The entire Indian manufacturing industry has heard about the famous Fiat India case that happened two years ago. The Italian manufacturer was asked to cough around Rs 400 crore as excise duty by the Supreme Court.
Fiat along with its partner Premier Automobiles was importing completely-knocked-down (CKD) kits of its popular Uno hatchback cars, and selling them in the market at much below its cost price. This was done to penetrate the Indian market, at a time when only few companies like Maruti Suzuki and Tata were doing business in India. After the excise department discovered that the Uno's wholesale price declared by the company was less than the production cost, it charged Fiat and Premier to pay duty on the cost price. But the company contested the charge, arguing that since their selling price was lesser than the cost price, its assessable value was also lower.
Finance Minister, Arun Jaitley, who announced the Union Budget 2014, yesterday announced that the excise duty would be levied on the final sale price. This is a major relief to auto manufacturers, who sometimes sell their products at a discounted price due to market competitiveness and other commercial considerations. The industry was not quite happy about the way Fiat India litigation turned out to be, but with this new announcement in place, there is a positive vibe in the industry.
