M/s. Hyundai Motors India Ltd. (HMIL), Sriperumbudur, Tamil Nadu is a one hundred percent subsidiary of M/s. Hyundai Motor Corporation, Korea (HMC). M/s. HMIL apart from catering to the domestic automobile market is also exporting since the year 2000, cars, and other spare parts of motor cars, such as fully assembled engines, doors, body parts etc. (as CKD exports) to its Parent and Group companies (Associates and related parties) and to their own assembling plants situated throughout the world at less than half the ‘cost of production’ of the items by mis-declaring the market value of the items in the export documents. Such ‘below cost’ exports, is assuming huge proportions of late, (since HMIL is becoming the export hub for other manufacturing plants of HMC throughout the world, and another plant has been erected by M/s. HMIL at Sriperumbudur adjacent to the existing plant mainly for exports. By exporting at less than half the cost of production to its parent and associate companies M/s. Hyundai Motor India ltd. is draining the resources of this country illegally and huge losses as detailed below are incurred by the Nation.
1. Loss in Foreign Exchange to the Tune of thousands of crores since value declared in the export documents and realized subsequently is less than half the actual value of the goods exported.
2. Loss in Corporate Tax due to reduced turnover since the profits of the Indian subsidiary is drained and taken away out of the country to its parent company illegally.
3. Accumulation of huge CENVAT credit due to purchase of large quantities of raw materials for such illegal exports and consequent utilization of accumulated credit for the domestic clearances resulting in less payment of Central Excise duty in PLA (Personal Ledger Account), which is the actual revenue received by the Govt. The company which started production during the year 98-99 picked up production during subsequent years and paid an amount of Rs.518.83 crores in PLA during the year 2000-01. Its duty payment gradually came down subsequently due to such illegal exports and during the years 2005-06; 06-07 and 07-08 (up to Nov.07) it has paid only Rs.141.21.crores; 128.51 crores; and 87.16 crores resptly. In fact they are receiving back an amount of Rs.20 crores approx. from the Govt. every month of late as refund of the unutilized CENVAT credit accumulated due to such exports, even though the production and domestic clearance of the unit has multiplied manifold.
4. The company is grossly violating the laws of the land in taking away the profits out of the country to its Parent company viz. Section 4 of the Central excise Act 1944, Section 14 of the Customs Act 1962 and provisions of FEMA. (Foreign Exchange Management Act 2000)
5. On the domestic clearances front also, several hundred crores of Central Excise duty is evaded by the Company contravening the provisions of Section 4 of the Central Excise Act 1944, and Central Excise Valuation Rules 2000. Though the company has declared to the Central Excise Department itself that the actual buyers of the cars (Customers) are the ‘Buyers’ for the purpose of ‘Transaction Value’ in respect of certain benefits. A contradictory stand is taken in their sales through ‘Dealers’ which constitutes the major portion in their sales, by declaring the ‘Dealers’ as the buyers to evade payment of duty on Dealer Commissions. Many other evidences also confirm the fact that the dealers are not buyers but only have to be treated as “related persons” as per definitions in Section 4 of the Central excise Act 1944 and Valuation Rules 2000.
6. The Attempts of the Jurisdictional Range officer of Central Excise to investigate and bring to book the erring unit after gathering all prima facie evidences was foiled by the unit in connivance with the Department’s higher Officials. He was taken to task for attempting to investigate. No proper action was taken even after the facts were brought to the knowledge of the PM; FM; and the CBEC; the matter is being hushed up by obtaining false reports from the accused person himself without proper investigations. Efforts to find out the facts through filing of applications under the RTI have also failed in revealing the circumstances under which the issue has been closed by the CBEC. Only partial information after deleting names and confidential portions have been furnished. Full information on how the issue was closed has been refused even after appealing to the CIC
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