Govt investigating Cadbury India in tax evasion case

NEW DELHI Thu Nov 22, 2012 3:44pm IST

1 of 2. Workers protest after attending a union campaign launch at the Cadbury factory in Bournville, central England, December 15, 2009.

Credit: Reuters/Darren Staples/Files

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NEW DELHI (Reuters) - Authorities in India are investigating the local unit of chocolate maker Cadbury over allegations the company may have evaded as much as 2 billion rupees in taxes, the Minister of State for Finance said on Thursday, as the country beefs up its efforts to increase revenues to contain a widening fiscal deficit.

"Two cases of tax evasion by Cadbury India Ltd have been detected by the Directorate General of Central Excise Intelligence during the years 2009-10 to 2012-13, up to 31st October, 2012," the minister, S.S. Palanimanickam, told parliament in a written reply to questions from lawmakers.

This is the second time in as many years Cadbury has run into trouble with Indian authorities. Last year, an investigation was launched to determine whether Kraft Foods Inc (KRFT.O) needed to pay taxes arising from its $19 billion takeover of Cadbury. That probe is ongoing.

The latest of the two cases against Cadbury's India unit, which is controlled by Mondelez International Inc (MDLZ.O), involves alleged evasion of central excise duty, or factory gate tax at a company facility in Himachal Pradesh.

The Economic Times newspaper carried a Press Trust of India report earlier this month that Cadbury had "wrongfully" claimed an area-based tax exemption for its unit in Himachal Pradesh. That report said the amount involved about 1 billion rupees.

A spokesman for Cadbury India said the company was "fully cooperating" with authorities.

"Since the investigation currently is underway, it will be inappropriate on our part to discuss the details at this time," the spokesman said in an emailed statement.

Tax officials were not immediately available for comment.

Kraft Foods Inc last month spun off its North American grocery business as Kraft Foods Group. Mondelez International is the name of what remains from Kraft Foods Inc after the spinoff. Its brands include Oreo cookies, Cadbury chocolate and Trident gum. (Additional reporting by Anurag Kotoky, Devidutta Tripathy and Nandita Bose; editing by Tony Munroe)

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