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Delhi Wine Club

Posted: Monday, February 01 2010. 11:00

Taste the Power of Indian Customs

While the excise problem had forced the organisers of Indian Wine Challenge to change the venue from Hyatt to the exhibition venue in Goregaon, a bitter after-taste was left by the inept handling by the organisers and the high-handedness of the Customs  that made the Spanish participants red faced and walk out of the show with wines confiscated from their stands. Subhash Arora reports.

The four Spanish participants Grupo Garvy, Matarromera, Grapeland and Pasqua started their first day full of optimism. Keen to enter the market, they had shipped the wines for tasting and paid the freight and taxes as demanded by their shipping agent.  They were all set to charm the importers and other wine professionals-in fact there were smiles on their faces as the response had been good to quite good on the first day.

They were shocked out of their wits on the second day when they were presented with a huge invoice by the local freight forwarder Siddharth Logistics who presented them with a fresh demand running into thousands of Euros towards the customs duty which the forwarders claimed had paid from their pocket and unless they were reimbursed, they would be forced to take stocks back to the customs bonded warehouse at the show.

Now, the past experience at such shows is a testimonial that the Spaniards do not like surprises and they were red-faced, having ‘paid the charges including taxes’ in Spain.

The fundamental problem was in the valuation of the products. As is the universal knowledge, wines at such shows are for sampling only and are invoiced at a nominal amount with no commercial value. There are hundreds, if not thousands of such cases that exist in the government records. Whether the value was declared or at what price could not be ascertained as the exhibitors feigned ignorance of the shipment papers.

But the customs department did not accept the values declared and applied a multiplier factor of 15-22 times on the two papers that I studied, and levying the customs duty at 150% and a few other charges. Although the wines had arrived 10 days earlier, apparently the customs took time to appraise and at the late hour, the appraisal was given to the freight forwarders, who claimed they had no option but to pay the amount at the late hour, to recover from the producers when they arrived here.

Recover! On presentation! On demand! It seems rather absurd, especially since the freight forwarders refused to come out with any explanation except that they were also handling the IFDE show in Delhi and many such shows and they had no option but to make the huge payment on behalf of the exhibitors. Lincoln Estate, a small Australian winery in fact had to pay around Rs.50,000 with their credit card , out of frustration since they were left with no choice. ‘It is so unfair to force us to make the payment which we find  totally unfair but had to pay as otherwise our whole trip would have been wasted,’ informed Brian Turvey of the South Australian winery.

Duties levied in thousands of Euros for 60 bottles of wine are certainly not tenable in a court of law in India. Customs and excise officials can become a law unto themselves, especially with paucity of time, one has to reason with them and handle the situation more deftly. That said, the Spaniards left the show in a huff, refusing to pay the outrageous charges, and promising never to come back, with a hint that they might make a diplomatic event of the sad instance and take it up with their embassy.

The issue of customs and excise duty is the biggest headache for any wine show organiser. Even in Singapore, the problem persisted till last year when the organisers of the Wine for Asia event reportedly were able to convince the government of waiving off the duties for such shows. There might be a good chance of traders misusing the liberal action but says Malcolm Tham, organiser of the Style Wine Awards in Singapore  ‘our law is so strict and the penalties so hefty that it is not pragmatic to misuse the facility.’

Herr Ullrich Langguth, owner of Mo-Rhe-Na, one of the exhibitors from Germany, exporting through FineWinesnMore agreed. He says, ‘we take part in many shows but we never face this problem. There cannot be any misuse, if each exhibitor is allowed 3 bottles of each label-you don’t require more for such tastings.’ It seems to be a pragmatic approach and the government should consider it for such trade shows in future. Unlike most other products, wine has to be tasted and sampled for every vintage, every label for proper evaluation-surely even the non-wine drinkers in the government realize it by now!  

 One thing that still rankles is why producers from other countries did not complain. Was it a case of bungling by the handlers or they did not know how to ‘handle’ the appraisers? Usually, senior people in these two departments are very understanding and  accommodating and give the benefit to the industry rather than being unreasonable and appraising at the ridiculous factor of 23 times!!

Perhaps the Spanish Embassy could force the issue and try to get the answers not only for the four unlucky participants but the rest of the stakeholders in the Indian wine industry.

Subhash Arora


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