The Directorate of Revenue Intelligence (DRI) and Customs authorities has served a show-cause notice to Maruti Suzuki India for allegedly evading duty amounting to Rs 71 crores over the use of the Smart Hybrid Vehicle Technology (SHVS). Following the DRI investigation, a 105-page notice for Rs 71 crores was sent to Maruti on the 31st of March 2021. The Customs department of India has also served another notice related to the alleged duty evasion of an additional Rs 70 crores.
What is the show-clause notice?
This matter first came to light back in 2019 when the DRI in Lucknow floated an inquiry into the use of generators units or alternators instead of a combination of battery-powered electric motor and the internal combustion engine (ICE), which is not entitled to a customs exemption since this is not a complete hybrid technology. Maruti Suzuki is accused of importing the car’s alternator or MGU by declaring these components for use in hybrid vehicles by tweaking the software to avoid customs duties.
In 2017, the Government of India had passed a bill that offered huge incentives and customs exemptions to automotive manufacturers who use this hybrid technology. The exemption was implied to manufacturers who produced a vehicle that used a combination of battery-electric motors and ICE motors and not a micro-hybrid engine, assisting only certain vehicle features.
What is SHVS?
The Smart Hybrid Vehicle from Suzuki technology as claimed by DRI, is used only for three functions – auto start/stop, torque assist and regenerative braking. But unlike a conventional hybrid system that helps the ICE motor ensuring better fuel efficiency, the SHVS improves the engine’s performance and efficiency level. The SVHS technology is offered on six Maruti Suzuki line-up models, which consists of the Ertiga, Ciaz, Baleno, XL-6, Brezza and the S-Cross.