Volkswagen's $1.4 Billion Tax Dispute with Indian Customs: The CKD Controversy

The Bombay High Court is set to hear Volkswagen's plea against a $1.4 billion tax demand by Indian customs. The company is accused of misclassifying imports to pay lower duties. Volkswagen argues its units were imported individually, avoiding higher complete knockdown (CKD) unit tariffs.

The Bombay High Court has scheduled a hearing for February 17 on a plea filed by Skoda Auto Volkswagen India. This plea challenges a USD 1.4 billion tax demand issued by Indian customs authorities.

The Volkswagen group, led by Skoda Auto Volkswagen India, is accused of misleading customs regarding import classifications. The company allegedly declared imported parts as individual units instead of 'completely knocked down' (CKD) units to reduce duty payments.

Customs authorities claim the misclassification allowed Volkswagen to pay duties of 5-15%, compared to the higher 30-35% for CKD units. The case brings significant attention as Volkswagen aims for substantial market growth by 2025.

(With inputs from agencies.)