Tax evasion notices to Volkswagen, Kia for misclassifying imported parts, says customs chief

A work of 30 to 35 per cent is applicable connected parts imported successful CKD signifier successful a azygous shipment, whereas importing them separately arsenic idiosyncratic parts attracts a little taxation complaint of 10 to 15 per cent.

“In these cases, the investigations started successful 2022 and it was mostly noticed that the imports were divided into aggregate consignments, whereas these were falling successful the class of a car successful CKD (completely knocked down) information and the complaint applicable to CKD information was leviable,” Sanjay Kumar Agarwal, president of the Central Board of Indirect Taxes and Customs (CBIC), told The Indian Express successful an interview.

“Some automobile companies were paying the rates applicable to CKD condition, (but) immoderate car companies, for definite models imported successful CKD condition. (This) means each the main parts were imported and assembled successful India… So the complaint connected CKD was higher than the idiosyncratic components. Accordingly, notices person been issued, but it is simply a culmination of investigations which were initiated successful 2022,” Agarwal added, erstwhile asked astir the taxation request notices being sent to companies similar Volkswagen and Kia.

In a connection to The Indian Express, a spokesperson for Skoda Auto Volkswagen India Pvt Ltd (SAVWIPL) said, “”SAVWIPL is availing itself of each ineligible remedies successful effect to the Show Cause Notice arsenic permitted nether the law. SAVWIPL is committed to operating arsenic a liable organisation, ensuring afloat compliance with each applicable planetary and section laws and regulations. Compliance with regulatory requirements is 1 of SAVWIPL’s cardinal principles, and we are cooperating afloat with the authorities connected this matter”.

A spokesperson for Kia said that the institution has “already filed a elaborate response, supported by broad grounds and documentation to substantiate our stand”.

Agarwal clarified that not each car models of these companies person this issue. “It is lone connected definite models, which were imported successful CKD condition, but the work was paid arsenic applicable to idiosyncratic components, and not for CKD condition,” helium said. Cars similar Volkgwagen’s Tiguan, and those by its sister companies including Skoda Superb and Kodiaq, and luxury cars similar Audi A4 and Q5 and Kia’s Carnival limousine are nether the scanner implicit the classification of their imported parts, Reuters had reported.

“The authorities issued a notification a agelong clip back, wherever a little complaint was provided if a car is coming nether CKD information for assembling successful India. It is little than the complaint applicable connected imports of a wholly built portion (CBU), but higher than the (rate on) parts and components,” Agarwal explained.

Volkswagen has filed a suit against the taxation request notices, saying that it volition hamper the company’s concern plans successful India, and arguing that it utilized the imported components on with different locally made parts to physique their cars.