Tax dept in talks for Daewoo excise dues

Excise arrears of Daewoo amounts to around Rs 1,000 crore.

After settling tax claims with cigarette major ITC, the revenue department has now initiated talks with the lenders to Daewoo Motors India Ltd for recovering excise arrears amounting to around Rs 1,000 crore.

The lenders, which won the recovery case in the debt recovery tribunal, are awaiting the results of the bids called by the tribunal.

Last year, the tribunal had ruled that institutional investors would get the first right over the sale proceeds and the revenue department had decided against approaching the appellate tribunal.

Instead, it moved the Bombay High Court seeking precedence for government dues over those of the lenders and employees.

Over the last two weeks, however, the lenders have been called to North Block and told to share a part of the receipts from the sale of Daewoo Motors assets with the exchequer. On their part, the lenders fear the government may seize the property even after assets are sold.

"The fear could result in a lack of interest by interested parties like General Motors. Besides, we can't go against the will of the government, so we are trying to amicably settle the claims," said a senior executive with one of the lenders.

The bidding process is expected to be completed by the end of the month, but the government can hope to get a part of its excise dues only after the sale is completed.

The debt recovery tribunal recently advertised for the sale of the Daewoo assets and the formula for sharing the proceeds would be worked out shortly, bank executives said, adding that negotiations on the sharing formula had not been taken up so far.

Revenue department officials said valuations done so far indicated that the sale of assets could mop up around Rs 3,000 crore, which could be used to settle all outstanding dues of the company.

The lenders had earlier called bids for the sale of the assets and companies like General Motors, Mahindra & Mahindra and the Tata group had evinced interest. The lenders had proposed to go for a split sale of assets.