Things haven’t been great for Maruti Suzuki lately when talking about reliability and trustworthiness. Maruti is already being continuously lashed out upon by a section of car buyers over the poor built quality and safety features of its cars, and now MSIL has more troubles to take care of.
Maruti Suzuki India (MSIL) has been served a show-cause notice (SCN) for allegedly evading around Rs 71-crore duty by the Directorate of revenue intelligence (DRI) and the customs authorities (CBIC). The 105-page notice has been sent over dubious hybrid technology used in manufacturer’s Ciaz, Ertiga and S-cross. “Another notice in the same matter is being considered, with the scale of the alleged duty evasion estimated at another Rs 70 crore” informed a DRI official.
Responding to TOI queries, Sanjeev Handa, Head of Corporate Affairs and Communications at MSIL said, “The matter is under dispute. At this stage, we have no comments to offer. MSIL will pursue all legal remedies available to it.”
The matter came to light in 2019, when the DRI Lucknow initiated an investigation on being alerted that Maruti Suzuki was utilising a motor-generator unit (MGU) or alternator for its ‘Smart Hybrid Vehicle From Suzuki’ (SHVS) technology engines. The agencies have alleged that this is not a complete hybrid technology.
The matter began in 2017 when the Government of India had provided incentives through customs duty exemption for technology used in manufacturing hybrid technology cars. The tax authorities said the exemption was for the vehicles which use a combination of battery-powered electric motor and an internal combustion engine (ICE) to drive. It does not include such micro-hybrid motor vehicle that uses the ‘start and stop’ technology, using the battery-powered electric motor only, while in static condition.
Maruti Suzuki has been accused of declaring imported goods such as car alternator or MGU 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 against a complete hybrid vehicle that uses a combination of an electric motor and gasoline to ensure fuel efficiency. The 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 that got the tech first. Later, other cars were added. In 2017, Maruti announced that their SHVS sales had crossed 1 lakh units. In 2021, the total number of SHVS cars in the market is expected to be in the north of 5 lakh units.