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Delhi Wine Club
Wine Finally gets Respect from Delhi Excise

Posted: Monday, 02 May 2011 16:10

Wine Finally gets Respect from Delhi Excise

The Delhi Excise department needs to be complimented for finally delineating wine and beer from the stronger alcohols through the much awaited Public Notice issued this morning. Although the annual license fee has been increased from Rs.500,000 to Rs.600,000, the excise duty is expected to be rationalized and brought down as it will now  be  based on the Whole Sale Price rather than MRP, writes Subhash Arora

L-1F License fee has been increased from Rs.500,000 annually to Rs. 600,000 allowing up to  ten spirits labels (Whisky, Rum, Gin, Brandy, Vodka etc.) and  an unlimited brands of wine, beer,  alco-pops and liqueurs. For additional brands of spirits, an extra charge of Rs.30,000 per brand will be added. Therefore, if an importer is dealing with say, 5 labels of whisky, 4 labels of vodka, 4 labels of single malt and 110 labels of wine with 12 labels of beer, he will now have to pay Rs.690,000 as the license fee.

The big distinction between wine, beer etc and spirits has been in the label registration which has been untouched at Rs.5000 for wines but has been increased to Rs.20,000 per label for spirits, that is bound to create a lot of protest from the liquor giants who may be forced to absorb the increase due to the grey market forces in operation.

Thus the plea of importers to decrease the label registration charges to Rs.1000-2000 remains unaddressed as they breathe a sigh of relief that it has not gone up to Rs.10,000 since the dark rumours had been circulating in the industry.

There is some ambiguity and a possibility that the amount of Rs. 500, 000 remains unchanged if only non liquor products are imported. The circular says that ‘the above brand restriction does not apply on any other category and as such the policy will remain unchanged for these categories (Beer, Wine, Mild liquor and Mixed Alcoholic Beverages)

Wholesale Price Based Excise Duty

The biggest relief is expected in the excise duty which has been changed from MRP (in slabs of 30% on Rs.2000 and 20% on additional price, currently). Although the exact rate has not been announced and according to an excise official will be announced in a week’s time, it will be based on the Whole Sale Price: Excluding Customs Duty, Duty, VAT and other levies, which included CIF, margins and all other charges of importers or the L1-F licensee.

The importer would be required to pay a percentage (speculations vacillate from 60-70% ). This would not only reduce the excise duty substantially but also will remove the current anomaly of importers having to declare two types of rates-with duty for retail and without duty for duty free sales.

The applicants for L-1F  License  will be required  to  submit  the  details  of  their  cost  card  mentioning  the  CIF(cost, insurance and freight) value, Custom Duty (if any), Excise Duty, VAT  and  other  levies,  if  any,  Margins  and  all  other  charges  of  the  Importers/L-1 licensee.

Another interesting but inexplicable feature of the license is that the licensee (importer) will have to submit an affidavit declaring that the whole sale price   declared   in   Delhi   is   lowest   in   comparison   to   wholesale   price   declared   in neighbouring states i.e. Haryana, U.T. of Chandigarh, Punjab & U.P. and shall not    be allowed whole sale price more than the said WSP for any brand of Foreign  Liquor.

The policy also focuses on a separate Excise Bonded Warehouse for those importers who have a public customs duty bond- like Amfora of Delhi. Ranjit Gupta, CEO of Amfora opines that this would result in a slight increase in the monthly expenses but concedes that some importers might have misused the privilege earlier. Subject to the fact that the excise duty as percentage of WSP brings down the duties, he is quite satisfied with the new circular. ‘The biggest thing that the new policy has done is that it has given respect to wine and beer and seems to have recognised that the country needs to swing towards the lower alcohol products.’ The lumping of low alcohol products like the Bacardi Breezers and wine coolers in this category are perhaps also a statement by the Delhi government that the time has come to recognise that we need to reduce the level of alcohol intake.

Further details are expected to be made available within a week. In the meanwhile, it is learnt that the existing policy will continue for the month of May after making pro-rata payments for the license fee, registration and the vend fee.

While the policy falls short of the importers’ wish list of reduction of the license fee for only wine and beer to Rs.100-200,000 and the brand registration fee to Rs. 1000-2000 to enable newer producers to enter, the policy of reduced and rationalized excise duty will help the state to recoup a major chunk of leakage to the neighbouring Haryana, especially Gurgaon.

Subhash Arora 

Delhi Excise Policy 2011-12 (L-1F)                                 Delhi Excise Policy 2011-12 (L-1)


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