The Supreme court of India, has slammed Fiat India with regards to excise duties. The court has instructed the Italian car manufacturer, to pay around INR 400 crore towards excise duty. This outstanding excise duty, is with regards to the joint venture between Fiat and Premier Automobiles, which existed in 1996.
During this venture Fiat was importing CKD kits of its then popular hatchback Uno, and disposing them in the market at much below its cost price. The current excise duty taxes that have been levied on the cost of manufacturing Uno hatchbacks in India, is for the period between 1996 and 2001.
The Big question that is being asked by the Italian car manufacturer and its Indian joint venture partner is that, the selling price was lower than the cost price. However tax authorities have stated that, Fiat India sold cars at a lower rate than its cost price, just to penetrate the Indian market.
So the episode continues from low car sale volumes, to another debt for Fiat India and Premier Automobiles. Currently Premier Automobiles manufacturers the Rio compact utility vehicle for India. It is believed that, Premier has to shell out INR 49 crore towards this excise slap. On the other hand, Fiat's overall performance in India just gets bitter.