Skoda India has agreed before the Supreme Court to pay within four weeks Rs 30 crore to the Customs Department as pre-deposit money for initiating adjudication before the tax tribunal where it has challenged the imposition of duty of Rs 194 crore. A bench comprising justices D K Jain and H L Dattu admitted the request made by the subsidiary of the Czech auto giant Skoda and granted four weeks to the company to make the payment.

“The time granted to the applicant vide our order dated May 2, 2011, is extended by a further period of four weeks from today,” the bench said.

On May 2, the apex court had upheld tax appellate tribunal CESTAT’s direction to Skoda India to deposit Rs 30 crore in the dispute over the Customs demand.

The department had demanded Rs 194 crore as duty on Skoda Auto India for $ 45 million royalty paid to its parent company, which is a subsidiary of Volkswagen Group .

The bench had dismissed Skoda India’s petition and asked the auto maker to pay as per the directions of the Customs Excise and Service Tax Appellate Tribunal .

Earlier, the Bombay High court had also rejected Skoda’s petition.

“We do not find any ground to interfere with the impugned order passed by the High Court. Accordingly, the special leave petition is dismissed,” said the Supreme Court.

According to the Customs Department, $ 45 million paid by Skoda India under the technology transfer agreement was in fact part of the value of 45,000 car kits supplied by Skoda to its Indian subsidiary from time and time.

Skoda India, which has set up a plant in Auranagabad, manufactures cars by importing kits from its parent firm.

On the basis of the material found during a search operation and the statements made by various persons, the department had issued show-cause notices Skoda India asking it as to why $ 45 million paid by it should not be considered as part of the value of the raw materials imported from Skoda.

The department later slapped a duty of Rs 97.15 crore and imposed a penalty of equivalent amount under Section 114A of the Customs Act, 1962.

The tax department had also levied penalty against the ex Managing Directors as well as the Chartered Accountants of Skoda India. This was challenged by Skoda India before the CESTAT.

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June 2021