India’s Supreme Court allows Pernod Ricard India’s Plea for lesser penalty in liquor transit case 

INDIA – India’s Supreme Court has ruled in favor of Pernod Ricard India, allowing the company’s petition seeking a reduced penalty for exceeding permissible limits for loss of liquor in transit during imports.  

The decision came after a dispute over the applicability of relevant rules for penalty imposition during the company’s license period of 2009-10. 

The issue revolved around whether the penalty should be based on the Madhya Pradesh Foreign Liquor Rules of 1996, which were in place during the violation, or the amended rules of 2011, under which penalty proceedings were initiated.  

Initially, the penalty was four times the maximum duty payable on foreign liquor, but the amended rule reduced it to an amount not exceeding the duty payable. 

Pernod Ricard insisted on the application of the amended rule, citing the reduced penalty. However, both revenue authorities and the Madhya Pradesh High Court rejected the company’s argument, imposing a higher penalty under the old rule. 

The Supreme Court accepted the Absolut maker’s stance, setting aside the High Court’s decision and ruled that the amended rule should apply to pending proceedings. 

Justice PS Narasimha, leading the bench, emphasized the purpose of the amendment to achieve a proper balance between offense and penalty. 

The apex court said, “The purpose of the amendment is to achieve a proper balance between crime and punishment or the offence and penalty. In light of this, and recognizing that classifying offenders into before or after the amendment for imposing higher and lower penalties does not serve any public interest, we have directed that the substituted Rule alone will apply to pending proceedings.” 

The 1996 rules regulate various aspects of liquor manufacturing, bottling, procurement, storage, quality control, sale, export, and verification.  

They prescribe permissible limits for loss of liquor in transit to prevent illegal diversion and evasion of excise duty. Verification of liquor quality and quantity occurs upon reaching the destination. 

Meanwhile, In February, the company signed a memorandum of understanding (MoU) with Maharashtra to establish a new malt distillery in Nagpur at an investment of Rs 1,800 crore.  

The distillery, which will be one of the biggest in India and will be set up over the next few years, will have a capacity of up to 60,0000 litres per day and 13 million litres annually.  

With this project, the company aims to procure up to 50,000 tonne of barley on an annual basis from farmers nationwide to produce malts such as Longitude77, among other brands. 

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