Skoda Volkswagen
The Bombay High Court on Wednesday scheduled a hearing for February 17 regarding a plea filed by Skoda Auto Volkswagen India.
The company is challenging a tax demand of USD 1.4 billion levied by Indian customs authorities.
The Volkswagen Group, led in India by Skoda Auto Volkswagen India, is accused of misleading customs authorities by importing parts as individual units instead of as a completely knocked down (CKD) unit. This misclassification resulted in the company paying lower import duties.
In September 2024, a show-cause notice was issued to the company under the Customs Act, alleging that the company misclassified its imports of vehicles under the Audi, Skoda, and Volkswagen brands. The notice claims that these parts were declared as “individual parts” rather than CKD units, which attract higher duties.
Last month, Skoda Auto Volkswagen India filed a petition in the Bombay High Court, challenging the customs authorities’ notice. On Wednesday, the company’s counsels urged the court for an urgent hearing, and the bench comprising Justices B P Colabawalla and Firdosh Pooniwalla agreed to hear the plea on February 17.
The customs department claims that Volkswagen misclassified its imports of car parts for various models such as Audi, Skoda, and Volkswagen. Instead of declaring the vehicles as CKD units, which are subject to 30-35% import duty, the company declared them as individual parts, which only attract 5-15% duties.
Volkswagen has been assembling some of its most popular models, including the Octavia, Superb, Kodiaq, Passat, Jetta, and Tiguan, in India using CKD units imported from abroad.
In 2019, the Volkswagen Group India received approval to merge its three passenger car subsidiaries, including Audi, Volkswagen, and Skoda, into a single entity, Skoda Auto Volkswagen India, to streamline operations and enhance efficiency.
The group aims to increase market share significantly by 2025. As part of its commitment to the Indian market, the group announced an investment of 1 billion euros in the India 2.0 project in July 2018.
The outcome of this case could have significant implications for the company’s operations in India.
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