Based on a tip-off, the Special Investigation Branch of Customs has been probing German luxury car maker BMW for alleged evasion of duty to the tune of over Rs.500 crore, a Customs official said.

Authorities said that BMW was importing luxury cars in semi-knocked down conditions though the company had declared that it had brought them only in completely knocked down conditions, thereby evading tax.

While refusing to say when the actual probe began and whether BMW would be served with a show-cause notice, officials said they had not made any seizure so far, though they had visited the BMW plant recently.

Informed sources told The Hindu that BMW imported engines, gear boxes and transmission unit, and got them assembled at its facility.

In Customs parlance, it was termed as pre-assembled process that attracted customs duty of 30 per cent, whereas BMW said it adopted non-pre-assembled method that attracted customs duty of 10 per cent.

“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,” the official said.

Reacting to the development, BMW said an inspection was on at its plant and that it was co-operating with the authorities in the inspection process.

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