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Exemption date for Radico Khaitan advanced

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Mauli Bhatt New Delhi/ Lucknow
Radico Khaitan, the lone grain-based distillery in UP, has been given exemption allowed by the state government exemption from export fee from the date of production.
 
Earlier, the company was supposed to get this benefit after completing one year of production and contributing an annual revenue of Rs 50 crore to the state exchequer.
 
The firm has to give a bank guarantee equal to the amount of exemption from the export fee the company seeks.
 
The new grain based distillery commenced production from April 1, last year. As per the estimates of the excise department the Radico Khaitan, would have to ensure the sale of minimum 250,000 cases of IMFL annually for generating annual revenue of Rs 50 crore.
 
However the exemption from the export duty would be subject to generation of minimum revenue of Rs 50 crore by the distillery for the each of the three years. The relief from export duty would be renewed every year for the next three years to ensure whether the company was generating minimum revenue of Rs 50 crore as excise duty. In case of shortfall in minimum revenue of Rs 50 crore then the relief from export duty would be reduced proportionally.
 
In January last the state government had exempted the Radico Khaitan from the fee on the export of the spirit, extra neutral alcohol and IMFL produced in the grain based distillery. However this exemption was to come into force after one year of production and the export fee was to be refunded back to the Radico Khaitan by the state excise department.
 
Radico Khaitan had represented to the government in April, arguing for additional concession for the unit, besides those already announced as per the new excise policy. The company said export fee was adding to its cost in a highly competitive market so instead of refunding the export fee after one year of production, the exemption be enforced from the date of commencement of production. The company also offered to furnish an undertaking that it would contribute annual revenue of Rs 50 crore by way of excise duty to the state exchequer.
 
The government however rejected the proposal and asked the Radico to furnish bank guarantee equal to the amount of export duty to be charged on the export of finished product. Export duty at the rate of Rs 2.50 per liter is levied on spirit, Rs 3 per liter on extra neutral alcohol (ENA) and Rs 2.67 per bottle of IMFL is levied by the state government.
 
As per the government order the government would cash the bank guarantee if the distillery fails to generate annual revenue of Rs 50 crore.
 
Official sources said the tax relief has been given to the unit since Radico Khaitan, is the first company to set up the grain based distillery in UP. This benefit would also be available to all future grain based distilleries set up in UP.
 
The tax relief would also be subject to the interim order/judgment in Special Leave petition ``UP and others Vs Jubiliant Organosys" pending in the Supreme Court. The tax relief for the Radico Khaitan has been allowed on the recombination to this effect by the Investment promotion board of the state.
 
The licence for the grain based distillery to Radico Khaitan was issued after the new policy for distillery sector was approved by the state cabinet in August 2005. The Rampur based grain based distillery of Radico Khaitan Ltd, would annually produce 2.7 crore bulk liters of potable alcohol.
 
As per the policy for promoting distilleries producing alcohol from grains and Potato's approved in August 2005, several incentives were announced for the investors setting up distillery in UP.
 
For both the potato and grain based units, the investors setting up the unit before March 31, 2007, with a minimum investment of Rs 50 crore would be allowed concessions and tax exemptions equal to the total investment.
 
For availing this benefit the government had however put a rider that the distillery must contribute a minimum revenue of Rs 50 crore to the state exchequer annually. New distilleries coming after the new policy were also required to obtain the NOC from the UP Pollution Control Board.

 
 

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First Published: May 05 2006 | 12:00 AM IST

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