Delhi Excise Policy 2019-2020 announced with few Changes

Big disappointment for label Registration

According to Clause 1.2.3 L-1F Licence will be issued on regular basis on payment of basic licence fee for the licensing year 2019-2020. The licence fee will be charged fully, irrespective of issue of date of license. Up to ten brands of Wine/Beer/ Liqueur/ Cider/soft liquor one will continue to pay Rs. 700,000 as before. But for each additional brand one must shell out Rs. 50,000 per label. This has been the major point of grouse for the importers.

Grapevine has it that last year there was an error while doing the usual cut/paste method of making the new policy when Rs. 10,000 was changed to Rs. 50,000. Including the license fee of Rs.10,000  a label, the label registration was effectively increased to Rs. 60,000. A couple of importers confirm to delWine on the condition of anonymity that when they met the Commissioner and the DC a few months ago, the officers had conceded that the increase had been an error and promised to correct it in the new policy.

There were rumours of the charges being reduced rationally-the amount speculated varied between Rs. 20,000 to Rs. 30,000. All the close affinity with the officers claimed by some importers has just gone up in smoke. The move will continue to hurt the introduction of new labels.

The biggest loser is the consumer and even the government-because the number of labels has already been drastically dropped by the importers, Many new brands willing to experiment will stay away from the Delhi market, resulting in lower tax revenues. Low entry cost for the labels gives a better opportunity to new labels, regions and countries to enter and experiment with the market. With these barriers, new brands cannot dream entering the arena; generally the producers have to pitch in 50-100% of these registration charges- before  selling a bottle.

Importers and distributors to sign affidavid for lowest price

Another interesting, new aspect is that the importer and distributors have to give a declaration that the prices of wine sold in Delhi are the lowest  in India. How can the department expect to keep the prices low when the duties are so high? In all fairness, the WSP does not include customs, excise and VAT which will continue to be charged before the bottles can be taken out of the excise warehouse.

Clause 7.3 makes it more difficult to make importers like Pernod Ricard and Diageo who have multiple distributors who could individually certify minimum prices, But it was not easy to monitor. With importer also obliged to give the affidavit, it won’t be easy to circumvent the clause-though many would question the fairness of the policy. According to this new clause, ‘both the principal importer appointing the agent and L-1F licensee,  have to submit an affidavit declaring that the wholesale price as submitted for price fixation in Delhi is the lowest anywhere in India- net of all discounts, commissions, rebate etc.. In case there is a reduction in whole sale price/CIF price at any time during the year, the licensee/ principal importer shall have to intimate the Commissioner of Excise of such change immediately and in any case within 7 days failing which it shall be treated as breach of Terms & Conditions.’

Silver lining

There is one silver lining in the 2019-2020 policy. The Delhi government has been notorious in delaying the announcement of new policy every year, 4-5 months delay being a par for the course. To any outsider with common sense it is patently illegal asking for pro-rata depositing of label charges. After a couple of lawsuits, the excise department has finally relented and decided not to punish the licensees for its own inefficiency and lethargy. Perhaps to avoid further lawsuits and running on the wrong side of the law, the Policy has finally made amends with the licensees when a policy is extended by charging pro-rata charges.

According to 1.2A of a licensee, ‘who is holder of a non-renewable license in the current licensing year and has paid licence fee on account of extension of duration of licence in the preceding year, for the same brands, he will be given benefit of adjustment of licence fee, which he has already paid, for the extended period of licence, in the current licensing year. However, he will not be eligible for adjustment of the said licence fee, already paid, if the brands proposed to be registered are different.

Lip Service to Article 47

By the way, the policy continues to support the Directive Principles of the State Policy relating to prohibition, contained in Article 47 of the Constitution of India. ‘If the Government of the National Capital Territory of Delhi may issue orders and directions from time to time and such orders and directions shall be binding on the licensee and no compensation shall be payable on that account,’ it says as always.

Meanwhile, sale of foreign wines is expected to limp along with few new labels, barring new importers jumping into the fire.

Subhash Arora

Policy for L1 F                        Policy for L1

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