Cadbury hit with $92m tax bill in India over ‘phantom’ factory

Cadbury has been hit with a new Rs5.7 billion (€84 million) tax claim in India in relation to allegations that the Dairy Milk chocolate producer claimed excise benefits on a "phantom" factory.

The dispute is the latest in a series of tax battles involving global multinationals in India, including British-based oil group Cairn Energy and telecoms group Vodafone, denting the country's reputation as an investment destination.

Cadbury is fighting the tax bill. India's authorities suggest the confectioner, which is owned by global snacks business Mondelez International, provided inaccurate information when claiming an excise tax exemption linked to a factory in the Indian state of Himachal Pradesh.

The British-based chocolate brand completed an expansion of the plant in 2009. India’s authorities have claimed the expansion was portrayed as a new facility, and therefore eligible for a tax exemption, rather than an enlargement of an older factory.

This in turn prompted media reports in India claiming Cadbury had sought tax benefits for a “phantom” factory that officially did not exist, a claim the company denies, along with any other wrongdoing in the case.

Cadbury said it planned to launch an appeal against the claim, describing the dispute as “one of interpretation”.

“The company will challenge the [order] in appeal, as we firmly believe that we have correctly claimed exemption of excise duty. We also firmly believe that our executives acted in good faith and within the law in the decision to claim excise benefit in respect of our plant,” it said. – (Copyright The Financial Times Limited 2015)