Tax Authorities Scrutinize Major Distillers in Industry-Wide Probe into Scotch Imports

Leading Indian distiller Radico Khaitan, the producer behind the popular 8PM Whisky brand, has become the latest firm to face scrutiny from the Directorate of Revenue Intelligence (DRI). In a regulatory filing submitted on October 27, the company confirmed that tax officials conducted visits to its corporate headquarters in New Delhi and its manufacturing facility in Rampur, Uttar Pradesh.

The inspections, which took place on October 26, were reportedly conducted under the provisions of the Customs Act, 1962. According to the company, these visits are part of a broader, industry-wide investigation being carried out by government revenue authorities concerning the classification and importation of bulk Scotch whisky. Radico Khaitan has maintained that, thus far, the enforcement action has had no impact on its operational, financial, or manufacturing activities. The company stated it is providing full cooperation to the DRI as the investigation unfolds.

A Widespread Regulatory Review

The visit to Radico Khaitan is far from an isolated incident. Over the past month, authorities have intensified their review of the domestic alcohol industry, targeting major players who rely on imported Scotch for their blends. Earlier in October, Allied Blenders and Distillers, the manufacturer of Officer’s Choice, saw tax officials visit its Mumbai headquarters and its production plant in Aurangabad as part of the same investigation.

Furthermore, multinational giants including Diageo-owned United Spirits and Pernod Ricard have also been subjected to inquiries by the revenue department. The primary focus of these probes is the specific customs codes used by these companies when importing bulk Scotch into India, a process that determines the applicable tax and duty structures.

Concerns Over Market Access

The timing of this regulatory crackdown is sensitive, arriving shortly after a landmark trade agreement between India and the United Kingdom began to take effect in July. That deal lowered Indian tariffs on UK whisky imports from 150% to 75%, with a roadmap to phase duties down to 40% over the next decade.

The International Spirits and Wines Association of India (ISWAI) has reportedly expressed significant concern regarding the government’s current approach. According to reports, the industry body has written to the Ministry of Commerce and Industry, arguing that the ongoing classification dispute threatens to nullify the market-access benefits that were hard-won during the bilateral negotiations between India and the UK.

Strong Quarterly Performance

Despite the shadow cast by the ongoing tax investigation, Radico Khaitan’s latest financial results signal robust growth. The company reported a significant surge in its bottom line for the quarter ending September 30, with consolidated net profit jumping 66.1% year-on-year to reach Rs 2.32 billion.

Revenue from operations also saw a healthy increase, climbing 10.4% compared to the same period last year to hit Rs 55.8 billion. As the company navigates the current regulatory challenges, market analysts will be watching closely to see if the DRI’s industry-wide audit leads to significant shifts in how imported spirits are taxed and classified across the Indian market. For now, Radico Khaitan continues to maintain that its operations remain unaffected by the probe.

Disclaimer: This content is auto-generated for informational purposes only.

Source: Read Original News