Daewoo may escape Rs 600 cr Customs

This can facilitate the acquisition of the assets of the company by GM.

The government may drop Customs claim of over Rs 600 crore from Daewoo Motors India Ltd, which can facilitate the acquisition of the assets of the company by General Motors.

A proposal to this effect is scheduled to be discussed by the Cabinet Committee on Economic Affairs tomorrow.

This comes in the wake of the law ministry's observation that bidders would shy away from the company as the Customs department could attach the assets of the company even after the change of ownership, finance ministry officials said. In addition, penalties are also proposed to be dropped.

The Customs department has already encashed bank guarantees of Rs 177 crore. The Cabinet note moved by the revenue department has proposed that the sale proceeds from DMIL be shared with the lenders with first charge on the company's assets. The lenders have claims of nearly Rs 1,000 crore.

The revenue department has said it should get 45 per cent of the proceeds from the sale of DMIL assets, with 55 per cent going to the lenders for dropping their tax claims.

General Motors had last year carried out a due diligence on DMIL's assets. But nothing came out of it. A recent attempt by lenders led by ICICI Bank to sell Daewoo assets did not illicit any response.

A senior executive in a financial institution said lenders had opted against bidding in the wake of the tax claims.

"Once the claims are dropped there would be many takers. Besides, General Motors has already announced its interest in Daewoo," he added.