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Cadbury faces scrutiny in two tax cases

Friday, 23 November 2012 - 5:00am IST | Place: Mumbai | Agency: DNA
Cadbury India, a unit of Mondelez International, is under the income-tax department’s scanner for alleged tax evasions amounting to Rs213 crore.

Cadbury India, a unit of Mondelez International, is under the income-tax department’s scanner for alleged tax evasions amounting to `213 crore.

“Two cases of tax evasion by Cadbury India Ltd has been detected by the Directorate General of Central Excise Intelligence during the years 2009-10 to 2012-13, up to October 31, 2012,” S S Palanimanickam, minister of state, finance, told Parliament.
The cases pertain to a plant the company set up in Baddi, Himachal Pradesh.

Cadbury had written to the Excise Department seeking tax breaks on the plant it set up in June 2009 for manufacturing Cadbury chocolates, Five Star and Gems.

The department had, in turn, checked with Cadbury to find out if the plant was fully operational, or if the goods were only being packed there to get tax exemption. Its contention is that the excise duty waiver was sought even before the unit was fully set up and operational.

Had Cadbury got the tax exemption, it would have led to savings of `521 crore over a ten-year period, suggest reports.
But if the allegations against it are proved true, it will have to pay taxes from June 2009 onwards.

Evasion of excise duty on the plant would amount to `200 crore and evasion of service tax a further `13 crore or so.
Incidentally, the service tax case has already been adjudicated and a tax demand of `11.75 crore has been confirmed with a penalty of an equal amount, the minister said.

Companies that have set up plants in Himachal Pradesh and Uttarakhand before March 2010 can enjoy a tax holiday of ten years. The government had allowed this to encourage investments by companies. Several corporates, including Hindustan Unilever, Ranbaxy, Dabur, Hero Honda and Nestle, had set up plants in the state to make use of the tax sops.

This is the second time Cadbury has found itself in a tax tangle. Kraft International, which acquired Cadbury in 2010, is still being probed over tax dues in the $19 billion takeover.

“We are fully cooperating with the authorities on this enquiry. Since the investigation is currently  underway, it will be inappropriate on our part to discuss the details at this time,” said a Cadbury India Spokesperson.

 


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