Hero Electric seeks to settle Rs 140 crore penalty imposed by MHI

Hero Electric has told the government that it wants a resolution of the contentious Rs 140 crore penalty imposed on it by the Ministry of Heavy Industries (MHI).

The ministry had sent notices to seven companies, including Hero Electric, with a penalty demand for alleged violation of the Phased Manufacturing Programme guidelines and other issues.   

Hero Electric, which makes electric two wheelers, has informed the ministry that it is clear that the government has taken a case-by-case approach and has settled the demands imposed on each of the original equi­pment manufacturers (OEMs) on the basis of the merits of the case. 
 

As a result, Hero Electric has made it clear that it, too, is willing to make a similar settlement of any violations that the ministry might ascertain after examining its case.

That is why the company has asked the ministry for a meeting, saying the government has not provided any template for such penalties or settlement. Consequently, it will require consultation with MHI officials, as in the case of other OEMs, to settle penalties according to the ministry’s assessment of the violation.  

Hero Electric has been raising concerns that, despite making representations over almost 22 months, it is still waiting for its case to be settled. Instead, it has been withheld without reason.

The government has already rejected Hero Electric’s initial formula for a settlement offered in September, namely, that it will pay only Rs 8 crore for a brief period regarding which there was a difference of opinion between itself and the MHI.

But Hero Electric rejected a refund of Rs 140 crore, saying the demand does not apply to it.

The company said it had operated under certifications provided by the MHI during the period in question so its situation was different from competing companies.

A top MHI official acknowledged receiving the communication and said that it too wanted a settlement. “We have already given a template, which is the same as what was prepared for Greaves Electric Mobility, which is that Hero needs to pay the entire amount of the show cause notice and the accrued interest to the government to close the issue.”    

A Hero Electric spokesperson contradicted this claim. “We have had no communication with the MHI for a number of weeks now.  And our proposal earlier was on the basis of the facts of our case which is distinct from others,” he said.   

The new twists and turns come close on the heels of Greaves Electric Mobility refunding a Rs 124 crore subsidy in October following a government demand notice.

“In light of our commitment to consumer interests, to avoid protracted litigation, and without admitting to any of the allegations made in the notice, Greaves Electric Mobility has refunded Rs 124 crore approximately along with accrued interest and without prejudice to our legal rights,” the company said in a statement.

In April, the government had sent notices to over seven companies asking them collectively to return Rs 469 crore for alleged violations under the localisation rules.

Apart from Hero and Greaves Electric Mobility, the others were Okinawa, Benling India, Revolt, Amo Mobility, and Lohia Auto.

Revolt also paid back the government Rs 50.02 crore to settle the issue.

The government has made it clear that all these companies will only be eligible for subsidies after paying off their dues.

Hero Electric, however, has continued to reiterate in its recent communications the point that there is no charge against it in terms of under-invoicing, over-charging customers, using non-compliant parts, or misappropriation of subsidies, which had already been disbursed to customers and which were in complete compliance of all rules for being eligible for subsidies between 2019-21 – a fact, it says, that has been certified by the ministry itself.

 

TWISTS & TURNS

Hero says government has not provided any template for such penalties and settlement

Government says it has sent a template under which Hero has to pay the demanded amount in the notice plus accrued interest 

Hero has made representations for 22 months and is waiting disposal of its case but it has been withheld for no reason

Government says it has rejected Hero’s offer in September to offer MHI Rs 8 crore as settlement