The Directorate of Revenue Intelligence (DRI) on Tuesday conducted raids on the manufacturer and importer of Johnnie Walker liquor brand in connection with alleged duty evasion of around Rs 50 crore.
The raids were conducted at five places belonging to Diageo India Private Limited, the manufacturers and exporters of the brand, Sun Tan Trading Company, the importers (of the brand) and a customs house agent (CHA).
Raids were conducted at Sun Tan’s office in Churchgate, its owner’s residence at Napean Sea Road, Diageo’s office at Lower Parel, CHA’s office at Fort and a godown at Navi Mumbai.
The DRI found that Sun Tan was undervaluing the import to the extent of 40 per cent thus evading duty on this amount. Diageo allegedly helped Sun Tan in under invoicing of bills.
A DRI official said the 40 per cent under valuation amount was used by Sun Tan to locally (in India) advertise and promote the brands of Diageo.
A day after the raid (on Wednesday) Sun Tan paid Rs 7 crore through a draft as duty to the DRI.
The official said Sun Tan could be levied a penalty of 20 per cent of the duty evaded.
The official added that duty on the liquor is about 140 per cent.
Though the DRI conducted raids on their information, the Customs had also kept on hold a liquor consignment of Diageo at Nhava Sheva for the last about 10 days because of some valuation dispute.
The DRI, on Wednesday, questioned three people including two Diageo employees who are looking after valuation and prices of the products.
One of the Director’s of Sun Tan was also questioned.
This is the second time Diageo has landed in trouble. Earlier this year, the South Korean authorities had asked the company to pay about $150 million (close to Rs 700 crore) in duty for under valuation.
Based in London, Diageo is one of the biggest liquor manufacturers and has offices in 80 countries.
It is listed in London and New York Stock Exchanges.