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Posted: Thursday, 07 March 2019 19:10

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New Haryana Excise moves from Monopoly to Oligopoly

March 07: Haryana Government has announced the excise policy for 2019-20 by released 51 page comprehensive Document by the Excise Commissioner Dr. Amit Kumar Agrawal, removing the 2-year Monopoly from the State and opting for Oligopoly by allowing four players the same status for L1-BF License at the same price of Rs. 16 crores and keeping a strict control on the stocks to be lifted with penalties for shortfall, this making available hundreds of wine Brands that had vanished from the Haryana market earlier due to monopoly

Applications for these 4 License holders will be opened soon on their website and subject to fulfilling the conditions specified in the policy including a crime free record, draw of lots will be taken out if the number is more than four. In case the number is less, the price for the license will go up correspondingly. In case of only one person bidding, the scheme will be scrapped, explicitly conveying that there will not be any monopoly situation this year.

The successful applicant shall have to deposit security amount equal to 21% of the license fee i.e.  Rs.3.36 Crore, or higher as the case may be, within three days  of  the  allotment.

Patting on its back for the successful Excise Policies since 2015-16 achieving  ‘the long term objectives of breaking the cartels, broad-basing the trade by facilitating the entry of new players of even modest means, simplifying/unifying the structure of wholesale supply of liquor by giving wholesale licenses to retail licensees, establishing a transparent system of allotment  of retail outlets, complete check on manufacturing/sale of spurious liquor, thwarting all attempts of evasion of excise levies, plugging the leakage/pilferage, optimization of revenue, creating ambience for legitimate and responsible drinking and providing good quality liquor at reasonable price to those who drink,’  the Commissioner asserts that while framing excise policy on liquor social considerations  also assume  paramount significance.

Not only did the price of wines went up by up to 30%, there was no wine label sold in the market and there was a total black out of old labels of international quality and repute and the locals were forced to buy from Delhi or other places where they were cheaper or simply shifted to non-wine products and Indian wines.

‘An ideal Excise Policy, therefore, not only has to strike a delicate balance between the twin objectives of preventing dominance of liquor mafia or social degeneration on the one hand and securing an optimum revenue for the Government on the other, but also has to address the concerns of all the four key stakeholders i.e. the Government, the Manufacturers, the Licensees and most important of all the Consumer,’ says the Policy.

Excise Policy 2019-2020

 A lot of thought process seems to have gone in formulation of the policy this time and details can be seen on the Excise Policy 2019-20 for all aspects including the issuance of L1-BF license, the most controversial aspect of the previous two policies. Lakeforest Wines, Gurgaon was the sole licensee. He will now have to apply for one of the four licensees. Unless otherwise circumvented, the policy prescribes strict checks and balances of decartelisation and the four new constituents are expected to help improve the market climate and make available many more labels that simply evaporated from the market place.

Only time will tell who will partake in this process but names of Buddy Retail, Singla and Brindco and Lakeforest are doing the rounds. Whereas Lakeforest has taken the ‘No Comments’ posture, others are keeping open mind as more are expected to join in the process. Traders and wine importers are apparently happy because they feel their wines will have a chance to be present in the market through one of the other three. Many feel that due to the changed market scenario, Lakeforest may also like to change its stance of discouraging sale of wines from other importers by settling for terms that could be more amicable.

Nothing new in discouraging alcoholism

Unfortunately, there is nothing much new about discouraging alcohol consumption- a need of the warnings on the labels-‘Excessive Use of Liquor is injurious to health’ and ‘Be Safe-Don’t drink and drive’.  The Department needs to give it a serious look to avoid the problem of alcoholism-especially the youth drinking more and more of hard liquor-even in Haryana.

As always, during elections, there will be Dry Days. As if to allow the citizens to celebrate Republic Day and Independence Day, the no-booze restriction will be removed after 5 pm. As an apology to Mahatma Gandhi, his Birthday will be a full Dry Day. Furthermore, one cannot hang the pictures of the Mahatma and the other current personalities whose pictures adorn all the government offices, on the walls of any of the licensees.

Other Charges

There are several other charges like Label Registration at Rs. 30,000 (Rs. 15,000 for the CSD supplies), Assessment fee, Permit Fee etc are leviable on a per BL basis.

Quota System

In order to root out corruption possibilities, quota has been pre-fixed for each of the licensee. They must pick up 12,000 cases of wine and 25,000 cases each of whiskey etc and beer every quarter and for any shortfall, they must pay penalty of Rs. 5,000 per case. Penalty  shall  be leviable  for  deficient  quantity  of  quota  lifted  at  the  end  of  all  the  quarters calculated  on  cumulative  basis.  However,  in  case  of  shortage  of  quota penalised  in  a  quarter,  the  same  quota  shall  not  be  penalized  again  in  any subsequent  quarter(s).  Each quarter shall have 25% of the  annual  quota  of each segment. Additional quotas may be granted for picking up more cases at nil/some extra licensee fee. Check the Policy document for details.

Exorbitant rates to be checked

As during the last 2 years, the L1-BF licensee is theoretically required to keep sufficient stock of all brands that are registered and demanded by the buying licensees.  No exorbitant rates shall be charged  by  L1-BF  licensee.  No cartelisation of L1-BF licensees shall be allowed.  In  case  of  any  complaint/ feedback of exorbitant rates being charged,  an enquiry shall be conducted in such  manner  as  the  Excise  and  Taxation  Commissioner  may  decide. This ought to check the runaway prices on many products. One hopes that they are serious about this aspect.

Wine Promotion

L-10B has been prescribed for retail sale to be given to the departmental stores located in shopping malls having minimum carpet area of 500 sq feet. The license shall be granted on an annual license fee  of Rs.25  Lakh.  The licensees  shall  procure  their  supplies  of  wine from any retail vend within the Zone in which it is located.

Similarly an interesting feature this year is the issuance of Avant Garde Outlet at special malls etc and on payment of extra license fees (please check details).

Winery  License:  In order to promote wine production a Winery  License  in  form  S-I  shall  be granted/renewed on the payment of a nominal license fee of Rs. 10,000/- per annum.  A  local  wine  manufacturer  from  the  State  of Haryana  shall  be  required  to  obtain  a  license  in  form  L-1W  to  market  its products in the State of Haryana. The L-1W license will be granted and renewed at an annual fee of Rs. 1 Lakh by the Excise Commissioner. The L-1W licensee shall make its supplies to the L-1s of the State. Further, excise duty levied on wine shall be paid by L-1W licensees while obtaining permits.

To promote consumption of wine in comparison to hard liquor, a  separate license in form S-1A for retail sale of wine shall be granted to the local wineries of the State for selling their own indigenously manufactured products in  the adjoining premises  of  the  winery.  The stock of wine under  this  license shall be duty paid stock. An annual license fee of Rs. 5000 shall be charged for this license. It would be interesting to know what types of wines are going to be manufactured in Haryana-perhaps the reference is more to fruit wines or bringing grapes from Punjab.

 Wine tasting at Winery (License S-1B) can be taken for a “Wine Tavern”,  a place for consumption of own indigenously manufactured wine, with or without  eatables, on the premises of S-1A licensee, shall be granted to the license holder of S-1A license, at an annual license fee of Rs. 1000.

VAT Reduced

In order to enforce compliance of VAT collection, it has been reduced drastically from 34.65% (according to NRAI)  to 10.5% according to one of the importers who is not currently selling in Haryana and plans to enter back in a big way.  VAT shall be charged @18% along with surcharge @5% on all types of wine and liquor when sold by Bar and Pub licensees.

More details will be published after the dust settles down and the policy is slightly more clear. In the meantime, some people are actively getting ready for the Rs. 16 Crore license and others are building new bridges to start the business that was disrupted for two years.

In the meantime, NRAI has also published a note which one can access to know the positives and negatives of the new Policy.

Subhash Arora

Excise Policy                              NRAI Notes

 

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