Volkswagen's ₹11,526 Crore Customs Case: Bombay High Court Hears Both Sides, Next Date 3 November

India and Volkswagen Face Off Over the Country's Largest Car Tax Demand

The ₹11,526 crore customs case against Skoda Auto Volkswagen India returned to the Bombay High Court on 29 October, and the argument has narrowed to one question with a very large number attached: how far back can the customs department look? Volkswagen's counsel, senior advocate Arvind Datar, told the bench that Indian law allows officials to reopen imports going back only five years, so a demand stretching to March 2012 is time-barred. Additional Solicitor General N. Venkataraman, for the government, said the company did not furnish information investigators sought within the deadline, and that no other importing carmaker in India has behaved this way.

The underlying allegation, which Volkswagen denies, is about classification rather than arithmetic. The Directorate of Revenue Intelligence examined imports between March 2012 and July 2024, spread across roughly 33,000 transactions, and concluded the company was bringing in what amounted to complete vehicles in unassembled form while declaring them as individual components. Loose parts attract 5% to 15% duty; completely knocked down kits attract 30% to 35%, and some configurations go higher. The show-cause notice proposing recovery of about ₹11,526 crore, with interest, was issued in September 2024.

What the case turns on	Volkswagen's position	Customs department's position
Lookback period	Five years under Indian law, backed by a 2011 Revenue Secretary clarification	The delay was caused by the company not furnishing information in time
Classification of imports	Components came from multiple suppliers and were combined with local parts, so they are not one kit	The imports formed almost the entire car, so they are CKD kits
Role of VW's planning software	NADIN is a global production and procurement system, not an evasion tool	The software coordinated split shipments to stay below the CKD threshold
Precedent	The demand is retrospective and provisional assessments took too long to close	No other importing carmaker has challenged such a demand

Why the Case Matters Beyond Volkswagen

The number is roughly the size of a mid-sized Indian carmaker's annual revenue, and Volkswagen has described the dispute as a matter of "life and death" for its India business. It holds about 2% of the world's third-largest car market and is simultaneously negotiating the sale of a stake in its Indian operations to Sajjan Jindal's JSW Group, so a tax overhang this size sits directly on the valuation table.

Long-running tax cases have unsettled foreign investors, Reuters noted, at a moment when the government is trying to attract manufacturing capital. For car buyers the effect is indirect but real: Volkswagen has already paused further investment in its India electric vehicle programme pending clarity on the JSW partnership.

What Happens Next

The court hears the matter again on 3 November. The limitation and classification questions are being argued separately. A ruling for Volkswagen on limitation would end the demand without settling the classification question, leaving the underlying issue open for every other importer.

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(Sources: Reuters via CNBC-TV18 and Business Standard, 29 October 2026; WION Drive explainer. Images: Wikimedia Commons, CC BY-SA 4.0 and CC BY 3.0)

::KEY_NUMBERS:: Duty demand | ₹11,526 crore (about $1.2 billion) Imports under review | March 2012 to July 2024 Transactions examined | about 33,000 Duty paid | 5-15%, against 30-35% claimed ::TLDR:: Customs says VW imported near-complete cars as loose parts and paid 5-15% duty instead of 30-35% VW's case rests on a five-year limitation period, not on the classification itself The demand is India's largest ever against a carmaker and overlaps with VW's stake talks with JSW India's counsel argued no other importing carmaker has challenged the demand ::CHART:: type: bar title: Customs duty rates at the centre of the VW case (%) labels: Rate paid on goods declared as parts,Rate claimed on CKD kits values: 15,35 source: AUTOINDIA from submissions in the Bombay High Court ::TIMELINE:: September 2024 | customs issues a ₹11,526 crore show-cause notice February 2025 | a Bombay High Court bench reserves judgment August 2026 | that bench releases the case without a verdict 21 October 2026 | fresh hearings begin before a new bench 29 October 2026 | both sides argue the limitation question 3 November 2026 | next hearing ::GLOSSARY:: CKD | Completely Knocked Down, a vehicle imported as a kit for local assembly and taxed higher than loose parts DRI | Directorate of Revenue Intelligence, the agency that investigated the imports Show-cause notice | a formal demand asking a company to explain why duty should not be recovered ::POLL:: Is a 12-year lookback fair in import duty cases? || Yes, evasion should have no time limit || No, five years is the law || Only if the company delayed the probe ::SOURCES:: Reuters report on the Bombay High Court hearing of 29 October 2026 via CNBC-TV18 and Business Standard; WION Drive explainer on the Skoda Auto Volkswagen India case