Canon, Sony and Nikon artificially restricting memory of high end cameras to evade duty: DRI

Canon, Nikon and Sony, the three leading camera companies in India have been issued a show-cause notice by the Directorate of Revenue Intelligence (DRI) according to a report in The Times of India. According to DRI, these companies have alleged to have artificially restricted memory of high-end digital cameras to evade duties.

According to the DRI officials, these camera companies which control around 85% of the Indian camera market, have been issued notices for wrongfully claiming duty exemption. DRI says that Canon, Nikon and Sony each have evaded duties of Rs 161 crore, Rs 105 crore and Rs 129 crore respectively. Low-end digital cameras are exempt from any duty, but higher-end cameras are subjected to 10% customs duty.

The definition of a low-end camera according to customs department is any camera that is capable of shooting only VGA video at minimum 23 frames per second for at least 30 minutes in a single sequence using the maximum storage. Anything above this will quality as a high end camera which will be charged a 10% customs duty. The thing under dispute is the condition to avail duty-exemption. The recording time can be shot in a single sequence or using the maximum storage. To avail the exemption, the camera should use its full storage capacity including the expanded capacity for a single clip whose length is under 30 mins.

According to DRI, the camera importers had declared that the digital cameras could not shoot beyond 30 mins in a single sequence, while ensuring that the firmware kept the video recording time artificially under 30 mins. This allows one to shoot multiple video segments under 30 mins, as long as the memory gets exhausted, which the DRI feels is a piece of information that was suppressed in the bill of entry.

Canon, Sony and Nikon had sought a stay order against the notices, but the court proceeded with the show-cause notice as per regular process.

India is a signatory to the Information Technology Agreement (ITA) and this membership exempts participating countries from duties on IT products. Sony has approached the courts as it believes that it has followed the ITA regulations when it comes to duty-exemptions. Sony did not comment on the matter further. Nikon India’s Hiroshi Takashina, suggested removal of the import duties as India is the only ITA signatory which taxes import of digital cameras. This is one reason why we have suddenly seen a jump in the prices of cameras and lenses last year. Canon India did not comment on the matter as their President and CEO Kazutada Kobayashi was travelling.

Posted by : Gizmeon