Chinese online firms in India are having a hard time due to increased scrutiny on their business model by the customs department over import duties.
Shein, the Chinese e-commerce firm, has shut operations partially in India and is refunding money to consumers with pending orders following a crackdown by Mumbai Customs over import duties.
Earlier this month, around 500 parcels of Shein and Club Factory were seized by Mumbai Customs. Following this, Shein warehouse stands sealed in Mumbai as it was found undervaluing and wrongly declaring goods.
“Major items on shein.in are imported in bulk and then dispatched. Due to customs clearance issue for import, there is no certain release date till now. To protect your interest we will cancel the order ….. & arrange refund at the earliest,” read a message to a customer after the order was cancelled.
The mobile app and the website of the Chinese e-tailer prominently displayed a message requesting consumers to ‘hold back’. “We are upgrading our systems for newer experience, with fresh looks and exciting offers. Request you to hold back for some time while (you) watch this space for more,” the message read.
Besides Sino India Etail, a smaller number of parcels of Globemax Commerce India were also seized by the Customs. Notably, Globemax Commerce India is the local unit of another Chinese e-tailer Club Factory.
Many Chinese e-commerce firms ship goods ordered by Indians to various cities claiming they are ‘gifts’. As per the domestic laws, any gift received by Indians up to Rs. 5,000 do not attract any tax.
The officials found that the companies declared that their packaging was for B2B usage while they are actually conducting B2C business with the items. According to reports, these firms bypass the cumulative 42.08 per cent duty levied on individual imports and use the CB-13 low-value consignment route, which calls for very little disclosure.
