Volkswagen has filed a petition in the Bombay High Court against a $1.4 billion customs duty demand, which it claims is excessive. The customs department alleged misclassification of imports, charging lower duties than applicable for CKD units. The court’s decision could significantly impact Volkswagen and the automobile industry in India.
Mumbai: Global automobile giant Volkswagen has moved the Bombay High Court against a massive $1.4 billion customs duty demand, calling it “impossibly enormous.”
The case pertains to a show-cause notice issued by Indian revenue authorities in September 2024 under the Customs Act, alleging that the company misclassified its imports to evade higher duties.
According to the customs department, Škoda Auto Volkswagen India (SAVWIPL)—the Indian unit of the German car manufacturer—classified imports of Audi, Skoda, and Volkswagen cars as “individual parts” instead of “completely knocked down” (CKD) units.
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- CKD units attract a duty of 30-35%.
- Volkswagen allegedly paid only 5-15% by declaring the imports as separate components arriving in different shipments.
The authorities argue that the company should have declared its imports as CKD units, which would have led to significantly higher duty payments.
In response, Volkswagen filed a petition in the Bombay High Court on January 29, challenging the notice and seeking legal relief.
A spokesperson for Škoda Auto Volkswagen India (SAVWIPL) issued a statement regarding the case:
“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.”
Volkswagen operates two major manufacturing facilities in India:
- Chakan, Pune
- Shendra, Chhatrapati Sambhajinagar
These plants play a key role in Volkswagen’s Indian and global supply chains.
The Bombay High Court is expected to hear Volkswagen’s plea in the coming weeks. The outcome of this case could have significant financial and regulatory implications for the automobile industry in India.
As the legal battle unfolds, Volkswagen’s tax classification practices and India’s customs policies on imported car parts will be closely scrutinized.
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