Customs blames VW for delay in $1.4 bn tax evasion case

Subscribe to enjoy similar stories. India’s tax authorities have blamed Skoda Auto Volkswagen India Pvt. Ltd for the delay in its provisional assessment of $1.4 billion (about ₹11,526 crore) tax demand, saying the Indian unit of the German automaker did not provide the information needed promptly.

The customs commissioner refuted the automaker's challenge to the notice, asserting that the delays were "solely attributable to the company and not to any inaction on the part of the authorities", according to an affidavit filed before the Bombay High Court--Mint has reviewed a copy. Skoda Auto approached the high court on 29 January, contesting the customs department's demand for duty at Completely Knocked Down (CKD) rates on imported car components over the past 12 years. The department has also issued a notice threatening to confiscate the imported goods.

Responding to Mint's emailed query, Škoda Auto said, "We, at Škoda Auto Volkswagen India Pvt Ltd, acknowledge the ongoing proceedings and are actively pursuing all legal remedies available to us under the law. As this matter is currently under legal review, we cannot provide further comments at this moment", the company said emphasizing they were fully co-operating with the authorities. The core of the dispute, evident from the show-cause notices of September and November 2024, is the company's classification of parts and components imported for its Aurangabad factory between March 2012 and July 2024.

The government argues these imports should have been classified as CKD kits – unassembled motor vehicle parts – as they were intended for car production. CKD classification applies when all vehicle components are imported in an unassembled state for local assembly. The tax