Tag Archives: excise department

CAG flags Rs. 58-crore loss as Excise department failed to ensure IMFL yield

The Comptroller and Auditor General (CAG) has detected failure on the part of the Excise department to notify norms for production of Indian Made Foreign Liquor (IMFL) from ENA, which led to the shortfall in the IMFL yield during production and resulted in a revenue loss of Rs. 57.83 crore.

ENA is the primary raw material for making alcoholic beverages such as whisky, vodka, gin, liqueur and alcoholic fruit beverages. It typically contains 95% alcohol by volume and is derived from sources such as sugarcane, molasses and grains.

The CAG report for the year ending March 31, 2020, was tabled in the autumn session of the Assembly.

The report said the records (June 2020) of one distillery (CMJ Breweries Pvt Ltd) and bottling plants of the same firm and four others – North East Bottling Plant, MDH Beverages Bottling Plant, Marwet Bottling Plant and Oaken Gold Bottling Plant – from 2015-16 to 2019-20 were audited to assess the correctness of excise duty collected based on data relating to production and stock.

The audit revealed that four of the five bottling plants utilised a total of Rs. 3.58 crore BL of the ENA during this period. Taking the 1% wastage norm (0.5% for blending and 0.5% for racking) into account, the bottling plants were expected to produce 90,96,457 cases of IMFL, the report said.

“However, four bottling plants disclosed production of 87,17,511 cases of IMFL. This resulted in the short-production of IMFL by 3,78,946 cases. These plants failed to maintain any records of ENA procured and consumed; nor were such reports submitted to the Excise authorities,” the report stated. The audit report observed that the rate of excise duty notified by the state Excise department during the review period was fixed at a uniform rate of Rs.810 per case. It noted that the rate of VAT (40%) fixed by the Taxation department varies from brand to brand ranging from Rs.716 to Rs.787.59 per case.

“The failure of the government to notify norms for production of IMFL from ENA, despite lacunae pointed out in the audit report for the year ended March 31, 2014, resulted in a shortfall of 3,78,946 cases during production, involving loss of revenue to the tune of Rs. 57.83 crore in the form of excise duty (Rs. 30.69 crore) and VAT (Rs. 27.13 crore) over a period of five years under scrutiny,” the CAG report said.

It further said the failure of the state government to notify norms for production of IMFL from ENA and norms for production of ENA from raw materials (grains) resulted in the loss of Rs. 57.83 crore in revenue. Besides, concealment of actual production and sale of IMFL cannot be ruled out, it added.

The CAG stated that the matter was reported to the state government in November 2021. “During the exit meeting in February 2022, the commissioner and secretary of Excise department assured that the norms for production of IMFL from ENA and norms for production of ENA from raw materials will be notified latest by May 2022,” it said. 

No discounts or offers on Alcohol in Delhi says Excise Department

Following complaints of congestion outside vents and the ongoing danger of COVID-19, the excise commissioner of Delhi advised liquor outlets in the city on Monday to cease giving discounts and rebates on alcohol brands. In an order, the government urged licensees to stop offering concessions, rebates, or discounts and threatened action against shops that did.

Crowds were observed thronging the vends as booze stores offered discounts and incentives such as ‘buy one get one free.’ There were also reports of law-and-order difficulties, and police were sent in to quell the mob. People in Jagatpuri, where a liquor store refused discounts, had lately resorted to throwing stones, breaking the shop’s glass panes, and injuring the employees.

“It has been brought to the notice of the excise department that as a result of discounts being offered by the licensees through their retail vends, instances were reported of large crowds gathering outside the liquor stores leading to law-and-order problems and causing inconvenience to locals,” the order by the excise commissioner stated.

As a result of liquor retailers lowering prices on various brands of alcohol by up to 40%, many consumers began acquiring and storing significant quantities, believing that the programmes would be discontinued at the end of the current fiscal year. According to the ruling, the Excise Department also learned that the programmes and discounts given at liquor stores were contributing to “unhealthy” market practises. The Covid pandemic is not ended, and the risk of infection remains, according to the directive, which adds that large crowds are expected to exacerbate the issue in Delhi.

“Commissioner Excise hereby orders that all L7Z licensees shall neither give concession, rebate or discount on the maximum retail price of liquor and hereby directs all L7Z licensees to strictly abide by Rule 54(3) of Delhi Excise Rules 2010. If any such instance of discount/rebate/ concession is brought to the knowledge of the undersigned, action as per Rules and Act as well as penal action as per tender document will be taken against defaulting licensees,” read the order.

The intent of the government in allowing discounts by retailers was to promote consumer choice and healthy competition and determination of price by market forces, it said. “The discounting of this nature was not the objective of the government while permitting the discounts in the new excise regime. The licensees are seen indulging in various promotional activities through social media and banners, hoardings outside the stores which is a non-permissible activity under the Delhi Excise Act, 2009 and Delhi Excise Rules, 2010.”

Last year, the Delhi Government adopted the Excise Policy 2021-22, as well as the terms and circumstances for the award of several kinds of licences. On November 17, 2021, the policy went into force. According to the Excise Department’s tender document for issuing 849 retail liquor licences, licensees are permitted to provide a rebate/discount/concession on the maximum retail price of liquor set by the Excise Commissioner. According to the ruling, under clause 15.2 of the tender document, the Department of Excise may, in its sole discretion, but without any obligation to do so, update, revise, or supplement the information in the tender document issued last year.