GUWAHATI: The Indian government has issued a $1.4 billion (₹11,842 crore) notice to German auto manufacturer Volkswagen for allegedly evading import taxes by underreporting duties on car components.
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According to news outlets, the notice accuses the company of “wilfully” paying lower import taxes on parts for its Audi, Volkswagen (VW), and Skoda cars.
The 95-page “show cause notice” was issued by the Office of the Commissioner of Customs in Maharashtra issued the 95-page “show cause notice,” alleging that Volkswagen imported "almost the entire car" in an unassembled condition, classified as completely knocked down (CKD) units, which ultimately attracts a 30–35% import duty.
However, according to the notice, Volkswagen allegedly misclassified the imports as “individual parts,” subjecting them to a lower duty of 5–15%.
"This logistical arrangement is an artificial arrangement ... a ploy to clear the goods without the payment of the applicable duty," the notice states. It demands that the company explain why penalties and interest should not be imposed in addition to the $1.4 billion in unpaid duties. If found guilty, Volkswagen could face penalties as high as 100% of the evaded amount, potentially totaling $2.8 billion.
In its response, Skoda Auto Volkswagen India stated that it is a "responsible organisation, fully complying with all global and local laws and regulations." The company added that it is analysing the notice and cooperating with authorities.