Skoda Auto India has been struggling for its place in the small car segment and still battling for a firm position in the sedan category and recently it has been hit by another problem. The Supreme Court has ordered Skoda to pay Rs. 30 crore to the Customs Department supporting the argument made by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
A USD 45 million royalty paid to the Volkswagen group which is Skoda’s parent company, incurs this imposed duty and even Bombay High Court had rejected Skoda’s petition against this imposition.
The 30 crore deposit is to be made to the Customs Department towards a duty of Rs. 194 crore and the court has a given a 4 week respite to do the same. As per Custom Department’s report, for a technology transfer the company had made a partial payment of $ 45 million for 45,000 car kit units supplied by the parent company.
The VW subsidiary has been exporting kits to Skoda’s Aurangabad facility and the current issue arose during a search operation where it was found that the money was being shown as payment for technology transfer agreement and not accounted for procuring kits . We hope that Skoda does sort this out as soon as possible and continue a hassle free operation.
