SC upholds over Rs40-crore customs claim on Pernod Ricard

The Supreme Court has upheld a Rs40 crore duty demand on leading importer of whiskeys Pernod Ricard India Private Limited (earlier known as Seagram India Private Limited).

The Supreme Court has ordered Pernod Ricards to deposit the entire amount in the case pertaining to its imports between 1994 and 2001, involving duty evasion of over Rs40 crore.

However, the Rs40 crore may not be the sole amount due from Pernod as the finalisation of provisional assessments on imports of the goods by Seagram from 2001 is likely to result in significant revenue to the government, an official release said today.

The case pertains to import of concentrates of alcoholic beverages (CABs) of Scotch whiskeys at highly undervalued rates by Seagram from the exporter Joseph E Seagram and    Sons Ltd, Scotland. Both the importer and exporter are wholly owned subsidiaries of Seagram Company Ltd, Canada.

The CABs so imported were diluted and bottled for introducing four different types of Scotch whiskeys in the Indian market. These were sold in the brand name 100 Pipers, Passport, Something Special, International Malt (Royal Stag; Oaken Glow; Blenders Pride and Imperial Blue).

The declared prices at which the CABs were imported by Seagram were suppressed and were much lower (by as much as 50 per cent) vis-à-vis the prices of similar and comparable Scotch CABs imported by others.

The importer also blatantly misdeclared quantity of whiskey imported for certain consignments with the intention to evade duty. In fact, the bills of entry had white ink marks and overwriting indicating a deliberate misdeclaration, it was pointed out.

The demand was initially raised following an extensive investigation by the directorate of revenue intelligence (DRI) through two show-cause notices (SCN) issued in December 2000 and January 2001. The notices demanded the short paid duty besides proposing penalty on the party and its top office bearers in India.

After issuing of the SCNs, the notices were adjudicated by the commissioner of customs, Inland Container Depot, Tughlakabad. After availing the appellate remedies before the customs, excise and service tax appellate tribunal (CESTAT), the matter finally went to the Supreme Court. The SC has in the recent order completely vindicated the stand of the department on the valuation issues.