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Wine may be healthy for the consumer when taken in moderation but it is not healthy for the wine importers-at least in India and especially in Delhi in recent times. They are hit constantly by some misfortune or the other-the least of their problems being high customs duty, excise duty and VAT which have to be borne by the end consumer anyway. They are an unhappy lot because the procedural and bureaucratic storms hit them regularly-in a seemingly synchronised fashion with one after the other hitting their business, leaving them frustrated and bringing the sales and imported wine consumption down. The loss due to governmental procedures is expected to be between 15-25% during this year alone, practically washing away the gains made otherwise.
The googly of online ordering issue that resulted in sales loss for months, about 2 years ago was immediately followed by the bouncer from the FSSAI last year that resulted in hurting every importer and causing millions of rupee losses for the food, wine and spirits importers. Hardly had they started picking up the pieces, the Delhi importers were hit by the Customs directive of online transactions using EDI which has been otherwise the norm for importers as well as exporters in other areas.
All the steps taken by the government are legitimate and logical measures. So no one challenges their introduction but the loss is either because of bad timing or less than helpful attitude of the staff which is equally befuddled but keeps blind eye to the problems generated by the policy and is generally wanting in listening to their side of the story. The balance of power being naturally on their side, results in arrogance or indifference.
Customs clearance has been online in places like Maharashtra. No one denies that EDI is the proper way to handle the procedures and has been done successfully in other imports and exports. So it would have not been a surprise with a whip from the department forcing them to comply with the new procedure of online payment of customs duty w.e.f. around December 20 last year. The importers pleaded with the Collector for some time and he magnanimously allowed reprieve till December 31.
What happened from January 1 this year may be comic to those who are not in the wine and spirits business but it brought the business of importers to a halt insofar as the clearance from the bonded warehouse on payment of customs duty or debiting the duty free licences of the hotels was concerned. The reason is equally comic-when they calculated the applicable customs duty payable online, they discovered that the computers expected them to pay less, implying that they could pay less duty and forget about it for now but live under the fear of tax demand in future. The duty calculated in a computer in Delhi may not match with the computer in Mumbai due to some software glitch. According to our several sources not willing to be identified, the department is foxed too but offers them no solution except advising them to deposit the difference separately by cash. How they would finally tally their accounts is reportedly not the concern of the department.
Then there is the question of Duty free licenses which are to be debited exactly by the amount of customs duty applicable. How much should they be debited? According to the amount indicated by the computer or the manual calculations? Here also, they have been advised to deposit the difference in cash. That would be absurd of course, since hotels don’t pay any customs duty-only their licenses are debited. Importers also inform delWine that the paperwork has increased tremendously because earlier all goods under one invoice could be cleared under one Bill of Lading-now requires a separate one for each of them.
Interest payable on late release of material is another factor creating confusion. The fiscal policy dictates that if the material is released from duty free bond after 90 days the interest must be calculated and deposited even for the hotels with Duty Free license unlike Mumbai where they are more logical and allow the license to be debited this interest. The different interpretation of the law for is incomprehensible since both Delhi and Mumbai fall under the Central Government. Be as it may, according to an importer, the customs department is currently not equipped to address the issue and their people are vague about it.
They had complained bitterly about the bar coding issue a couple of years ago but eventually came around and the system is working, even though after causing a lot of irrepairable damage (wine not available to drink today may not be drunk tomorrow). FSSAI issued has been more or less resolved even though it has resulted in higher costs and no visible improvement in the quality. So they would come around this time too, won’t they? ‘Well, the last time at least, they had established a helpline that sought to address the issue but this time even that is not there’, says an irate importer who feels a lot of precious time is being lost as this is the time wine is sold and consumed the most.
Any change in the government policy is expected to be opposed by those who are affected by it. ‘But we are not opposed to the change; it is the timing. December is the time to do business; our business is seasonal. They could have picked up the lean period when we would have had more time to experiment with it and get to terms; the government has picked the wrong time,’ he says, adding, ‘they must understand that the loss of our business is also a loss to the exchequer.’
One of these days the crisis will hopefully be resolved. By then a new one would be ready to be pulled out of the hat. Perhaps, after a few years these problems might become a thing of the past and collection of painful stories. But for now, Customs department in Delhi appears to be the scourge of the wine and spirit import industry.
Subhash Arora |