Bombay High Court To Hear Skoda Volkswagen’s Plea Against USD 1.4 bn Tax Notice On Feb 17

The Bombay High Court has scheduled a hearing for February 17 on a petition filed by Skoda Auto Volkswagen India, challenging a USD 1.4 billion tax demand by Indian customs authorities.

The Volkswagen Group, which operates in India through Skoda Auto Volkswagen India, has been accused of misleading customs authorities. The group allegedly imported parts as individual units rather than as “completely knocked down” (CKD) units, which would attract higher import duties.

Challenge Against Customs Demand

The company filed the petition in January 2025, challenging a show-cause notice issued by the Indian customs authorities in September 2024 under the Customs Act. The notice claims that Volkswagen deliberately misclassified its imports, leading to lower duties.

On Wednesday, the company’s counsels mentioned the plea before a division bench of Justices B P Colabawalla and Firdosh Pooniwalla, seeking an urgent hearing. The court agreed to hear the matter on February 17.

Allegations of Misclassification

The Customs Department alleges that Volkswagen misclassified the imports of its Audi, Skoda, and Volkswagen cars, declaring them as individual parts rather than CKD units. This resulted in significantly lower customs duties.

CKD units attract a duty of 30-35%.

However, Volkswagen declared the imports as separate parts in multiple shipments, paying only 5-15% duty.
The Volkswagen Group has been importing several models, such as Octavia, Superb, Kodiaq, Passat, Jetta, and Tiguan, as CKD units and assembling them in India.

Volkswagen Group’s Strategic Shift

In 2019, the Volkswagen Group received approval to merge its three passenger car subsidiaries in India into a single entity—Skoda Auto Volkswagen India—to improve efficiency and market share. The goal was to capture significant market share by 2025.

As part of the India 2.0 project, the group invested €1 billion in July 2018 to strengthen its position in India’s growing automobile market.

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