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Old 31st August 2012, 17:06   #1
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Default Fiat India loses Rs 400 crore excise case in Supreme Court

A Supreme Court verdict has directed Fiat India to pay about Rs 400 crore as excise duty, the Economic Times reports. The case, which has been in court for almost a decade, concerns the reduced excise duty that Fiat India paid between 1996 to 2001.

During that time period, the Fiat & Premier Automobile joint venture imported CKD (Completely Knocked Down) and SKD (Semi Knocked Down) kits for the Uno hatchback model. The car was sold at a price lesser than its cost at the time. The production cost was reportedly Rs 3.80 -3.99 lakh per car, while its assessable value (on which excise is paid) was only Rs. 1.85 lakh. According to the excise department, the Italian carmaker sold the car at a loss, as a part of its market penetration strategy.

After the excise department discovered that the Uno's wholesale price declared by the company was less that the production cost, it charged Fiat and Premier to pay duty on the cost price. But the company contested the charge, arguing that since their selling price was lesser than the cost price, its assessable value was also lower.

Ultimately, the court verdict held that excise duty has to be paid on the cost price and not the sale price. Also, Premier Automobile will have to pay Rs 49 crore in excise as Fiatís former JV partner.
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Old 31st August 2012, 19:05   #2
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Default Re: Fiat India loses Rs 400 crore excise case in Supreme Court

Does that mean that India was a dumping ground for Fiat? Were we buying the car for less than it's actual value?
I guess that Fiat Uno owners will now start prosecuting Fiat and Premier.
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Old 31st August 2012, 19:15   #3
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Default Re: Fiat India loses Rs 400 crore excise case in Supreme Court

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Originally Posted by wildsdi5530 View Post
Does that mean that India was a dumping ground for Fiat? Were we buying the car for less than it's actual value?
I guess that Fiat Uno owners will now start prosecuting Fiat and Premier.
Which owner would want to complain against a company for selling cars for less than their actual value?

Selling a car which is outdated in other countries - if that can be termed as 'dumping ground', the India is a bigger dumping ground for the most popular brand here.

400 crores is a significant portion of the TATA JV itself!! I am afraid whether this is the beginning of the end for Fiat in India?!
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Old 31st August 2012, 19:39   #4
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Default Re: Fiat India loses Rs 400 crore excise case in Supreme Court

India is a country where apparently this happens. When a company sells its product to us at less than cost price, we litigate against it to collect taxes at the cost price rather than selling price.
Goodbye to half price shops and discount shops.
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Old 31st August 2012, 20:17   #5
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Default Re: Fiat India loses Rs 400 crore excise case in Supreme Court

I see it as a Non issue For the current TATA - FIAT JV . It has Nothing to do with them as its a completely new entity .

IMO It Do affects the previous JV FIAT has with PAL , which in turn should affect the Parent in Italy .

As for dumping ground goes, yes India is a Big dumping ground with top manufacturers leading the way .
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Old 31st August 2012, 21:01   #6
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Default Re: Fiat India loses Rs 400 crore excise case in Supreme Court

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Originally Posted by clevermax View Post
Which owner would want to complain against a company for selling cars for less than their actual value?
So true!

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Selling a car which is outdated in other countries - if that can be termed as 'dumping ground', the India is a bigger dumping ground for the most popular brand here.
Unfortunately our trade laws don't have such a restriction

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400 crores is a significant portion of the TATA JV itself!! I am afraid whether this is the beginning of the end for Fiat in India?!
Surprising that Fiat adopted such a valuation methodology.

In general, Excise duty is not calculated on cost or selling price, it is calculated on the Assessable value of the goods (*Cars* in this case), arrived on the basis of certain guided valuation principles which indicates what is to be included and what is not to be included in the *Value*.

Cost of production is a major factor in valuation. Since Excise is not a duty on sale but a duty on manufacture, selling price is mostly irrelevant. Heck, even if you don't sell the goods but clear it out of your factory gate, you are liable to pay ED.

Remember, the actual pay out could be much higher if the interest and penalty were not factored into that 400 figure. It should create a huge dent in the bottom line of the company. Sad!
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Old 1st September 2012, 11:04   #7
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Default Re: Fiat India loses Rs 400 crore excise case in Supreme Court

Can anyone throw some light on how exactly this will affect the current Tata-Fiat JV?
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Old 1st September 2012, 12:09   #8
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Default Re: Fiat India loses Rs 400 crore excise case in Supreme Court

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Originally Posted by one-77 View Post
Can anyone throw some light on how exactly this will affect the current Tata-Fiat JV?

IIRC , Tata and Fiat have parted ways and its been sometime now.
Correct me if wrong.
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Old 1st September 2012, 13:48   #9
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Quote:
Originally Posted by PlatzdaTurbo

IIRC , Tata and Fiat have parted ways and its been sometime now.
Correct me if wrong.
I thought only sales and service are going to be separate?
Or has Fiat Italy bought out Tata's stake in the JV?
But what I'd like to know is whether this verdict will be the last nail in Fiat's coffin. As a Fiat owner, that is a rather scary prospect. I've seen how some friends and relatives who owned Palios hunted around for parts and struggled to sell their cars the last time Fiat shut shop.
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Old 1st September 2012, 15:31   #10
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Default

Quote:
Originally Posted by one-77 View Post
I thought only sales and service are going to be separate?
Or has Fiat Italy bought out Tata's stake in the JV?
But what I'd like to know is whether this verdict will be the last nail in Fiat's coffin. As a Fiat owner, that is a rather scary prospect.
From what I have read, the JV will continue to manufacture engines and assemble all Fiat and some Tata cars. The new Fiat company will handle only sales and service.

How can this be last nail in the coffin? Even if they want to shut shop, they'll still have to pay up. When they pay up, they might as well continue!
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Old 1st September 2012, 16:20   #11
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Default Re: Fiat India loses Rs 400 crore excise case in Supreme Court

I guess this question would be off topic but here goes. Does the Oil majors in India pay excise to the government based on the actual cost of diesel or on the rate of subsidized diesel that we get in the country. From this judgment of the supreme court I guess they will have to pay excise duty based on the production cost and not on the sale price of diesel.
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Old 1st September 2012, 18:12   #12
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Quote:
Originally Posted by drpullockaran
I guess this question would be off topic but here goes. Does the Oil majors in India pay excise to the government based on the actual cost of diesel or on the rate of subsidized diesel that we get in the country. From this judgment of the supreme court I guess they will have to pay excise duty based on the production cost and not on the sale price of diesel.
Hey you know what? The Govt. makes big money by way of customs and excise on fuel. When crude oil is imported they levy customs on it. So whenever the barrel prices go up, your customs collection also goes up.


The Govt should rightfully reduce the rate so as to reduce the price impact on the end user. But it hardly does.

Regarding excise. Absolutely no. Again I repeat excise is a duty on manufacture and not a duty on sale. So no question of the subsidy being factored into it.

Alcohol and petroleum products are two major streams of revenue for the state and center.
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Old 1st September 2012, 18:28   #13
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Default Re: Fiat India loses Rs 400 crore excise case in Supreme Court

^^PlatzdaTurbo, A lot of my friends who own Fiats still have to depend on Tata service centers.

Quote:
Originally Posted by one-77 View Post
But what I'd like to know is whether this verdict will be the last nail in Fiat's coffin. As a Fiat owner, that is a rather scary prospect. I've seen how some friends and relatives who owned Palios hunted around for parts and struggled to sell their cars the last time Fiat shut shop.
I doubt that will happen. The market is very different as compared to that stage and now. Even with the worst-case scenario of Fiat shutting shop (which I doubt if it'll happen), availability & sourcing of parts would not be that much of an issue, considering how mobile & well-connected the world is nowdays.
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Old 1st September 2012, 18:47   #14
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Default Re: Fiat India loses Rs 400 crore excise case in Supreme Court

Quote:
Originally Posted by one-77 View Post
Can anyone throw some light on how exactly this will affect the current Tata-Fiat JV?
IMO we are forgetting One basic things while looking at this judgement just because of word FIAT .

The judgement is against previous JV , fiat has with Premier . that was a separate entity and current one is separate. given the Above the current JV will have no effect as it;s a separate legal entity . Yes, Fiat Italy might has to Bear this amount but not Current JV . why would TATA pay for some thing which happened in 90;s when they were not doing business together .
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Old 26th October 2012, 18:24   #15
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Default Re: Fiat India loses Rs 400 crore excise case in Supreme Court

This decision goes against the principles of Excise Act.Cost of production has no bearing with assessable value when price is the sole consideration and the buyer and the seller are not related.Even if it is below cost.I expect a review petition to be filed by FIAT.
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