India probes Pernod’s Scotch import practices over alleged duty evasion: Report – Firstpost

Indian investigators have accused French liquor giant Pernod Ricard of concealing the age and composition of its imported Scotch whisky concentrates to allegedly undervalue shipments and reduce customs duties, Reuters reported on Wednesday, citing court documents.

The dispute has escalated into a major legal battle after Indian authorities demanded nearly $314 million in unpaid taxes from the maker of Chivas Regal and Absolut Vodka, whose biggest market by volume is India.

According to Reuters, investigators concluded in a September order that Pernod had “intentionally complicated” disclosures related to its Scotch malt imports by introducing internal codenames that made comparisons with rival imports difficult for customs officials.

Authorities alleged the company failed to declare the “true description” of imported malts, including their composition and age, “with the intention to hide the actual value of the imported goods”.

India’s customs authorities claim Pernod undervalued its bulk Scotch concentrate imports by nearly 67.5 per cent, helping reduce the impact of India’s 150 per cent tariff on imported Scotch concentrates. These concentrates are blended locally to make whisky brands such as Royal Stag.

Pernod India denied wrongdoing and said it remained compliant with Indian laws.

“We reject any suggestion of wrongdoing,” the company said in a statement cited by Reuters, adding that it was addressing the matter through “appropriate legal channels”.

Court filings reviewed by Reuters showed Pernod’s current tax liability stands at nearly 30 billion rupees ($314 million). Penalties under Indian law could potentially push the total exposure beyond $600 million if the company loses the case.

A key focus of the probe is a codename system allegedly introduced in 2011 for imported Scotch concentrates. Investigators alleged Pernod used labels such as “RFM” (Rich Fruity Malt) and “HMW” (Heavy Malt Whisky) without adequately disclosing composition details.

Pernod told the Delhi High Court the codenames referred to a “bouquet of reconstituted Scotch malts” and challenged the investigation process, arguing authorities selectively compared its imports with those of Allied Blenders and Distillers.

The case comes as India sharpens scrutiny of multinational companies over customs valuation and tax practices.