BMW India maybe asked to pay a fine of Rs 650 crore by the Central Board of Excise and Customs (CBEC) for evading duties worth Rs 500 crore. The German automakers plant in Chennai was searched by the tax officials in this regard recently.
The tax agency believes that the German manufacturer imported cars through semi-knocked down (SKD) route and paid duties for completely-knocked down (CKD) cars. The custom duty for semi-knocked down (SKD) route stands at 30 per cent whereas for the completely-knocked down (CKD) route is 10 per cent.
"An inspection is in process by the authorities at BMW plant in Chennai. We are co-operating with the authorities in the inspection process." said a BMW spokesman.
"It is not only BMW; even other luxury car makers in the country are adopting the same method and have evaded taxes to the tune of more than Rs 2,000 crore. These car manufacturers are given tax concession to encourage local manufacturing units. However, they have not gone in for indigenisation of components as the sales volume does not justify it," said a tax official.