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Mumbai Court Upholds Higher Excise Duties

The Bombay High Court has upheld the hike in duties imposed by Maharashtra on imported foreign wines and liquor and rejected the petition of an importer, upholding the government stand of classifying and treating them differently, according to  newspaper reports.

Karan Nevatia an importer and distributer of imported  wines under the Foreign Liquor-I license since 2008 under the name of  Kunal Vintners , had challenged several government notifications issued from 2006 to 2009, hiking duties on foreign liquor.

He had contended that the state discriminated between locally produced wines and imported wines in gross violation of the central government’s trade agreements with 153 countries around the world.

Arguing for the Centre, additional solicitor general DJ Khambata had contended that in case of local laws contrary to international agreements, the local law would prevail.

The High Court Bench of Justices Ranjana Desai and Amjad Sayed disagreed with the wine importer’s stand and said, "Since imported wines never loose their character as imported wines, if they are classified as a group and subjected to heavier duty, the classification would be reasonable and founded on an intelligible differentia.", says the report in TOI

The judgment may not have much impact of the government policy. During the period 2006-09, the excise duty had been increased on imported wines progressively, first to Rs 200, then Rs.300 a bottle and in 2007 it shot up to 150% and eventually 200% of the assessable value while the central government had waived the Additional custom duty but increased the customs duty from 100% to 150% in July 2007. However, under constant pressure from EU and WTO, the duties have been substantially brought down to around Rs. 200-300 a bottle based on slab rates. Most importers, retailers and on-premise customers find the current reduced duties quite tenable.

However, in Delhi where the excise duties are playing havoc with the increase to 20-30% of the MRP (Maximum Retail Price) this fiscal year have made the imported wines too expensive- a lot more than in Maharashtra. However, EU is still putting a lot of pressure on the central government and threatening to go to WTO which if satisfied by the complaint can impose sanctions-a matter beyond the purview of courts.

 

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