxes. CAS is either embedded in the set top box or comes in a smart card which is externally inserted in the set top box. The CAS technology is patented by manufacturers outside India.
International vendors that supply CAS embedded set top boxes charge a licence fee of $2 to $7 per set top box to the importers as the technology is available with only a few European and Chinese companies. The DRI investigation has now revealed that the Indian importers of CAS embedded set top boxes have not declared this licence fee paid to the foreign vendors at the time of import. As a result the firms have allegedly evaded duty of Rs 40 on each of the imported set top boxes, said sources.
“Investigations into the all such instances of undervaluation of imports are still on. A few companies have collectively deposited about Rs 30 crore after the probe agency confronted them. Since the probe on a number of firms is yet to conclude, the quantum of total evasion is likely to go up ,” said an official.
According to data accessed by The Indian Express, Hathway Cable& Datacom has allegedly evaded duty on over 65 lakh set top boxes, Den Networks on 43 lakh boxes and GTPL Hathway and Kerala Communicators on 42 lakh and 11 lakh set top boxes respectively.
In 2012, the government mandated implementation of CAS. Currently in the third and fourth phase of ongoing digitisation of TV services in India, experts estimate need for at least 7 crore boxes.