The Central Bureau of Investigation (CBI) has filed a case against Mondelez, the maker of Cadbury chocolates, its former executives as well as several government officials for setting up a “ghost” production unit of the company in Baddi, Himachal Pradesh.
Cadbury allegedly misrepresented facts to avail area-based tax exemption benefits worth around ₹241 crore, according to the CBI First Information Report. Rather than expanding production by creating a unit, Cadbury decided to increase production capacity in its existing unit and avail tax exemption from May 2005, CBI said.
The Central Vigilance Commission (CVC) had asked the central anti-corruption agency to look into the matter after the latter filed a Preliminary Enquiry (PE) in 2017, which has now been turned into an FIR. A PE is the first stage of any investigation in the CBI.
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The enquiry revealed that a plant was proposed by Cadbury India in Baddi in 2007 to manufacture its popular chocolates, 5 Star and Gems, so that it could avail area-based excise and tax exemption. To avail the same, some members of the executive board of the company along with the key managers, collectively decided to manipulate records, engage intermediaries to route bribes to the government officials, and cover up evidence, according to the CBI FIR. No new plant was constructed.
{{/usCountry}}The enquiry revealed that a plant was proposed by Cadbury India in Baddi in 2007 to manufacture its popular chocolates, 5 Star and Gems, so that it could avail area-based excise and tax exemption. To avail the same, some members of the executive board of the company along with the key managers, collectively decided to manipulate records, engage intermediaries to route bribes to the government officials, and cover up evidence, according to the CBI FIR. No new plant was constructed.
{{/usCountry}}Cadbury officials, CBI added, “paid bribes, misrepresented facts and manipulated records to fraudulently avail area-based exemption benefits (Central Excise and Income Tax) in Baddi, Himachal Pradesh, knowing fully well that they were not entitled to avail area-based tax exemption benefits”.
People familiar with the development said that the CBI teams carried out searches at five places in Himachal Pradesh and Haryana on Wednesday.
Among those named in the FIR include Cadbury’s then vice-president (Finance) Vikram Arora, former director, finance Rajesh Garg, former director Jaiboy Phillips (then director, supply chain), and officials of Central Excise among others.
A Mondelez India spokesperson said in a statement, “In 2019, the company settled a potentially protracted litigation through the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 – an amnesty scheme introduced by the Indian government to settle tax litigation. This decision was made in the interest of putting an end to protracted litigation to enable us to focus on what we do best, growing our business in India. We are yet to receive any formal communication in the matter from the authorities”.