The mis-classification resulted in Cadbury India paying Rs 2.80 crore less in duties
A recent audit by Comptroller and Auditor General (CAG), India’s auditor, has found that certain items imported by confectionery giant Cadbury India (now Mondelez) and 27 other importers were ‘mis-classified’, causing loss of around Rs 10 crore to the national exchequer.
In Cadbury’s case, however, the company has claimed that the custom’s commissioner has finally dropped the demand for both duty and penalty in February.
CAG in its report said between July 2012 and March 2014 Cadbury India imported 19 consignments of ‘Hydrolysed vegetable protein containing – Soya’ through JNCH, Mumbai. The goods were classified as ‘isolated soya protein’ and cleared levying basic customs duty (BCD) at the rate of 10% and countervailing duty (CVD) at the rate 6%, instead of applicable BCD at 30% and CVD at 10%.
The mis-classification resulted in Cadbury India paying Rs 2.80 crore less in duties.
After the matter was brought to the notice of customs department, a demand showcause notice for 15 consignments was sent to the importer.
A Mondelez India spokesperson (formerly Cadbury India), said, “We responded to the notice from the Customs Department on the alleged misclassification of certain imports. The Commissioner of Customs accepted our submissions, and by an order issued in early February 2017, has dropped the demand for both duty and penalty.”
According to the industry insiders, ‘mis-classification’ is a very common practice by way of which high import duties/levies on certain goods are avoided if they are named and coded differently. However, certain others believe that classification of goods is a complex matter and subject to multiple interpretations and any mis-classification results in severe legal consequences. According to legal experts, there is a settled law for ‘mis-classification’ and ‘declaration’ of the imported goods as in the case of Commissioner of Customs, Bangalore versus Mahesh Raj (2006).
Some of the other companies that have been mentioned in the CAG report include Pioma Chemicals, Rashi Seeds Pvt Ltd, Vasta Biotech Pvt Ltd, Ashok Company, Kanegrade Flavours and Ingredients Pvt Ltd, Mark International, Dharampal Satyapal, Vinod Kumar Virendra Kumar, Shree Sai Overseas.
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