The much delayed controversial fool proof sticker and labeling system for local and imported alcoholic beverages is now fully operational and affixing these stickers on manufactured liquor bottles and cans will be completed by March, M..J. Gunasiri, Commissioner General of Excise confirmed.
The implementation of this system came into effect on January 3 with a number of Excise Department officers currently monitoring the process of affixing these stickers on liquor bottles at several manufacturing companies, he said.
The department will collect Rs. 2 the cost of the sticker from every liquor bottle or a can of beer as the government will have to increase taxes resulting in a price hike to earn a revenue of Rs. 20 billion per annum, he said.
Liquor sticker and its (labelling) management system was initially implemented to all imported liquor with effect from July 20, 2020 and it will be made compulsory to all alcoholic beverages by March 1 this year, he disclosed.
With the implementation of the new system, the department expects high revenue by preventing excise duty evasion, he said adding that despite the COVID-19 pandemic lockdown for around three months, it has earned Rs. 138 billion last year compared to Rs. 121 billion in 2020.
This project will coordinate around 70 licensed liquor manufacturers and 18 alcoholic beverage importers in the process of affixing fool proof stickers and digital security printed labels on bottles and cans.
The selection of stickers or labels will be made by considering the production capacity and technical capability of the manufacturing entities, Mr. Gunasiri revealed.
He noted that several leading manufacturers informed the department that the per hour production capacity at its manufacturing facilities are much higher than the sticker applicators’ per-hour manual pasting capacity and requested the authorities to go for a digital method.
This request has now been fulfilled while the process of developing mobile app and QR code for the foolproof sticker has been completed by using 30 special machines to this code bought by the department, he said.
The implementation of the liquor sticker scheme is aimed at guaranteeing the consumer purchases authentic products and it will be useful in tackling tax evasion on alcohol products as well as preventing the illicit and counterfeit alcoholic beverages.
The department has already banned the sale of all brands of imported liquor without the new foolproof sticker .
Meanwhile awarding of this tender to the Madras Company, rejecting several other bidders who have quoted lesser prices, came under severe criticism at that time from local manufacturers.
They have protested over the selection of this printer with allegations of its involvement in two scandals in India and Kenya in 2017 and 2018 and the impracticality of the foolproof liquor scheme.
The Indian company’s bid for the deal was US$5.99 to print 1000 stickers during the second tender although its initial bid was $3.19; other bidders claimed adding that one of them has placed a bid of $4.57 per 1000 stickers and the lowest bid was $2.8 per 1000.
Thereafter the then government had been compelled to pay an additional amount of $1,075,200 (or slightly over $1 million) for 384 million stickers obtained in the first year, the Auditor General’s relevant report revealed.
Currently local manufacturers are vehemently opposing the government’s decision to introduce the foolproof sticker with QR code for all liquor products without addressing practical issues in the implementation of this scheme.
Several leading liquor manufacturers said that the department’s scheme of manual pasting of stickers is not practical for their speedy production process and they have suggested a digital coding system sometime back with the consent of the former Finance Minister in 2019.