The petition is expected to be filed today and would come up for hearing in the next 3-4 days. In case of any delays in filing, these 3 producers plan to go to the court together on their own since the demand note gives them only 15 days to comply with the order or face the music. The notice was issued to only 3 producers and the deadline is this week.
Informed sources have told delWine that the demand notices have been ready for the other producers as well and are awaiting the orders from the higher authorities.Ironically, many producers have confirmed to delWine that they were in fact, asked by the department to make their own calculations and submit the figures based on which the demand notice would be issued.
Based on a court order reported earlier, the department had sent a Show Cause Notice to all producers but demand notice to only these three-presumably the latest entrants in production so that the computation of back excise duty payable is easier to calculate.
The court in its order of September, 2008 had directed the excise department to collect the waived excise duty from the producers since 2001, which they were supposed to have forwarded to the poor grape growers, and pass it on to the farmers- now.
'The duty demand can run into tens of crores (1crore= 10 million) for companies like Indage and Sula,' says Ranjit Dhuru, CEO of victim no.1.Only a few thousand cases and hardly a year into the business, the demand of Rs. 5.8 million till Oct 2008, the basis of calculation is not exactly small change.' My bigger worry is what to do now, in terms of charging the customers.'
Apparently the department has given an ad-hoc order (not on official letterhead) in Marathi to give an undertaking that whatever wines they will sell from now on, the duties would have to be deposited, subject to the court findings.
Although Viral Pancholia, CEO of the newly formed Mercury Winery Pvt. Ltd. has not been given the blow lethally, 'as we were fortunate to have focused on exports,' he is very disillusioned and frustrated man. 'We won 4 medals in the International Wine and Spirits Competition this year-our maiden entry. We won the same number at the India Wine Challenge. We are proud to produce a quality product. Believe me; I am filled with pride when I see a European drinking Sula in his country. But we should not be treated as 'criminals' in our country when we are investors and are providing so many jobs and working towards the progress of our farmers.'
Viral is perhaps being emotional because he also feels singled out. The problem is that the excise department is simply trying to save their skin. It is generally accepted that the government bungled very badly in handling the legal case. 'In which country does the government ask for taxes on a retrospective basis and that too after waiving them off through a gazette notification', is the universal angry refrain.
To that extent, the producers feel that justice has not been meted out to them as they were not consulted or cross-examined in the matter. The present plea is to request the honorable court to hear their side of the story and till it is fully told, to restrain the excise department from collecting the dues according to the demand notices.
It is again a general perception that Mr. P.P. Surve, Superintendent of Excise has been too hasty in passing the buck and send out the notices. Although the show cause notice was issued, nobody bothered to wait for the reply or take the producers into confidence and present their side of the story to the honourable high court.
One amused person watching the happenings from a ringside seat is Kapil Grover, CEO of Grove Vineyards. His winery being an out-of-state winery and thus not being a beneficiary of the 2001 state policy of Maharashtra to attract new wine industry, he has been paying the excise duty @100% of the declared manufacturing cost; the duty was increased to 150% last year. Although he is sympathetic to the current scenario, especially when all these producers now have to pay Rs.300 a bulk liter to sell in his 'home' state Karnataka (the winery is in Karnataka-his home has been Mumbai since childhood), he was always very philosophic when he was practically shut out of the market due to the extra duties he had to cough up. He is branded as the one who lobbied hard to have the excised duty increased in Karnataka for out-of-state-wineries.
Reliable sources also claim that the demand notices have been prepared and are ready to be issued. But the department knows the action being contemplated by the wineries and the Association of which Mr. Shyam Chougule, Chairman of Indage is the President. Mr. Chougule could not be reached. Mr. Ranjit Chougule, the MD of the company expressed ignorance of the action being planned when delWine contacted him.' It is my dad who is handling on behalf of the Association and has been working with the lawyers. I don't know the latest status about the same,' he added.
Rajeev Samant of Sula confirmed he had not received the demand notice yet but was not aware of the amount they might come up with. Refusing to be drawn into any controversy or speculation, his company Nashik Vintners, owners of Sula, is also joining in the petition as they are not apart of the above Association. Sula is a powerful vector in the local Nashik Valley Wine Association, which apparently is not a registered body and thus could not join the petition.
With the problem of recession affecting the domestic wine industry which saw the Maharashtra grape growers leapfrogged to prosperity during the last 5 years, but which foresees a flat revenue year at best, this is one problem they could surely live without.
Subhash Arora
It is status quo. The court has not stayed the order of excise department demanding the past excise duties. The department is not houinding the three producers to pay up. No new demand notices have been sent as on January 24th, 2009. The next date of hearing is 6th February-Editor
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