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Sop Story
Distilleries set back govt by Rs 250 cr
Saurabh Malik
Tribune News Service

Chandigarh, December 30
It may hit you like a strong drink, but the high-spirited Punjab Government has granted excise duty exemptions and other benefits to distilleries and breweries coming up in the state in violation of the Punjab Excise Act. Rough estimates put the loss at Rs 250 crore.

A number of these mega projects are either owned by Congress men or party supporters. In at least one case, the objections raised by the Excise and Taxation Department and Punjab Distillery Association were overruled. In fact, the association's representation against financial incentives to a firm was placed before Chief Minister Amarinder Singh himself. Yet, the approval was granted.

Documents in possession of The Tribune reveal that the Excise and Taxation Department had clearly stated that concessions asked by Ferozepore-based Bhankarpur Distilleries Limited could not be granted as "there is no provision in the Punjab Excise Act to allow exemptions to any unit regarding state excise duty, import fee, export fee, franchise fee and bottling fee".

Overruling the objections, the Empowered Committee headed by the Chief Minister "decided that exemption of excise duty and additional excise duty, equal to total fixed capital investment (maximum Rs 90 crore) can be availed in 10 years from the commencement of commercial production on a pro-rata basis".

Taking a serious note of the incentives, the Punjab Distilleries Association in its representation requested the Empowered Committee against granting "huge financial incentives to the proposed unit under the pretext of border area development" as the same would amount to "injustice to the existing distilleries”. The Chief Minister’s approval on the same was sought by the Secretary (Industries). He, in turn, ruled that decision already taken in the matter need not be withheld.

It was also decided “to give the incentive of excise duty exemption to the extent of Rs 2 crore or one-tenth of the fixed capital investment, whichever is lower, per year for a maximum period of 10 years from the date of production” to Pioneer Industries setting up a unit in the border district of Gurdaspur.

In another matter, additional concessions, including exemption from the payment of stamp duty on the purchase of additional land, was granted to a distillery unit being set up by Rana Sugars Limited in Amritsar district. It was further decided to grant benefits to A.B. Sugars Limited belonging to the Chadha Group, Chandigarh Distilleries and Bottlers Limited.

Reacting to the move of granting benefits to Piccadilly Sugar and Allied Industries Limited, the Financial Commissioner concerned asserted that only two grain-based units, to be set up in collaboration with Punjab Agro Industries Corporation, were to be given excise duty benefits according to the Committee’s own decision.

In “partial modification” of its earlier decision, the Committee, however, decided that three grain-based units, including the Piccadilly Sugar and Allied Industries, were entitled to the concession.

In an agreement with Bhagat Industries Corporation Limited, exemption was granted from payment of electricity duty for five years “only on the incremental consumption from the sate of release of connection or enhancement of load for the expanded capacity”.

Along with this, “exemption from the payment of registration fee/stamp duty on the purchase of land exclusively for the expansion of the approved project” was granted. This was not all. “Exemption of excise duty to a maximum limit of Rs 25 crore to be availed in 10 years from the date of production,” was also granted.

Apprehensions on record:

The implications of granting concessions to distilleries proposed to be set up in the state under the mega project category were discussed by the Financial Commissioner (Excise and Taxation) and the Principal Secretary (Industries and Commerce).

The Empowered Committee, looking into the matter, was informed that it was undesirable “to give financial incentives in terms of excise duty benefits to the distilleries in the state because the same would affect the existing revenue from the excise, adversely.” It was added that excise duty benefit to the proposed distilleries would “lead to loss of existing revenue, rather than postponement of incremental revenue”. The apprehensions are recorded in minutes of meeting of the Empowered Committee held on September 23, 2004.