Flat excise on foreign liquor sought

Indian importers of foreign liquor are pressing hard for the imposition of a flat excise duty rate structure in Maharashtra.

In a meeting scheduled with the Maharashtra commissioner of excise, Ramanath Jha, tomorrow, representatives from companies like top spirits companies including Bacardi and Seagram India are likely to even push for the scrapping of MRP requirements that were made mandatory in Maharashtra state last month.

The liquor importers' demand includes a reduction in excise duty to Rs 300 per bulk litre of both wines and spirits, from the 150 per cent for wine and 200 per cent for spirits rate that was imposed in mid-July 2007.

The rates should be uniform irrespective of the price of the product, sources close to the development said. Prior to the latest state levy, importers paid Rs 200 per bulk litre as excise.

In mid-July, the state excise department had levied a 150 per cent excise duty on wine imports and 200 per cent on spirits. In addition to the state excise duty, the Maharashtra government also demanded the fixing of MRP on imported liquor, using the same formula used by domestic manufacturers of liquor.

This was to counter the abolition of 20 to 75 per cent additional customs duty by the central excise earlier and to provide a level playing field to the domestic players, according to senior state officials.

According to an industry insider, the excise ministry had, some time ago, indicated that the excise duty could be reduced and the condition for the MRP could be scrapped, as long as the interest of the domestic market was protected.

"We have already made a presentation to the state excise department yesterday, trying to make them aware of the difficulties of fixing an MRP on imported liquor. We have also told them about the losses we have been incurring because we cannot access fresh stock without fixing an MRP," said an industry insider.

"We source stock from locations all over the world, even for the same product. Insurance adds to this cost. Moreover, prices vary depending on the size of the cargo or whether we import them as air or marine cargo. And finally, every month we are given a fresh set of exchange rates by the customs department. These variable costs fluctuate rapidly, meaning that we would need to revise MRP every other day," said an industry expert.

The failure to affix an MRP has cost the imported liquor industry and those dependent on them dearly. The state government has refused to release stock without an MRP, even after the payment of the new excise duty. With the old stock running out, business has almost come to a standstill for some, sources said.