Mondelez pays Centre Rs 439 cr to settle tax dispute involving phantom unit

Mondelez India Foods Private Limited, manufacturer of Cadbury chocolates, has paid over Rs 400 crore to settle a tax dispute involving an alleged phantom unit in India, officials said on Thursday.

The Directorate General of Central Excise Intelligence (DGCEI) had in 2011 initiated a probe against the company for allegedly misusing "area-based exemption" for a new unit in Baddi in Himachal Pradesh to avail excise duty benefits, even before it came into existence, they said.

The DGCEI is now known as the Directorate General of Goods and Services Tax Intelligence (DGGSTI).

The "area-based exemption" for new units of firms in Himachal Pradesh provides full exemption from excise duties for production of specific goods for 10 years, as per norms.

However, for availing the exemption, the unit should have been established before March 2010.

The officials said a demand of about Rs 580 crore was raised against Mondelez India Foods Private Limited, erstwhile Cadbury India Limited, following the probe.

The firm has paid Rs 439 crore under the Centre's 'Sabka Vishwas' Legacy Dispute Resolution Scheme to settle the amount of tax and penalty, they said.

When contacted, a Mondelez India spokesperson told PTI: "We continue to believe that the decision to claim an excise tax benefit in respect of our plant in Baddi was valid."

However, the matter relates back to 2010, and it could take several more years to be resolved through the legal process, the spokesperson said in a statement.

"The Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, introduced by the Indian government in 2019, was an opportunity to settle a potentially protracted litigation.

"Like other tax payers, Mondelez India chose to take advantage of the amnesty, and we settled several legacy disputes including the Baddi matter," it said.

The decision to take advantage of the tax amnesty was made in the interest of putting an end to the issue so that "we can focus on what we do best, our purpose of empowering people to snack right," the statement said.

India is a key market for Mondelez International and "we will continue to prioritise growing our business here", it said.

During investigation, DGCEI officials allegedly found that Mondelez India had claimed excise duty exemption for its new unit in Sandoli village in Baddi relating to a period even before it came into existence, the officials said.