Mondelez Gets Indian Query on Cadbury Plant Tax Payment

Mondelez International Inc., the snacks company separated from Kraft Foods Inc. last year, said it received a notice from an Indian government agency looking into tax payments by a factory for its Cadbury business.

The Deerfield, Illinois-based company is reviewing a “show cause” notice from India’s excise department, Michael Mitchell, a Mondelez spokesman, said in an e-mail today.

India has accused Cadbury of dodging about $46 million in taxes by pretending to produce at a factory that didn’t exist, the Wall Street Journal reported yesterday. A report by Indian tax authorities says the confectionery-maker manipulated invoices and documents to avail of a tax exemption reserved for new factories that were opened before March 31, 2010 in the northern Himachal Pradesh state, the Journal said.

A show cause notice requires a company to defend itself or provide an explanation for certain allegations. India’s Directorate General of Central Excise Intelligence, a government agency, detected a case of tax evasion of about 2 billion rupees ($36.5 million) at Cadbury’s Baddi factory, S.S. Palanimanickam, Minister of State for Finance, said in a question-and-answer session in parliament last year.

Mondelez is cooperating with authorities and can’t discuss details at present, Mitchell said. The notice is related to a plant in the town of Baddi in Himachal Pradesh, he said.

Kraft Foods split into two companies in October so the international snacks unit, named Mondelez, could expand product offerings in emerging markets. The remaining company, Kraft Foods Group Inc., contains the North American grocery unit.