The Maharashtra producers feel the judges were sympathetic to their plea at the last hearing on 9th January. At the core of their prayer was that the wine producers were not made a party to the case to present their viewpoint.
Today is the next hearing of the plea filed in the Aurangabad Bench of the Mumbai High Court.
Chateau d'Ori, Vallée de Vin and Mercury Winery who have been served the demand notes by the excise department have pleaded to be heard and explain that the government in fact had issued executive orders waiving off the excise duties in various steps unconditionally. All India Wine Producers Association and Nashik Vintners (Sula) had also filed separate applications in the same case.
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The producers are not direct party in the case filed by a plaintiff claiming that the excise department had given away the benefits to the producers who did not pass them to the farmers for whom the policy was designed.
While not denying that the Maximum Retail Price (MRP) of their wines were not reduced after the duty benefits announced in 2001, the producers contend that the excise rebates resulted in several new wineries entering the business, resulting in higher demand for grapes and a constant increase in prices. The Cabernet Sauvignon that sold for Rs. 20 a kg. about 5 years ago fetched Rs. 38-40 last year. Many overseas wineries sell wine for less than this cost of grapes.
The MRP approved by the government has been divided in 4 parts- manufacturing, marketing and distribution costs, excise and profits. The MRPs are approved by the excise department every year without which the sale is not possible, they contend.
Ironically, the 3 producers who have been asked to cough up are the ones who had given details of their sales as directed by the Show Cause Notice issued by the excise department. Says a perplexed Ranjit Dhuru, 'When we got our license to manufacture wine, we knew there would be no excise duties till 2011 and we priced our wines accordingly and to complete with other quality producers.
Viral Pancholia, the young energetic entrepreneur who is proud of winning a medal in the International Wine and Spirit Medal for his maiden vintage is simply foxed, The idealist producer asks, 'would a thing like this happen anywhere else in the world? We are trying to produce quality wine so that India may find its name in the list of world producers, we offer employment to so many people and this is how we are treated?'
The problem perhaps lies somewhere in the corridors of power where the excise department took the case lightly. Perhaps, this is the reason the department has not insisted on taking any action against the 'defaulting' producers who despite having no stay order from court are not being hounded to pay the money demanded. Curiously, no other producer has been served any more demand notes during the last one month.
Karnataka Here We Come
In the meanwhile, as predicted by delWine that over 20 new wineries would come up in the state during the next 2-3 years, the day the new Karnataka liberal policy was announced for setting up new wineries, many old and new wineries are plannig to enter Karnataka , irrespective of the outcome of the court case.
The price difference of Rs. 250-300 between Grover wines from Karnataka and out of state wines like Sula and Nine Hills is enough to make any accountant's head spin. DelWine has reliably learnt that Indage and Sula have already made plans to enter the market with their Karnataka produced wines during the '09 season.
Chateau Banyan which is headquartered in Bangalore with a winery in Goa and arrangements with grape growers and wineries in Maharashtra to take benefits of the excise scheme under question, had said last year that if Karnataka announced a progressive policy they would not be averse to setting up a winery near Bangalore. It is difficult to imagine that UB with its center of gravity in Bangalore would stay away too long. Perhaps they are awaiting stabilisation of their Baramati operation.
With the wine market gasping for breath, any cost cuts would be welcome by producers. With market getting tougher by the day, the producers are in an unenviable position and the possibility of paying back the excise is simply not something they can fathom and sustain their business.
If one thing the producers are optimistic about in today's wine scenario is that the frivolous excise demand would be withdrawn.
Watch this space for continuation of the story. |