[wheelguy]

According to customs sources, following the DRI Lucknow investigation, on Wednesday, MSIL was served a 105-page notice for Rs 71 crore. Another notice in the same matter is being considered, with the scale of the alleged duty evasion estimated at another Rs 70 crore.

LUCKNOW: Directorate of revenue intelligence (DRI) and customs authorities have served a show-cause notice to Maruti Suzuki India (MSIL) for allegedly evading around Rs 71-crore duty over ‘dubious’ hybrid technology used in Ciaz, Ertiga and S-cross.

According to customs sources, following the DRI Lucknow investigation, on Wednesday, MSIL was served a 105-page notice for Rs 71 crore. Another notice in the same matter is being considered, with the scale of the alleged duty evasion estimated at another Rs 70 crore.

Responding to TOI queries, MSIL’s spokesperson 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 started an investigation after it was alerted that Maruti Suzuki was utilising 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.

In 2017, the government had provided incentives through customs duty exemption for technology used in manufacturing hybrid technology cars, which tax authorities said uses a combination of battery powered electric motor and an internal combustion engine (ICE) to power the vehicle to drive and does not include such micro hybrid motor vehicle with ‘start and stop’ technology, using battery powered electric motor only, while in static condition.

Maruti is accused of importing a simple car alternator or MGU and, with the use of software, tweaking and declaring it as goods for hybrid motor vehicles for customs clearance. Later, the company allegedly called the same equipment as SHVS or smart hybrid to fool their customers. The SHVS has basically three functions, including auto start stop, regenerative braking and torque assist, but a complete hybrid car uses a combination of electric motor and gasoline in sync which further helps in fuel saving, said a DRI source.

Source

[PaddleShifter]

Maruti has been given a notice by customs and DRI over its SHVS technology not being a proper hybrid. The 105 page notice is for duty evasion of Rs71 crore while another notice of 70 crore is being considered.

https://timesofindia.indiatimes.com/...w/81881004.cms

This is not the first time that the SHVS has attracted such action. NGT had given similar notice wrt SHVS system previously. It had demanded Maruti to deposit Rs95 crore received as subsidy under FAME India scheme.


Maruti was issued a notice by NGT previously for similar reasons related to SHVS.

NGT notice to Centre, Maruti on plea seeking refund of subsidy to mild hybrids
https://auto.economictimes.indiatime...brids/62854222

The said subsidies and duty exemptions are meant for hybrid cars having an electric motor along with the regular ICE engine. Maruti is alleged to be gaining these benefits by installing an ISG (integrated starter generator) motor instead as per the news articles cited above.

[Oomph11]

This is a serious issue. My friend’s family bought the updated Scross last month due to the hybrid tech and when I explained them that it was just a gimmick and not a real technology, they felt cheated. MSIL needs to stop playing tricks with it’s customers. I bet a lot of customers fell for the “hybrid” card and no one ever got the experience they thought they would get . Stop fooling the customers Maruti.

[PaddleShifter]

Originally Posted by Oomph11

My friend’s family bought the updated Scross last month due to the hybrid tech and when I explained them that it was just a gimmick and not a real technology, they felt cheated.
...
Stop fooling the customers Maruti.

Actually, Maruti is not cheating the customers. Reasons:

1. Maruti is not charging the price of a proper plug in hybrid system but giving mild hybrid hardware instead.
2. Maruti is charging the customers for mild hybrid hardware only (apparently).
3. The mild hybrid system isn’t entirely or significantly useless gimmick. It is reasonably fuel efficient for a 1.5 petrol (compare it with a 1.2 petrol car such as Grand i10 with lesser kerb weight for reference) and provides torque assist via that ISG motor that delivers decent low end response.
4. Maruti is not claiming their cars to be plug in hybrids (proper hybrids) anywhere. Their marketing literature makes it clear that it is a mild hybrid system.
5. Customers shall understand that proper plug in hybrids can not be purchased at prices charged by Maruti for their cars such as Ciaz, Ertiga, Brezza and S-Cross. Still, I agree that there can be uninformed customers who thought that a plug in hybrid >4m car such as Ciaz or S-Cross in top variants can be had for a sub 10 lac ex showroom price.

The actual fraud, if any, is with the system rather than the customers. It needs to be seen what provisions did Maruti exploit to gain subsidies or duty exemptions in the name of hybrid technology. If indeed those were categorically meant for proper plug in hybrids only, I think Maruti will be reimbursing it back to the authorities. Let the outcome of these notices make things clear.

[S15]

Originally Posted by PaddleShifter

Actually, Maruti is not cheating the customers. Reasons:

1. Maruti is not charging the price of a proper plug in hybrid system but giving mild hybrid hardware instead.

I mean, yes and no.
Yes, maruti is not charging the price for the Hybrid system. (the price difference between swift and baleno was a mere 30-40 thousand, and if anyone expects a proper hybrid, along with a bigger car for 30k, they're a bit thick).

But maruti are calling this system a "mild hybrid", which it isn't.
But in Maruti's defence, they might be able to get away by stating that we called it a mild hybrid tech, and not full hybrid.

[vishnurp99]

Originally Posted by S15

I mean, yes and no.
But maruti are calling this system a "mild hybrid", which it isn't.

What is the definition of mild hybrid? For me it's just a marketing term that's been used across the world and it precisely means what Maruti is offering to it's customers.

The SHVS on the Scross is quite functional even if you turn off the auto-stop functionality. You do get great fuel efficiency and a little bit of torque assist.

[Shreyans_Jain]

The issue here is not straightforward. Govt issued sops to promote hybrids. Of course the babus who drafted the notification to decide what would pass as a hybrid and what wouldn’t didn’t know their engine oil from washer fluid. Maruti being Maruti took advantage. They acted in bad faith and passed off this ISG contraption as hybrid, thereby claiming subsidy. Mahindra then copied the formula.

It was only after a while that the govt realised they had been conned. Taxpayer money was being used to subside something that should’ve never qualified for the same. The fact that the system identified its mistake and is now trying to fix accountability and make some recovery is a big big deal for our country.

Maruti totally deserves to be penalised harshly for creating this false narrative and cheating both the government and its customers. Still, it is the babus behind the poorly written rule and those who subsequently approved Maruti’s subsidy that also are at fault. These are the people behind hybrids loosing favour in the eyes of the government. A perfectly relevant and proven technology got passed over because of the incompetence of a few public servants and the unethical and outright fraudulent behaviour of MSIL.

[fhdowntheline]

The government needs to clearly define the hybrid technology and provide more subsidies for proper hybrids ( like from Toyota and Honda). I am sure we have the technical experts in ARAI who can assist. Until that happens MSIL will continue to exploit the ambiguity.

[AVL500]

I am only surprised as to why did it took so long for authorities to come out with this notice. I have come across a lot of people including a couple of my close friends who bought these 'SHVS' enabled cars and were really excited to tell me that their car is a Hybrid. It took me quiet an effort to explain them that the car is just a normal ICE vehicle with just an automatic start stop system and an additional battery to manage that system. Needless to say they were a bit disappointed and never uttered the word Hybrid again

[Karthik.thm]

Originally Posted by Oomph11

This is a serious issue. My friend’s family bought the updated Scross last month due to the hybrid tech and when I explained them that it was just a gimmick and not a real technology, they felt cheated. MSIL needs to stop playing tricks with it’s customers. I bet a lot of customers fell for the “hybrid” card and no one ever got the experience they thought they would get . Stop fooling the customers Maruti.

No offense to your friend and other SVHS owners. I think majority of SVHS owners are not even aware of this tech or lack of said hybrid tech. These owners bought cars only because its a Maruti suzuki and SVHS mild hybrid tech for them is added advantage and to boast it among their friends and relatives.

My close relative bought a Dzire in 2020 and he is boasting his purchase by telling everyone that his car has space craft technology. Actually its AMT variant

As far as I know, 0.001% of Maruti Suzuki SVHS customers are bothered about this and move on like Jeremy says Any Way.

[GeeTee TSI]

I think the intent of the subsidy was to encourage adoption of new technologies (which would otherwise have not been a natural choice) having a significant impact on fuel consumption/emissions reduction. Being the largest and oldest OEM in India, MSIL never really acted in the right spirit around this intent, legal standpoint notwithstanding.

I mean, what additional benefit did it bring in terms of average fleet emissions reduction or accessible hybrid cars to the mass market for MSIL to claim the subsidy!

[PaddleShifter]

Originally Posted by GeeTee TSI

I mean, what additional benefit did it bring in terms of average fleet emissions reduction or accessible hybrid cars to the mass market for MSIL to claim the subsidy!

Interesting query. I am sharing my viewpoints at the bottom of my post.

Most businesses claim benefits of ambiguous definitions and rules. Saints don’t survive in cut throat competition easily.

On the ethical side of it, it’s the government that needs to clearly define hybrid as “plug in hybrid”. Till that time, companies are free to twist the system in their favour (I am not trying to justify anyone or anything, just highlighting the business part of it).

Regarding your query, I would like to say that the Plug-in hybrids are considered neither here nor there kind of vehicles.
- They offer very less range in pure electric mode.
- Their emissions aren’t as low as claimed according to the below mentioned news report published in BBC (lobbying for fully electric cars?).

https://www.bbc.com/news/science-environment-54170207

If the facts in this article are correct, does the extra cost of plug in hybrids translate into benefit to the environment or for the customer really?

For a car manufacturer like Maruti, who is not a risk taker, plug-in hybrids dont seem like a very value for money idea. How many of their typical customers would want a plug in hybrid?

As mentioned in the Toyota Camry hybrid test drive thread, it returned a 15kmpl figure in city driving which is almost twice of what a regular car such as Honda Accord would return in similar conditions (6-7kmpl). Give a Camry to Maruti and they can show us how to achieve atleast 12kmpl from it without any plug in hybrid hardware added to it.

[ZenMaster]

Originally Posted by PaddleShifter

As mentioned in the Toyota Camry hybrid test drive thread, it returned a 15kmpl figure in city driving which is almost twice of what a regular car such as Honda Accord would return in similar conditions (6-7kmpl). Give a Camry to Maruti and they can show us how to achieve atleast 12kmpl from it without any plug in hybrid hardware added to it.

You are not too far off! From what I have read on various websites, Toyota's hybrid technology is one of the things that Suzuki/Maruti is getting in return for their Badge Engineering service to Toyota. Toyota seems to want to get out the Micro/Small car business and handover that responsibility to Suzuki who are experts in the small car business and in return Suzuki gets to make cars for Toyota as well as gets all the required technology (Hybrid now and Electric in the future) to update its own line-up.

If the above reports are indeed correct, I think this is just a case of a company taking advantage of poorly written rules (probably walking a thin line between legal and illegal and taking advantage of the vagueness of the rule). How different is this compared to Maruti's and other companies' claim of adhering to all safety standard according to the law of the land. Are they breaking the law? No. The laws are just substandard.

Also as far as customers are concerned, I have never felt that Maruti has in anyway cheated their customers or misrepresented their SHVS products. I have never seen Maruti claiming anywhere that their SHVS equipped cars are HYBRID vechicles. As far as I am concerned SHVS is just a tech to get more FE ( from both customers and the company's POV).

Some Babu might have become indignant suddenly seeing that his poorly written law was taken advantage of by a company while he didn't profit from it. Or maybe this is just a way of hiding his embarrassment for drafting a law without any research in the first place.

[NPV]

Just like any other company/automobile manufacturer, I'm absolutely sure Maruti would have done their homework and due diligence on this with their legal teams poring over the FAME scheme/rules.

If the rules were drafted with ambiguity and loopholes, obviously Maruti would have exploited them just like any other company, why should we expect them to be ethical and not exploit the scheme ?

That said, if the government Babus realise their folly now and try to retrospectively penalise Maruti, this will become just another high profile government Vs corporate litigation.

[nandrive]

Originally Posted by NPV

If the rules were drafted with ambiguity and loopholes, obviously Maruti would have exploited them just like any other company, why should we expect them to be ethical and not exploit the scheme ?.

Being the market leader people expect Maruti to conduct ethically as well to steer the industry in right direction. Here is one such example from other part of the world https://www.caradvice.com.au/915084/...ecember%202020.

Someone has already said "With great power comes great responsibility".