Cooperating with authorities over show cause notice: Skoda Auto Volkswagen India

New Delhi: German automotive group Volkswagen on Friday said it is extending full cooperation to authorities in India following a show cause notice over alleged customs duty fraud. The group, which is currently led in India by Skoda Auto Volkswagen India, is understood to have been slapped a show cause by authorities for alleged customs duty fraud to the tune of around Rs 11,000 crore (about $1.4 billion) over the import of cars as completely knocked down units. “We are analysing the notice and extending our full cooperation to the authorities,” Skoda Auto Volkswagen India said in a statement.

While not elaborating on the notice, the company said it being “a part of a global group, is a responsible organisation, fully complying with all global and local laws and regulations”. It is understood that the alleged customs duty fraud is applicable only to cars which are brought under CKD (completely knocked down) route. The VW group, through its various brands including Audi, VW, and Skoda, sold a variety of models which have been imported as CKD units and assembled in India. Some of the models include Octavia, Superb, Kodiaq, Passat, Jetta, and Tiguan.

The group has been accused of deliberately misleading customs authorities through its mode of import of parts as individual units rather than as a component of a CKD unit which attracts higher import duty. In 2019, Volkswagen Group India received regulatory and statutory approvals to merge its three passenger car subsidiaries in the country into one entity — Skoda Auto Volkswagen India in order to work more efficiently at all levels to gain significant market shares for Volkswagen and Skoda by 2025. In July 2018, the Volkswagen Group announced investments of around 1 billion euros as part of the India 2.0 project.