Nationwide Excise Raids On 4 Automobile Majors
The directorate-general of anti-evasion (DGAE) yesterday searched the offices and factories of four automobile companies Hindustan Motors, General Motors, Maruti Udyog and Premier Automobiles for alleged excise evasion.
Central Board of Excise and Customs chairman R Gopalnathan clarified that the companies had not been raided. It was not a raid but a routine verification of assessable values of automobile manufacturers. This was done because there were some complaints that some components were not shown in the bill. The penalties, if any, will be imposed only after thorough scrutiny and examination, he said.
Significantly, the searches came on the heels of the governments rejection of industrys plea to extend the deadline for the voluntary disclosure of income scheme. The government seems to be now gearing up for a revenue collection drive.
The searches, which were conducted simultaneously in 16 different centres including the metros, Chandigarh, Indore and Gurgaon, commenced at 11am and continued till late in the evening. They are expected to yield about Rs 60 crore. According to DGAE sources, the alleged excise evasion relates to compulsory after-sales services and compulsory warranty reportedly borne by dealers who were offered high margins by the automobile companies.
The DGAE has yet to assess the extent of excise evasion by most auto companies through this method and will investigate duty evaded up to five years ago, said an official. Two auto majors, Telco and Mahindra & Mahindra, have been left alone by the directorate since they are believed to be paying excise duties to the departments satisfaction.
Officials pointed out that purchases by non-governmental organisations (unlike the vehicles purchased through the directorate-general of supplies and disposal) could be undervalued since the cost of warranty and after-sale services is not included in the assessable value.
They alleged that when vehicles are purchased through the directorate-general of supplies and disposal, the dealer who carries out after-sale services and warranty is paid Rs 2, 000 per car (in the case of Hindustan Motors. This may vary for other companies). This amount is included in the assessable value and duty is paid on it. However, in case of sales made to NGOs, this amount escapes the excise net, resulting in undervaluation.
When contacted by Business Standard, a release from Hindustan Motors stated: This is a sub judice matter. We cannot comment on it. Both the government and the excise department have been recipients of several representations on this subject. We, as well as several members of our industry have confidence that the department concerned will keep in mind the facts that we have been presenting before them over the last several years. This is all that we can say at this early stage.