Cadbury’s faced with $92m tax bill over ‘phantom’ factory

Cadbury’s has been landed with a $92m tax claim by the Indian tax authorities after the company was accused of claiming excise benefits on a ‘phantom’ factory.

Owned by US-based food and beverages giant Mondelez International, Cadbury’s has been accused of providing incorrect information when claiming an excise tax exemption for a factory in the northern state of Himachal Pradesh.

The company has now been asked by India’s Directorate General of Central Excise Intelligence to pay Rs5.7bn (€83m) in unpaid taxes, plus interest.

The authorities have said that the company claimed exemption for a factory that was expanded in 2009, and portrayed it as a new factory instead of an old one.

Following the allegation against the company, a probe was launched by Indian tax officials in 2011, and a show-cause notice issued to the firm demanded around Rs2.5bn against excise duty evasion.

However, Cadbury’s has denied all allegations and said it will challenge the court’s decision.

This is the latest in a series of tax battles in India involving global multinationals, including Cairn Energy; the British oil group and Vodafone; the telecoms group, reported the Financial Times.

Cadbury’s said in a statement: "The issue is one of interpretation, and it will be inappropriate on our part to discuss the details externally at this time, since the matter is sub-judice and in the legal domain.

"The company is examining the order and will challenge the same in appeal, as we firmly believe that we have correctly claimed exemption of excise duty. We also firmly believe that our executives acted in good faith and within the law in the decision to claim excise benefit in respect of our plant."

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Image: Cadbury’s faces with $92m tax bill over ‘phantom’ factory. Photo: courtsey of Mister GC via freedigitalphotos.net.