Car enthusiast may know that Fiat India is already striving hard to sell its car in India and now the company is facing another new problem almost a decade after the long battle with the excise department wherein the Supreme court has yesterday ordered to pay a fine of Rs 432 crore as excise duty penalty for the Fiat Uno cars which were sold at a less price and thereby paying up less duty.
Well, firstly do you remember Fiat Uno? Fiat Uno is the popular hatchback in late 90s, it was shipped via the CKD route which was assembled and sold with the help of Premier Auto. Fiat Uno was pitted against all small cars especially the Maruti 800 and Zen. However, high maintenance costs and poor after sales experience ensued that the car failed to take the hatchback segment by storm.
On those days it was not that easy to challenge the mighty Maruti Suzuki in the Indian car market. And in order to conquer the market, Fiat sold the Uno at a tremendous loss per unit just to penetrate in the market. The cost of production of a single car was Rs. 3,80,883 (CKD) and Rs. 3,98,585 (SKD) respectively, against the assessable value of Rs. 1,85,400.
The Supreme Court declared that since the cars were sold at a lower price to penetrate the market, duty is chargeable on the entire sum and not the selling price. The order vindicates the department’s contention that duty is chargeable on manufacture and not sale of goods. As per the judgment, Fiat should pay close to Rs. 400 crore and Premier should pay Rs. 32 crore as outstanding excise duty. This outstanding is related to the Fiat Uno which was brought to India via the CKD route and was sold during 1996-2001.
What we say? Premier has been a very old partner for Fiat since early days of Independent India. They used to assemble the Fiat 500 (Dukkar), 1100 (Padmini) and 118 NE on license from Fiat. In 1996, Fiat started importing the Uno via the CKD route which was assembled and sold with the help of Premier Auto. At present, Premier’s Rio model plonks their ex-partner Fiat’s 1.3-litre multijet diesel engine.
Also see – Pastout – Premier Padmini
Premier enters a diesel engine deal with Fiat for RiO
Source – Times of India
