Cadbury fraudulently availed excise duty exemption, says allegation.
By Sreekanth A Nair
The Central Vigilance Commission (CVC) has started an investigation against the US-based company Mondelez, maker of the famous chocolate brand Cadbury, regarding alleged tax evasion to the tune of $84 million.
The commission has asked the company to submit documents as part of the investigation. CVC is also probing whether some state and central government officials have helped the company to evade taxes.
The allegation against Mondelez is that the company fraudulently availed excise duty exemption for its production units in Himachal Pradesh’s Baddi area. In 2011, The Directorate General of Central Excise Intelligence (DGCEI) had started a probe against the company for violating the norms of ‘area-based exemption.’
In Himachal Pradesh, as per the norms of ‘area-based exemption’, new industrial units established in the state are fully exempted from excise duties for the production of specified goods for a period of 10 years. But the exemption is available only to those units established before March 2010.
In 2011, DGCEI alleged that the company had claimed excise duty exemption for its new unit in Himachal Pradesh even before the unit came into existence.
Mondelez India said that the company will co-operate with the investigation.
“We will cooperate with all authorities to address this matter through the administrative and judicial process. It would be inappropriate for us to comment at this time since the matter is in the legal domain,” it said in response to a query sent by PTI.
“A compliant and ethical corporate culture, which includes adhering to laws and industry regulations in all jurisdictions in which we do business, is integral to our success. We firmly believe that the decision to claim excise tax benefit is valid and that our executives acted in good faith and within the law in the decision to claim excise benefit in respect of our plant in Baddi,” it added.
Mondelez has recently informed the Securities and Exchange Commission (SEC) in the US that they are challenging the notice issued by the Income Tax department of India demanding unpaid taxes and penalties from the company.
Cadbury was acquired by Kraft Foods in 2010 and later it adopted the new name Mondelez International.
Earlier, CVC had initiated a probe against retail giant Wal-Mart on allegations that the company had bribed Indian government officials to get permission to establish its units in India.