A demand of over Rs 570 crore has been raised against confectionery giant Cadbury India Ltd for allegedly evading excise duty by fraudulently taking exemption for one of its 'ghost' production units in Himachal Pradesh.
The Directorate General of Central Excise Intelligence (DGCEI) had in 2011 initiated a probe against the company for allegedly misusing 'area-based exemption' for its new unit in Baddi, Himachal Pradesh even before it came into existence, official sources said.
After completion of its investigation, the DGCEI had slapped a show-cause notice to the firm demanding about Rs 250 crore against excise duty evasion, they said.
The demand was contested and the central excise office of Chandigarh had late last month issued an assessment-cum-demand notice to Cadbury India Ltd (now Mondelez India Foods Private Limited) upholding the demands raised by the DGCEI.
It has demanded from the firm Rs 574 crore towards alleged excise duty evasion -- including Rs 231.47 crore for the period from July 28, 2010 to January 31, 2013, Rs 111.36 crore for the period from February 1, 2013 to December 31, 2013 and a penalty of Rs 231.47 crore, according to the demand order.
Further, a penalty of Rs one crore has also been imposed against Anand Kripalu, Managing Director of Cadbury India Ltd for allegedly violating central excise rules, the order said.
In addition, penalties to the tune of several lakhs of rupees have been imposed on a few present and former employees of the company.
Mondelez India in a statement said: "The company is examining the Commissioner's order and will challenge the same in appeal, as we firmly believe that we have correctly claimed exemption of excise duty."
The company said "the issue relates to applicability of excise exemption in respect of our Unit II of our Baddi plant, which has been manufacturing our much loved products since 2009".
"The issue is one of interpretation and it will be inappropriate on our part to discuss the details externally at this time since the matter is sub-judice and in the legal domain," it added.
As per the central government norms, the area-based exemption for new industrial units of firms in Himachal Pradesh provide full exemption from excise duties for specified goods for a period of 10 years. However, for availing such exemption the unit should have been established before March 2010 to claim such exemption.
During investigation, the DGCEI officials had found that Cadbury India Ltd claimed excise duty exemption for its new unit in Sandoli village in Baddi relating to a period even before it came into existence, the sources said.
According to a certificate of Department of Industries, Himachal Pradesh, the unit was established after March 31, 2010, they said
It was further found during the course of investigation that mandatory licenses or permissions from local bodies concerned for setting up the unit were not obtained before the last date of March 31, 2010, the sources claimed.