In the second major case involving a foreign company under its probe, the Central Vigilance Commission (CVC) is investigating alleged excise duty evasion to the tune of about Rs 580 crore by confectionery giant Mondelez, maker of Cadbury chocolates.
CVC sources said today the anti-corruption watchdog is also looking into the role of central and state government officials who might have facilitated the alleged evasion.
An investigation has been started by the Commission in the case, they said, adding some documents have also been sought from the company.
There are allegations that certain government officials might have helped the company in allegedly evading the excise duty, the sources said.
It is the second big case being probed by the CVC involving a foreign private company. US-retail giant Wal-Mart has come under the scanner of the CVC amid allegations that it gave bribes to government officials to get customs clearances and obtain permits to set up stores in India.
A Mondelez India spokesperson said today they will cooperate with all the authorities concerned.
“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.
“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 demand of about Rs 580 crore was raised last year against Mondelez India Foods Pvt Ltd, erstwhile Cadbury India Ltd, for allegedly evading excise duty by fraudulently taking exemption for one of its ‘ghost’ production units in Himachal Pradesh’s Baddi area.
The Directorate General of Central Excise Intelligence (DGCEI) here had in 2011 initiated a probe against the company for allegedly misusing ‘area-based exemption’ for its new unit in Baddi, even before it came into existence, to avail excise duty benefits, the sources said.
As per norms, the area-based exemption for new industrial units of firms in Himachal Pradesh provide full exemption from excise duties for production of specified goods for a period of 10 years.
However, for availing such exemption the unit should have been established before March 2010.
During investigation, the DGCEI officials allegedly found that Mondelez, formerly 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, they said.
The US-based multinational, in a filing to Securities and Exchange Commission (SEC) there, has recently said it is contesting showcause notices issued by the excise department in India that has demanded from it unpaid taxes and penalties.
In the filing made with the SEC, Mondelez International said the investigation under the Foreign Corrupt Practices Act (FCPA) relates to a facility in India which it had acquired as part of the Cadbury takeover.
After a long takeover battle, Cadbury was acquired in 2010 by the erstwhile Kraft Foods which later adopted a new name, Mondelez International. However, Cadbury brand has been retained for various products.