CAG flags irregularities in UP excise department


The Comptroller and Auditor General (CAG) has detected several lapses resulting in losses worth Rs. 24,805 crores in the UP Excise Department during the 2008-2018 period. The CAG report tabled in the UP Legislative Assembly on Friday on pricing of production and sale of liquor (state excise department) for the year ended March 2018, points out at total financial implication of Rs. 24,805 crores.

Among the major findings, the report points out are irregular creation of special zones (Meerut) as per the excise policy 2009-2010 to check smuggling of liquor into the state from neighbouring states which despite not having the desired impact continued over next nine years.

The report said licences for retail shops were renewed continuously for nine years (2009-2018) without resorting to any form of open tendering on an annual basis eliminating any possibility of competition in production and sale of liquor at reasonable rates.


It also pointed out that state excise policies (2008- 2018) allowed unchecked discretion to distilleries/breweries in determining ex-distillery and ex-brewery price of the IMFL and beer, allowing them to inflate ex-distillery and ex-brewery price of both identical and similar brands of liquor (IMFL and beer) much higher (46 and 135 per cent) as compared to neighbouring states leading to accrual of undue gains to them to the tune of Rs.5,525 crores during 2008-18 at the cost of state exchequer/consumers.

Undue advantage also accrued to wholesalers and retailers (in case of IMFL) to the tune of Rs. 1,643.61 crores due to higher Ex Distillery Price (EDP).

The report said during 2008-2018, distilleries wrongly calculated EDP of IMFL bottles of sizes of 180 ml and 90 ml at 187.5 ml and 93.75 ml respectively. The excise duty was, however, calculated by the excise commissioner at rates of 180 ml and 90 ml only.

The excise department could not detect this malpractice for 10 years and lost additional excise duty worth Rs. 227.98 crores during 2008-2018.

It pointed out incorrect computation of maximum wholesale price of IMFL resulting in short realisation of additional excise duty of Rs. 4.85 crores during 2013-2014 on sale of 97.17 lakh bottles besides short fixation of minimum guaranteed quality of country liquor during 2011-2018 led to potential revenue loss of Rs. 3,674.80 crores.

It also said that non-fixation of minimum guaranteed quality of IMFL and beer led to potential revenue loss amounting to Rs. 13,246 crores.

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