Cheers!: Brewery wins raw alcohol duty battle over duty on

Punjab govt committee waives ‘outstanding dues’ calculated by Excise Dept, only duty on finished products to remain.

LAHORE:

The Punjab government has come down on the side of Pakistan’s biggest liquor manufacturer in a dispute with the Excise and Taxation Department over duty on raw alcohol, deciding that Murree Brewery need only pay excise on finished products, The Express Tribune has learnt.

The decision was made by a committee headed by Additional Chief Secretary Nadeem Hassan Asif in a meeting on Thursday, said an official close to the development. Chief Minister Shahbaz Sharif had set up the committee after brewery representatives appealed to him for mediation.

Murree Brewery, which was established in 1860, had suspended most of its production since July after Excise and Taxation Secretary Fawad Hassan Fawad, just appointed to the job, directed the brewery to pay excise duty of Rs75 per gallon on spirit purchased from sugar mills for use in the manufacture of alcoholic beverages. The distillery was also directed to pay tax on 450,000 gallons (Rs32.4 million) before it could purchase any more from the sugar mills.

Fawad said that the department’s viewpoint was that the brewery should have to pay duty on raw alcohol under the terms of its licence, which was renewed in July. The department felt that it was owed duty on 450,000 gallons that had been used as raw material by the brewery since 2004-05. He said that the brewery was misinterpreting the rules to avoid paying duty.

Major (retired) Sabihur Rehman, who is special assistant to the Murree Brewery chief executive, said the management believed that it should only have to pay excise on finished products.

“The department wanted excise duty on the raw material and on the final product, which is illogical,” he said. “That would mean a double duty on a single product. So they stopped our supply and we had to cut production.”

The distillery management later made a presentation to the chief minister and asked for mediation on the issue. The chief minister set up a committee headed by the additional chief secretary. The committee met on Thursday and decided to ‘waive’ the outstanding taxes the department had felt the brewery owed, as well as ruling that it would only need to pay duty on the finished product.

Officials from the distillery declined to comment on the latest development.

Eleven factories in the Punjab produce some 182 million litres of raw alcohol per year under the supervision of the Excise and Taxation Department. This is then sold to distilleries with valid licences and homoeopathy or medical laboratories.

Published in The Express Tribune, November 1^st, 2011.