A Division Bench comprising Justice BP Colabawalla and Justice Firdosh Pooniwalla agreed to hear the case next week after the company’s counsel brought it up before the bench on Wednesday.
The Bombay High Court is set to hear Skoda Volkswagen India’s challenge against a $1.4 billion tax demand by Indian customs authorities on February 17.
A Division Bench comprising Justice BP Colabawalla and Justice Firdosh Pooniwalla agreed to take up the case next week after the company’s counsel, Naresh Thacker and Gopal Mundhra, brought it before the bench on Wednesday.
Volkswagen has moved the court challenging a show-cause notice issued by customs authorities in September 2024 under the Customs Act. The notice alleges that Škoda Auto Volkswagen India misclassified its imports of Audi, Škoda, and Volkswagen vehicles as “individual parts” instead of “completely knocked down” (CKD) units, resulting in significantly lower customs duties.
According to customs authorities, CKD units attract a duty of 30-35%, whereas Volkswagen classified its imports as separate components in different shipments, thereby paying only 5-15% in duties.
The Directorate of Revenue Intelligence (DRI) claims that Volkswagen has been importing nearly complete vehicles in this manner for over a decade and should have been subject to the higher CKD duty rate.
Additional Solicitor General (ASG) N Venkataraman, representing the customs department, informed the court that authorities possess “incriminating private records” to substantiate their claim.
Volkswagen’s counsel countered that the concept of CKD parts was introduced only in 2002 and lacked a clear definition until 2011. He argued that Volkswagen had sought and received a favorable clarification from tax authorities in 2011. He further alleged that the DRI has now altered its interpretation of the rules, leading to the substantial tax demand.
Volkswagen operates two manufacturing plants in India—one in Chakan (Pune) and another in Shendra (Chhatrapati Sambhajinagar).
