The Central Bureau of Investigation (CBI) has filed a lawsuit against Cadbury India Limited (now Mondolez Foods Pvt Ltd) and Central Excise tax authorities for allegedly obtaining fraudulent license for a chocolate factory in Himachal Pradesh in 2009-2010. It is alleged that the conspiracy with Excise officials offered a Rs 240 crores (approx) exemption for its new manufacturing unit in Himachal Pradesh. The conducted an investigation on Wednesday in about half a dozen parts of Mumbai, Punjab (Mohali) and Himachal Pradesh.
A lawsuit against the company and officials of Excise has been registered for fraud and under the relevant provisions of the Prevention of Corruption Act. According to the CBI’s FIR, a preliminary investigation was conducted by CBI’s Anti-Corruption Bureau in Shimla on allegations that Mondolez Foods Private Limited (formerly known as Cadbury India) paid bribes, produced false information and fraudulent records in order to extradite in Baddi, Himachal Pradesh. The company was well aware that it was not entitled to exemption of tax benefits.
FIR adds “with similar findings, other members of the company’s executive committee and key managers, all of whom have decided to change the records, have engaged mediators to submit bribes and conceal all such evidence that emerged during the internal investigation”. It was revealed during the PE that M/s Cadbury India Ltd had established a production unit in the name and style of M/s Cadbury India Ltd in Baddi by producing Malt based Food (Bournvita) and had started commercial production from May 19, 2005
In 2007, M/s Cadbury India Ltd proposed to increase production by building a 5 star and heritage unit such as Unit II on land acquired by M/s Barmalt in 2007 in Baddi, to avoid exemption from excise duty and income tax for additional ten years. CBIs FIR says its preliminary investigation has revealed that M/s Cadbury India Ltd has decided to increase the production capacity of its existing unit rather than a separate unit and receive tax exemption from May 19, 2005, i.e. the first day of commercial production only. Therefore, the company vide in its letter dated January 22, 2007 to the Director of Industry, Himachal Pradesh government and applied for the merger of its two units in which it was informed that the company had decided to establish its second location as a merger unit with the existing name of M /s Cadbury India Ltd. The Directorate of Industries granted permission for merger on March 7, 2008. FIR further states that the company has also applied for the removal of the merger i.e., to establish a separate unit on behalf of M/s Cadbury India Ltd.
The CBI alleged that the company “had no right to be exempted”. FIR also accused Excise officials of conspiring with company officials to provide illegal exemptions and of not making proper verification made by the company.
