[Redline6800]

Fiat's Similar Case

Honda's discounting exercise has resulted in a Rs. 164 crore excise duty claim by the Central Board of Excise & Customs (CBEC). The demand has been made as a result of Honda having paid duties on the discounted price for the Jazz (now discontinued) & Brio (to a lesser extent). The CBEC is demanding that the excise duty has to be paid on the production cost of the cars, and not on discounted rates at the time of sale. A show cause notice has been issued to Honda for payment of the additional excise duty.

Honda had earlier slashed prices of the Jazz towards the second half of 2011 by Rs 1.6 Lakh, in an effort to try increasing sales to 1,000 units a month (they had slid to 250 units / month by then). The Jazz never really recovered from its initial pricing fiasco though.



The Supreme Court had ruled against Fiat India in a judgement earlier last year, directing Fiat to pay Rs 400 crore in excise duty. In this case, Fiat had imported CKD kits (between 1996 and 2001) of the Uno hatchback and sold them below cost price (paying lower taxes as a result). It was found that the cost of production was much less than the wholesale price declared by Fiat, and hence it was liable to pay the amount claimed by the authorities.

[GTO]

Thread moved from the Assembly Line to the Indian Car Scene. Thanks for sharing!

[Maverift]

I guess this is bad news for customers.

Will make manufacturers think ten times before launching discount offers. Even when they decide to offer discounts, it will be after factoring in customer's share in additional duty they will have to pay.

[bobbafett]

The math does not make sense. If the CBEC logic was right, the Honda would have had to sell anywhere from 50,000 to 70,000 Jazz cars at the discounted price to evade excise duty of 164 crores!

[Maky]

Taxing money that does not exist? What rubbish.

This I think is yet another attempt by this failed Govt. to raise more money ahead of the elections. Pathetic...