Skoda’s Import Duty Troubles: A Shortcut That Led to a Customs Showdown
- bachherarjan9
- May 9
- 2 min read
Skoda makes sleek cars. But what if they’ve been too sleek… with taxes?The German carmaker, known for premium yet affordable models in India, is now in hot water with the customs department over alleged import duty evasion.
Let’s break it down, simply.
The Case: CKD vs CBU — The Customs Loophole?
Skoda allegedly imported car parts into India and declared them as CKD (Completely Knocked Down) kits, which are taxed much lower (10%-15%). But authorities believe these kits were closer to CBU (Completely Built-Up units), which attract a 100%+ duty.
In short:
➡️ CKD = Cheaper imports
➡️ CBU = Expensive imports
And Skoda may have tried to pass off CBUs as CKDs to save crores in duties.
What the Customs Department Found?
Investigations revealed that some of the car kits were almost fully assembled, with just minor tweaks needed in India. That doesn’t qualify as “knocked down” under customs rules.
As a result, Skoda (and its parent, Volkswagen) was slapped with a ₹250 crore duty demand.
Why Does This Matter?
Import duties are a huge cost factor for foreign car brands in India.
India wants companies to “Make in India,” not just “Assemble in India.”
If brands exploit the CKD loophole, it hurts the government’s tax collection and local manufacturing efforts.
The Skeptical View
Is this just a creative interpretation of rules by Skoda, or intentional evasion?
Why did it take years for customs to flag the issue?
Will such cases discourage more foreign automakers from entering India?
The Optimistic View
This may push Skoda and others to invest in deeper localization, which helps Indian jobs and suppliers.
The case might lead to clearer, fairer definitions of CKD vs CBU to avoid confusion.
Despite the hiccup, Skoda’s sales are growing — showing consumer trust hasn’t collapsed.
Bottom Line: Import duty rules may be dry, but they have real consequences. This case reminds us how international companies must play by local rules — or face heavy penalties.
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