| Using
CWC could be an option
Since CWC is bank-guarantee free zone, one could take
shelter in their warehouses- except this would be like
committing business hara-kiri. CWC is notorious for
poor and indifferent storage and service. It does not
have any temperature-controlled facility, nor does it
have much of unused space left with it.
There are some other practical problems. For instance,
private warehouses for public storage warehouse goods
for other importers and survive essentially only by
charging the storage rent pr box.. So who should pay
the bank guarantee? Although Seagram’s and some
other importers have reportedly given the bank guarantees
on behalf of Veritas, others claim that the department
refuses to accept theirs and insists that the warehouses
only can file the guarantee.
Another confusion prevailing is that they accept revolving
bank guarantees, meaning the guarantees must be valid
throughout the life of the license. Apart from depositing
margin money of 25-100%, the banks charge guarantee
charges, which at a fraction of a percent work out to
be quite hefty, especially for importers like Brindco,
Global Tax Free or Mohan Bros., who carry huge inventories
of wine.
Is it fair and just
On the face of it both the customs and the importers
have a point. The importers rightly feel that it will
put unnecessary financial burden on them. The bigger
importers will be most affected, but they may be able
to bear it. Most affected will be the small and the
new importers some of whom have created the problem
for the whole lot to start with.
As the importers rightly point out, the government
is free to, and must check out the veracity of the solvency
claims of Rs. 50 lakhs while issuing the new bonds or
even the existing ones.. They are not fair in asserting
that since the title of the goods and the keys are in
the hands of the government, they must be held accountable.
It may be for the courts to decide eventually, but
the customs department cannot be held responsible for
looking after safety of the products. They are not in
the business of storage and it should be the responsibility
of the importer to make sure the stocks are well stores
and wheeled so they move out fast.
The department needs to train its people in the domain
knowledge on wines; people who can tell whether the
product is obsolete or is in the process of going dead.
There may be some high ended wines which may be sold
after two years but if properly stored, they appreciate
in value and the department is getting the interest
on delayed payments. This is a business risk and reward
relationship which goes even with non sensitive products.
The fact remains that unless the product is taken out
for sales, the duty should not be charged. Contrary
to what the department or the CAG feels, no duty is
lost and there is no loss of revenue to the government
if the product becomes non-consumable. If there are
any lacunae in the procedure, there are many strict
checks and balance actions available to them in the
law to punish the miscreants. .
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