Skoda Volkswagen Can’t Play Victim, Must Comply With Tax Rules: Customs Tells Bombay HC

Mumbai: The Customs department on Thursday justified its tax demand notice of USD 1.4 billion to Skoda Auto Volkswagen India before the Bombay High Court stating the law is same for everyone. The customs emphasised that the auto major will have to “fall in line and not play victim”.

Emphasising that the rule of law was the same for everyone, Additional Solicitor General (ASG) N Venkatraman, representing the customs department, said: “You have to follow the law. You have to fall in line. The rule of law is the same for everyone. Similar importers are already paying 30 per cent.”

ASG said the car maker was at fault for “not classifying the items properly”. “Don't be the victim here. If you don't follow the law then we will initiate action in accordance with the provisions of law,” Venkatraman said.

A bench of Justices BP Colabawalla and Firdosh Pooniwalla was hearing a petition filed by the company last month challenging the show cause notice, calling it “arbitrary and illegal.” The dispute stems from allegations that the company imported car parts as individual units rather than as “completely knocked down” (CKD) kits, which attract higher import duties. It claimed that the over Rs 12,000 crore demand was "exorbitant".

On Thursday, the bench remarked that the company has contended that once customs classifies its imports in one category, can it re-classify it in another category. “Their (Volkswagen) argument is that once you (customs) have classified them under one category all these years, can you now re-classify them,” the court said.

ASG replied that it was possible when the department comes across new facts. Until now, no commissioner had any idea of what the company has been doing all these years, said ASG. He said: “How they were importing their material, how they were assembling it, no one in the world knew. Our investigation revealed the truth.” The senior advocate said that the company ought to have come clean.

The customs had informed the court early this week that that it has not, and will not, block any consignments of Skoda in view of the demand notice. The court will continue hearing the arguments on Friday.