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Posted: Thursday, 08 August 2019 16:18

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Delhi Excise Rejects AB InBev Appeal against Debarring Order

August 08: Delhi Excise authority has rejected the plea by Anheuser-Busch InBev to suspend the 3-year blanket ban on the sale of all its beer offerings in Delhi while it hears the appeal of the global giant to temporarily lift a 3-year ban last month when a raid at one of the restaurants owned by its distributor/agent it was discovered that duplicate labels had been used in one case of beer, and thus suspecting connivance with the company and the distributor to evade taxes

"The ban order was detailed, there was no ground to give an interim stay," reportedly said an official, An importer who has been dealing with beer imports for years, informs delWine that in the policy framework of the excise department, no interim relief is possible when such serious charges are levied, till the case is finally disposed of. Senior executives of AB InBev, including vice president for legal & corporate affairs for South Asia, John K. Johnson had appeared before the Delhi officials who are hearing the company's appeal.

The company along with the well-known and influential distributor and his wife, who also own a chain of bars/pubs one of which was found selling beer in one of its BarShala (promoted as Peeney Walon ka Paradise-drunkards’ paradise) outlets in Delhi, was found to sell beer with duplicate labels and barred from selling any of the AB InBev in Delhi for 3 years last month. The distributor was also reportedly black-listed.

The excise department has become more vigilant in the recent past. Privee Pub in Shangri-la Hotel Delhi and Toy Room in Aerocity were recently sealed and levied heavy fines, one of them reportedly to the tune of Rs. 86 lakhs for breaking law and allowing and serving alcohol to minors. It might be mentioned that the legal age in Delhi is 25 years when internationally it is 18 years). Though these 2 pubs/nightclubs have re-opened after paying heavy fine, another one Da Code in South Extension is still shut down. It shows as (‘Under Renovation’ in the Just dial website)

Authorities want to spread the message loud and clear-follow the law strictly or face the consequences-heavy fines, prosecution and even jail, besides sealing or debarring from doing any more business. A distributor risks his license being cancelled and debarred from doing further business when found guilty.

A company of international repute like AB InBev is not likely to ever indulge in such fraudulent dealings- such companies have too much at stake and they have usually even anti corruption, compliance departments in their organisations. But the department is not willing to listen to their explanation that it was perhaps due to the dealing in 2016 before they bought over SABMiller but remember the excise department is under AAP administration and must be perceived to be an honest and hardworking department. This could perhaps be a reason for such a strict order.  

Delhi ban would be a major setback for AB InBev, which is already battling a separate Indian antitrust probe concerning alleged beer price fixing by SABMiller and other companies. "New Delhi remains an extremely critical market for any beer company as it is India’s social capital, apart from Mumbai. It's a showcase market for the premium beer portfolio..

AB InBev is the second biggest player in India's $7 billion beer market, with a 17.5% market share. The world’s largest brewer acquired SABMiller in 2016 for an astronomical amount. It is this label where duplicate barcodes were allegedly found on the bottles supplied to retailers, thus evading excise duties and letting them dispose of the inventories at lower prices. It also sells popular brands like Budweiser, Hoegaarden, Corona and Stella Artois which have all been banned as of now.  

delWine also queried wine importers on assurance of anonymity if such practice of duplicate bar codes existed in the wine industry also but was assured that the volume involved is so small compared to the beer industry that there was no logic in doing so, explicitly denying that any such activity took place in the wine industry.  

The 2 D software was developed by TCS and was touted as a sophisticated software that would help stop the leakage-every bottle could be traced back to the origin. With at least two cases of duplicate barcodes on liquor bottles surfacing in the last few months, Delhi government has decided to seek additional security features on the labels. The excise department is reportedly in talks with the government company that prints currency notes, to print security features-rich excise adhesive labels, which can't be copied or duplicated. Currently, the department uses 2D bar coding on its bottles and cartons the software for which was developed by TCS which had touted the 2 D system as fool proof.

Whether it is selling beer, wine or liquor in Retail or restaurants and whether is 2D or the proposed enhance security features, it would be a prudent and responsible move for the industry to stay clean and avoid heavy potential losses on being caught.

Subhash Arora

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