The Hindu Business Line : Mahindras to appeal against Rs 304-cr excise duty claim

The company informed the BSE today that the office of The Commissioner of Central Excise (Adjudication), Mumbai, had sought payment of Rs 216.03 crore as differential duty and Rs 88.08 crore as penalty under the Central Excise Act.

This was primarily on account of the dispute M&M had with the Excise Department over 1991-96 pertaining to the classification of its `Commander' range of vehicles as 10-seater under Central Excise Tariff Entry 8702, attracting a lower duty rate. The vehicles were produced at the company's Kandivli and Nasik factories.

"Whilst this classification was prima facie accepted by the jurisdictional authorities, the Excise Department subsequently disputed the classification," an M&M statement said.

The department contended that the Commander's classification did not meet certain parameters of the Motor Vehicles Act 1988 and the Maharashtra Motor Vehicles Rules, 1989. It demanded differential duty.

This argument was despite the Transport Commissioner of the State accepting the vehicle as a 10-seater.

M&M challenged the department's stand of classifying the Commander under Tariff Entry 8703 attracting higher excise duty through writ petitions before the High Court, Mumbai. The Court had unconditionally stayed proceedings in April 1993.

Recently, without pronouncing on the merits, the Court remanded these matters to the excise authorities for adjudication resulting in the order served on M&M. The automobile manufacturer has said that the excise demand is unsustainable as it is contrary to the findings of two excise commissioners, besides being contrary to the certificate issued by the Automotive Research Association of India, an independent certifying agency.

When contacted, Mr Bharat Doshi, Executive Director, M&M, said, "We will definitely be appealing against this order. We strongly believe that the duty we paid was the correct duty and that our stand would be vindicated in the higher Court."

The company does not expect any liability.

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