New Delhi, Oct. 18: The customs department has accused liquor company Seagram of making misleading declarations to evade duty and imposed a fine of Rs 40 crore.
Seagram Manufacturing Limited makes whisky brands like 100 Pipers, Something Special and Royal Stag.
The department has found discrepancies in the declared quantity, value and description of the liquor the company was importing from Chivas Brothers of Scotland — a subsidiary of Canada-based Joseph E Seagram & Sons. The customs department has accused Seagram of importing Scotch while declaring it as “concentrates of alcoholic beverages”.
Seagram was “clearly guilty of mala fide intent to evade customs duty by way of deliberate under invoicing of their imports”, said A.K. Raha, commissioner of customs at the Inland Container Depot, Tughlakabad, in his October 8 order.
Apart from penalising Seagram, Raha also slapped individual fines on senior company executives for playing a “significant” role in duty evasion.
While Akram Fahmi and Sunil Mehndiratta have been asked to pay Rs 20 lakh each, Parampaul Uberoi was fined Rs 15 lakh and Harvinder Singh Bhatia Rs 5 lakh.
The customs department’s order is based on the extensive investigation by the directorate of revenue intelligence (DRI).
According to it, the company has been importing in bulk three types of full blend whiskys — Something Special, Passport and 100 Pipers.
However, in all the 183 consignments that landed in Delhi in a period of five years beginning 1995, it suppressed facts by declaring these scotch whiskys as “concentrates of alcoholic beverages”, says the order of the customs commissioner.
The consignments of imported alcohol were undervalued by at least 40 per cent, leading to huge loss of government revenue, says Raha’s order.
In the initial days of import, Seagram misdeclared the age of Something Special, a 12-year-old whisky, so that it could on record price it similar to comparatively cheaper brands of Passport (4/5-year-old) and 100 Pipers (3/4-year-old).
On the contrary, they were selling Something Special at Rs 1,250 per 750-ml bottle in the retail market. The other two brands — Passport and 100 Pipers — were being sold at a rate between Rs 600 and Rs 800 per 750-ml bottle, the DRI investigation showed.
The full blends Seagram imports contain about 60 per cent of concentrated alcohol. It bottles these after diluting them to 42.8 per cent concentration by adding demineralised water.
The DRI alleged that “the company influenced their suppliers to supply the goods to them at a suppressed price of around Rs 50 per bulk litre, whereas other importers in India have been importing similar goods at a price of more than Rs 100 per bulk litre”.
The commissioner’s order also reprimanded Seagram for fudging records. “They also reveal that the importers have carried out their plans to go to any extent — even... resorting to obliteration in the import documents and creating backdated documents — for the purpose of justifying the declared value,” Raha says in his order.
The company can go in appeal against this order to the Customs, Excise & Gold (Control) Appellate Tribunal.