Did Cadbury use nonexistent factory to avoid taxes in India?

Cadbury Plc, now part of Mondelez International In, used a nonexistent factory in India to avoid about $46 million in taxes, the Wall Street Journal reported on Tuesday, citing a report by the Indian tax authorities.

[caption id=“attachment_649607” align=“alignleft” width=“450”] During its investigation, the officials found that the company claimed excise duty exemption for its new unit in Sandoli village in Baddi, relating to a period even before it came into existence. Reuters[/caption]

Cadbury’s Indian unit manipulated invoices and other documents to get an exemption from taxes available to companies that began production in new plants in Himachal Pradesh by March 31, 2010, the Journal said.

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The company was reviewing the contents of the show-cause notice and was cooperating fully with the Indian authorities, the Journal said, quoting a Mondelez spokesman.

A Cadbury India spokesperson said it will respond to the show cause notice in consultation with its legal advisers.

“We are in the process of reviewing the contents of the show-cause notice from the Excise Department and will respond to it in consultation with our legal advisers. A show cause is a matter of form in any such enquiry,” the spokesperson said in an email response to PTI query.

" We have been fully cooperating with the authorities on this enquiry. Since the process is currently under way, it will be inappropriate on our part to discuss the details at this time," he added.

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As per the central government norms, the area-based exemption for new industrial units of firms in Himachal Pradesh provide full exemption from excise duties for specified goods for a period of 10 years. However, for availing this the unit should have been established before March 2010 to claim such benefit.

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

Agencies