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Supreme Court orders Fiat India to cough up Rs 400 crore as excise duty

Discussion in 'Fiat India News' started by naveen2cool, Aug 31, 2012.

  1. naveen2cool

    naveen2cool Superiore

    Messages:
    646
    Chennai
    In a major setback to Fiat India, the Supreme Court, in an order on Wednesday, set aside a tribunal order and directed the Italian car maker to pay close to Rs 400 crore as excise duty.

    The case pertained to the joint venture between Fiatand Premier Automobiles which existed in 1996. Fiat was importing CKD kits of its popular Uno hatchback cars, and selling them in the market at much below its cost price.

    The tax authority had levied excise duty on the cost of manufacturing Uno hatchbacks in India between 1996 and 2001. The company contested the excise department's charge to pay duty on the cost price.

    The Italian car maker and its Indian joint venture partner contested this by arguing that the selling price was lower than the cost price, and therefore, paid lower than assessed valued. The tax authority claimed that the company sold cars at lower than its cost price to penetrate the market.

    The erstwhile Indian partner — Premier Auto which makes Rio Compact Utility, may have to cough up Rs 49 crore, as per the apex court order. ET tried to reach out to Fiat and Premier Auto management but could not elicit a response.

    The tax authority had found that the wholesale price declared by the company is much less than the cost of production and, therefore, the price declared by them could not be treated as a normal price for the purpose of quantification of assessable value.

    The apex court also therefore held that excise duty has to be paid on cost basis and not on sale price. The ruling will have wider implications as it gives clarity on the fact that valuation under the central excise laws, lays down that central excise duty is chargeable on manufacture or production of goods and not on sale.

    Supreme Court Justice HL Dattu, in his order, set aside the order passed by the tribunal and upheld the tax department's claim. The tax department was being represented by Bishwajit Bhattacharyya , additional solicitor-general of India, while for Fiat, the case was argued by senior counsel Joseph Vellapally and V Lakshmi Kumaran.



    SOURCE:
    Supreme Court orders Fiat India to cough up Rs 400 crore as excise duty - The Economic Times
    1 person likes this.
  2. Torpedo

    Torpedo Amatore

    Messages:
    67
    Bangalore
    Not good, as if Fiat did not have enough problems already. I just hope they don't walk out of India for this...
    Last edited: Aug 31, 2012
  3. sungoa2010

    sungoa2010

    Messages:
    2,878
    Goa
    Is it true for all products? For example the cost of production of a soft drink is much much lower than the market price. So do they pay much less excise duty?
    Bad luck for Fiat.
    1 person likes this.
  4. It seems very unfair at this juncture,as if offering a death sentence instead of life sentence...
  5. Read it in times, it is mentioned that Fiat UNOs were sold at 100% loss for the company, Fiat wanted to penetrate into indian market and sold them at half the price against what it cost them!!!
    1 person likes this.
  6. ramjn

    ramjn Staff Member Janitor

    Messages:
    5,245
    Chennai
    Linea 1.3
    1 person likes this.
  7. ramjn

    ramjn Staff Member Janitor

    Messages:
    5,245
    Chennai
    Linea 1.3
    Budget 2014: Fiat case resolved, pay excise duty on final sale price

    Automakers, white good makers and other manufacturers will not have to pay excise duty on the discounts they offer to their consumers. Finance minister Arun Jaitley has corrected a significant anomaly in the excise law created by the controversial 'Fiat judgment', as part of slew of measures to boost the country's manufacturing sector.

    Source - Budget 2014: Fiat case resolved, pay excise duty on final sale price | ET Auto
  8. sriramr9

    sriramr9 Amatore

    Messages:
    211
    Chennai
    When FIAPL is chalking out a three year plan for 9 new products in india they will be well aware of this 400 crores fact. I hope Fiat Chrysler takes quick action in settling the amount so the concentration can turn towards brand building. i am sure Nagesh Basawanahalli when he was proudly showcasing the new products in Delhi Autoexpo was well aware of this case.

    Walking out of the market for this money is the not the decision to be taken now.
  9. PaddleShifter

    PaddleShifter Staff Member Janitor

    Messages:
    2,697
    Chandigarh
    Grande Punto 1.3
    Hey OT but what about Road tax paid before discounted price?

    Haryana RTO charges road tax at the full ex-showroom price. Discounts etc. are not considered while paying road tax. I guess this is a bit unfair. :p

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