Wine and spirits importers who are up in arms against the Maharashtra government's order to levy excise duty of 150% on wines and 200% on spirits have approached the excise commissioner to request him to follow the earlier system of special duty per bottle. Meanwhile, the business is at standstill causing inconvenience to consumers and losses to the trade.

Whereas earlier a flat duty of Rs.200 bulk liter was charged on imported wines (translating into Rs.1800 per case of 12 bottles of .750 litres) the latest ruling implies a whopping 150% on the assessed value of the bottle which is calculated at the CIF value +1%. The following table explains the impact of the new policy on a per case basis and the percentage basis. All the amounts are in INR .

Let us take the example of a Brunello which could have been costing $200 per case. Earlier the special duty was Rs. 150 a bottle. This would translate into Rs. 1060. Now, there is an addition of Rs. 910 per bottle. Add to this, the increase of basic duty from 100%to 150%. And do not forget the VAT of 20% on the whole amount and you are sure to get into depression-even if you are not an ardent love of Brunello, an Italian gift to wine lovers throughout the world from Tuscany.

The above differential will translate into the end price being affected even more in the case of spirits which attract a Special Fee of 200% of the Assessable Value.

The importers’ request is to continue with a flat system of Special Fee per bulk litre as was prevailing before. Speaking privately to delWine on conditions of anonymity, most of them have expressed their willingness to go with higher amounts per bulk liter (this might adversely affect cheaper wines though-editor).

Biggest to be affected directly and immediately are the hotels that have been paying no customs duty and so an increase of customs duty does not affect them accept reducing their entitlement-an indirect effect. ‘ With most of the brands in the Wine Menu being priced prohibitively compared to international standards, guests would stay away from consuming wines and spirits, very badly affecting the revenue of Hotels and Restaurants’, claim the petitioners.

‘ International Travelers, who constitute bulk of the guests staying in five star hotels, would harbour an impression, based on the Wine Menu prices, that Mumbai hotels are very pricey, which is highly detrimental to the interest of the State in general, and the Tourism Industry in particular’ , adds the representation.

Another issue taken up by the importers is the Assessment value. In the case of Indian manufacturers, the cost of manufacture is taken as the assessment value. Whereas in the case of imports, the landed value is deemed to be taken as the benchmark, which includes the producer’s profits and all the variable costs of transportation and insurance etc.

The issue of MRP (max. retail price) and imposition of Rs.2.5 lakhs of additional charge for importers of imported goods to get the license endorsements are the other sore points that ought to be resolved. Otherwise the additional costs will have to be passed on to the consumer, thus resulting in fatalistic losses in sales and profits.

While the legality of the notification in terms of assessment value being unfair may be a matter of debate and challenged in the courts later, if bigwigs decide to take such action, the course of action taken by the government does seem to be high handed and unfair.

Championing the cause of wine lovers, delWine fully supports the representation made by the importers with the hope that the officials keep the interest of the consumer at heart too. Budgets and revenues are a matter of prime concern but you also do not kill the goose that lays the golden eggs, as it were-editor.