The Bombay High Court expressed dissatisfaction with Skoda Auto Volkswagen India’s arguments against a $1.4 billion Customs notice, praising the Customs officer’s research and questioning the tax classification of imports.
Mumbai: The Bombay High Court on Monday expressed “prime facie” dissatisfaction with Skoda Auto Volkswagen India’s arguments against a $1.4 billion Customs notice. The court also commended a Customs officer for his thorough research before issuing the notice.
Also Read: Volkswagen Challenges $1.4 Billion Customs Duty Demand in Bombay High Court
Court Questions Volkswagen’s Tax Classification
✔ A division bench of Justices B P Colabawalla and Firdosh Pooniwalla questioned the company’s argument.
✔ “Prima facie, we are not satisfied with your (Skoda Auto Volkswagen India) argument. This is only prima facie,” the bench stated.
✔ The judges raised concerns about entertaining the plea at this stage, saying, “This is troubling us whether we should entertain the plea at the stage of show cause notice.”
Customs Department’s Allegations
✔ The Customs department accused Skoda Auto Volkswagen India of misclassifying its Audi, Skoda, and Volkswagen imports as “individual parts” instead of “Completely Knocked Down” (CKD) units to pay lower duties.
✔ CKD units attract a 30-35% duty, while Volkswagen allegedly declared its imports as separate parts and paid only 5-15% in duties.
✔ The HC noted that almost all parts were imported separately and then assembled at the company’s Aurangabad unit, questioning why this should not be classified under CKD.
High Court Commends Customs Officer
✔ Justice Colabawalla praised the Customs officer, stating,
“He has painstakingly gone through each number of the part. He has done some serious research before issuing the show cause notice.“
Also Read: 5 Lawyers Takes Oath As Additional Judges of Bombay High Court
✔ The HC emphasized that importers should not find ways to bypass tax regulations, adding, “Otherwise, the notification is just a paper. It is not effective. Or else all importers will do the same.”
The hearing will continue on Tuesday.
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