Saturday, 1 September 2012

Fiat India asked to pay Rs 400 Crore as excise duty penalty for Uno cars sold at less price

Fiat India already struggling to sell its cars in India has now lost an almost a decade old battle yesterday wherein the Supreme court has ordered to pay Rs 400 Crores as excise duty penalty for the Fiat Uno cars which were sold at a less price and thereby paying up less duty.

The excise department had discovered that the company was importing car kits in completely knocked down (CKD) and semi-knocked down condition and the cost of production of a single car was Rs 3,80,883 (CKD) and Rs 3,98,585 (SKD ),respectively,against the assessable value of Rs 1,85,400. The tax departments contention was that cars were imported at a higher price but were sold at loss for a consideration to penetrate the market,a fact confirmed by the company.

Fiat India with its Uno, once gave Maruti Suzuki a strong run for its cars, which was the market leader that time too in 1996, however due to poor after sales service and distribution network the car failed.

Uno cars were imported at around Rs 3.8 lakh but were sold at a loss The excise department contended that since the cars were sold at a lower price to penetrate the market,duty is chargeable on the entire sum and not the selling price The order vindicates the departments contention that duty is chargeable on manufacture and not sale of goods.


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