When the Republic of India was formed, the Constitution gave each state the right to frame their excise laws. Except the two dry states of Gujarat and Mizoram, every state has a different approach to price the wines. The level at which the government involves itself in the process of procuring the wines varies from state to state.
Since Mumbai is one of the major ports in India, most of the wines coming to the country first arrive here. Once the wine has reached the port, a Custom House Agency (CHA) is appointed to in-bond the wines and all necessary documentation like filing the Bill of Entry (BoE) is done for it to be moved to a Bonded Warehouse (BW), a space granted by the Government of India to private players to store imported goods duty free. The process of getting the wines into the BW from the ship takes around 7-8 days.
Next is the step of Label Registration that takes place with the Maharashtra state excise and this happens over a period of 10-15 days. Post this is the process of de-bonding the wines. There are two kinds of de-bonding transactions, duty paid and duty free for establishments buying under Served from India Scheme Certificate. For the duty paid de-bonding/ex-bonding a Bill of Entry (BoE) has to be filed, which contains the calculation of customs duty payable. Then the custom duties are paid. Once the duties are received the ex-bonding BoE is stamped.
In case of a duty free de-bonding, the Importer selling the wines to the establishment holding the Duty Free Entitlement Certificate (DFEC) picks up the license and presents it along with the ex-bonding BoE. The value of the customs duty is debited on the license and the customs clears and stamps the Bill of Entry.
Post to both the above cases (duty free and duty paid) the state excise procedures remain common. At this stage the distributor files for the payment of excise duties. Once the excise duties are paid, a triplicate copy (one goes to the Customs, one stays with the Excise office and one stay with the Consignment) of the Transport Permit (TP) is issued by the local officer of excise in the Old Customs House, Fort. Once the TP is issued and has reached the Bonded Warehouse, the wines are released. After this stage is when the Wines can move to anywhere in Maharashtra. The distributor pays the Octroi and gets the wines to his warehouse. The entire process of de-bonding takes place over a period of 5-6 days in Mumbai.
The tricky part is calculating the MRP before being quoted by the distributor and being agreed by the government. The state excise in Maharashtra is based on a reverse calculation on the MRP. The MRP has to round off before even paying the excise, because the excise duty decided on the basis of the final MRP. If the retail price for the bottle is up to INR900, there is a flat duty of INR 400 per bulk litre and that comes to INR 300 per bottle (750ml). Between INR901 to INR6000, it comes to INR225 per bottle. Beyond INR6000, the excise tax value will be 5% of the End Consumer Price (ECP).
It can be noticed that in the excel sheet attached herein, the entire pricing can change at the stage where the margins are decided by the importer/distributor. The state excise duty will change if the projected MRP is beyond INR 900.
Should you wish us to send you the calculation chart on an excel sheet, do drop us a line.