Volkswagen moves Bombay high court against $1.4 billion duty demand

MUMBAI: Automobile major Volkswagen has approached Bombay high court to challenge a notice issued by revenue authorities last year for an "impossibly enormous" demand of $1.4 billion.

The show cause notice issued in Sept 2024 under the Customs Act pertains to import of automobile parts. Customs authorities say that the unit of the German manufacturer in India, Škoda Auto Volkswagen India, was trying to skirt higher duties by classifying imports of Audi, Skoda and Volkswagen cars as "individual parts".

According to authorities, imports of various unassembled parts of cars should have been declared as "completely knocked down" (CKD) units, which would attract duties of 30-35%. Instead, Volkswagen paid a duty of 5-15% and allegedly chose to declare its imports as individual components arriving in separate shipments. The company operates two manufacturing facilities in India - at Chakan, Pune, and Shendra, Chhatrapati Sambhajinagar.

A spokesperson from Škoda India said in a statement, "SAVWIPL is availing itself of all legal remedies in response to the Show Cause Notice as permitted under the law. SAVWIPL is committed to operating as a responsible organisation, ensuring full compliance with all applicable global and local laws and regulations. Compliance with regulatory requirements is one of SAVWIPL's fundamental principles, and we are cooperating fully with the authorities on this matter." The petition was filed on Jan 29.