Commissioner of Central Excise (adjudication), Mumbai, has ordered Mahindra & Mahindra Ltd to pay Rs 216.03 crore (Rs 2.16 billion) as differential duty and Rs 88.08 crore (Rs 880 million) as penalty under the Central Excise Act.
This is primarily on account of the dispute the company had with the Excise department during 1991-96 over classification of Commander range of vehicles as 10-seater under Central Excise Tariff Entry 8702, M&M informed the Bombay Stock Exchange on Wednesday.
"The company does not expect any liability on this account as it believes and has been advised that it had correctly classified the vehicles in question as 10 seaters and appropriate duty has been paid by the company," it said.
"M&M has always acted in an entirely bonafide and transparent manner and in compliance with laws. The company would be contesting the issue before the appropriate forum and strongly believes and has also been advised that its stand will be upheld," it said.
Earlier, the Excise department disputed the classification on the ground that the 10-seater criteria was not met under the Motor Vehicles Act and Rules and demanded differential duty while this classification was prima facie accepted by the jurisdictional authorities, it said.
The department's stand of classifying Commander under Tariff Entry 8703 attracting higher rate of excise duty was challenged by the company by writ petitions before the Mumbai high court, which had unconditionally stayed further proceedings in April 1993, it said.