Maruti Suzuki India has been accused of evading Rs.71 crore duty over dubious hybrid technology used in cars such as the Ciaz, Ertiga and S-Cross
On Wednesday, the Directorate of Revenue Intelligence (DRI) and Customs have served a show-cause notice to Maruti Suzuki India. A 105 page notice has been issued to the automaker for allegedly evading around Rs. 71 crore duty over dubious hybrid technology currently being used on Ciaz, Ertiga and S-Cross. Another notice that is being considered, alleges duty evasion amounting to another Rs.70 crore.
Sanjeev Handa, Head of Corporate Affairs and Communications at Maruti Suzuki stated that the matter is yet under dispute and the company would be seeking legal recourse. “The matter is under dispute. At this stage we have no comments to offer. MSIL will pursue all legal remedies available to it.”
Smart Hybrid Vehicle Technologies
This matter was revealed in 2019 when the DRI of Lucknow initiated an inquiry into the use of motor generator units or alternators for ‘Smart Hybrid Vehicle From Suzuki’ (SHVS) technology engines. This is not complete hybrid technology and hence not entitled to customs duty exemption.
In 2017, the Government of India had offered incentives to automakers of hybrid cars. Custom’s exemption was offered to these OEMs. However, the tax authorities stated that these vehicles use a combination of battery powered electric motors and internal combustion engine (ICE) to power to vehicles and is not micro hybrid motor with start and stop technology using only electric power.
Maruti Suzuki has been accused of declaring imported goods such as car alternator or MGU as for use in hybrid vehicles by tweaking the software in a bid to avoid payment of customs duties. The company then went on to call the same equipment as SHVS or Smart Hybrid to deceive buyers.
SHVS is in fact not entirely hybrid technology. The DRI claims it is used for three functions – to auto start/stop, regenerative braking and torque assist. These features enhance the engine’s performance and efficiency levels as compared to non-hybrid units. This is as against a complete hybrid vehicle that uses a combination of an electric motor and gasoline to ensure fuel efficiency.
Existing range of Maruti SHVS
Currently, Maruti sells 6 cars with the SHVS smart hybrid tech. These are Ertiga, Ciaz, S-Cross, Baleno, XL6 and Brezza. These cars together account for over 35k unit sales monthly. The first SHVS car was launched back in Sep 2015. It was the Ciaz which got the tech first.
Later, other cars were added. In 2017, Maruti announced that their SHVS sales had crossed 1 lakh units. In 2021, total number of SHVS cars in the market is expected to be in the north of 5 lakh units.