SC verdict: Skoda India to deposit Rs 30 cr

In a crucial decision, the Supreme Court of India has upheld the decision of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) following which Skoda India has been asked to deposit Rs30 crore. With this decision in place, the dispute over the payment of Rs194 crore between Skoda India and the customs department has taken a crucial turn. However, as a breather to Skoda, the Supreme Court has extended the deadline for the deposit to another four weeks.

A double bench of the Supreme Court comprising of justices DK Jain and HL Dattu on Monday dismissed the special leave petition filed by Skoda India. Prior to this dismissal the Bombay High Court has also denied any relief to the Czech auto maker. Challenging the verdict of the Bombay High Court, Skoda India filed a special leave petition in the Supreme Court asking for a relief.

Notably, the customs department had asked Skoda Auto India to pay Rs194 crore as duty and penalty for the payment of USD 45 million made by Skoda India to its parent company in the name of technology transfer agreement. The customs department is said to have sensed something fishy in the transfer. Justifying the imposition, the customs department reportedly said that the transfer of money by Skoda was in fact for the 45,000 car kits that Skoda India imported from its parent firm. Notably, Skoda India runs its manufacturing plant for Skoda cars in Aurangabad and imports car kits from Skoda and assembles it in India.

After detailed inquiry and a series of statements, the customs department imposed a duty of Rs97.15 crore and a penalty equal to the same amount on Skoda India.

Taking the dispute further, Skoda India challenged the decision by the customs department before the CESTAT which also directed Skoda India to make an initial deposit of Rs30 crore in the stipulated time.