CBEC likely to slap Rs. 650 crore duty evasion notice on BMW

BMW's Chennai unit was searched by tax authorities on suspicion that the German automaker evaded taxes, the Economic Times has reported.

BMW's India spokesman has confirmed that the inspections did take place. 

The inspections took place on the behalf of apprehensions by the tax authorities that BMW paid duties for completely-knocked down (CKD) vehicles, when in reality, the company had imported the vehicles in semi-knocked down (SKD) state.

The inspections at the factory are aimed at verifying if BMW did indeed import critical components such as the engine along with transmission and gearbox without payment of the mandated duty. 

According to The Wall Street Journal, the authorities have seized a shipment of BMW engines and transmission equipment valued at Rs 250 crore. BMW could be hit with a tax claim ranging between Rs 500 to 650 crore as the duties on SKD kits is levied at 30 %, while taxes for CKD kits is levied at 10 %.