Prohibition and Excise Department

Policy Note - 2006 - 2007

Demand No. 37

INTRODUCTION

The Prohibition Policy of Tamil Nadu is formulated in a pragmatic manner keeping in mind the twin objectives of maintaining public order and augmenting State revenues. In a situation where neighbouring States have relaxed their prohibition policies, it has been found impracticable to implement the policy of total prohibition successfully in Tamil Nadu alone. Hence, the middle course of selling only Indian Made Foreign Liquor in retail vending shops is being practiced in the State.

II. ORGANISATION AND FUNCTIONS OF PROHIBITION AND EXCISE DEPT.

The Prohibition and Excise Department in the Secretariat functions under the Secretary to Government as the official head of the department. He is assisted by a Joint Secretary, five Under Secretaries and other officials. The following are the three wings functioning under the control of the Prohibition and Excise Department:-

1. Office of the Commissioner of Prohibition and Excise

2. The Tamil Nadu State Marketing Corporation Limited

3. The Prohibition Enforcement Wing

(Organisation chart of department of Prohibition and Excise is given in Annexure-I.)

III. OFFICE OF THE COMMISSIONER OF PROHIBITION AND EXCISE

The Commissioner of Prohibition and Excise is the Head of the Department. The Commissioner is assisted by two Joint Commissioners, one Financial Controller (in the cadre of Joint Secretary to Government, Finance Department) and four Assistant Commissioners in the headquarters. Besides, a flying squad headed by an Assistant Commissioner conducts surprise inspections and random checking.

The Commissioner of Prohibition and Excise assists the Government in formulating policies and implementing policies on Prohibition and Excise. He is in-charge of enforcing the Tamil Nadu Prohibition Act 1937 (Tamil Nadu Act X of 1937) and the rules made thereunder. He is the authority vested with the power of granting the privilege and licences to establish a distillery for the manufacture of spirit and also to grant privilege for the manufacture of IMFS / Beer with the prior approval of the Government in accordance with the rules. (Organisation chart of the Commissionerate of Prohibition and Excise is given in Annexure-II.)

DISTRICT LEVEL

At the district level the District Collector supervises excise administration. He has various statutory powers and responsibilities under the Act and Rules. The Collector is assisted by an Assistant Commissioner (Excise) in the cadre of Deputy Collector in all the districts except Chennai and Coimbatore where a Deputy Commissioner (Excise) in the cadre of District Revenue Officer assists the Collectors. Revenue department officials are posted as Distillery Officers and Excise Supervisory Officers in the distilleries and IMFS / Beer manufacturing units respectively. Officers of the Revenue department in the rank of Tahsildar and Deputy Tahsildar are posted as Excise Supervisory Officers and Bonded Manufactory Officers in the Chemical units and bonded warehouses to supervise the proper use of spirit and to levy excise duty on excisable articles under the Tamil Nadu Prohibition Act, 1937 and the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 and the Rules made thereunder.

There are 13 Distillery Officers in the cadre of Deputy Collectors in the Distilleries and 9 Excise Supervisory Officers in the Indian Made Foreign Spirit and Beer Units functioning in the State. There are 4 Excise Supervisory Officers in the cadre of Tahsildar and 4 Excise Supervisory Officers in the cadre of Deputy Tahsildar in the DL licensed units (Chemical units using denatured spirit), one Tahsildar as Excise Supervisory Officer in a Chemical Unit using Rectified Spirit and 3 Bonded Manufactory Officers in the cadre of Tahsildar in the Bonded Manufactory Warehouses.

SUGAR MILLS & MOLASSES

There are 38 Sugar Mills (19 in Private Sector, 16 in Co-operative Sector and 3 in Public Sector) in Tamil Nadu which produce molasses as a by product, in the process of manufacturing sugar. (the details of Sugar Mills and storage capacity are furnished in Annexure-V).

Molasses is the most common raw material used for distillation of Rectified Spirit. Consequent to the decontrol of molasses, the Sugar Mills are free to sell molasses to any licenced user depending on the quantity indicated in the licence. Though, there is no price control over molasses, the possession, sale, use, transport and export of molasses are controlled by using licences and permits such as ML2, ML4, ML5 and ML6 under Tamil Nadu Molasses Control and Regulation Rules, 1958.

DISTILLERIES AND SPIRIT

Spirit is used as a raw material in the manufacture of Indian Made Foreign Spirit products, other chemicals and varnish. Educational Institutions, Laboratories and Research Institutions also use spirit in small quantities. There are 12 Private Sector and 2 Co-operative Sector Distilleries manufacturing spirit from molasses. (Details of Distilleries producing Spirit are given in Annexure-VI).

The Tamil Nadu Rectified Spirit Rules, 2000 and the Tamil Nadu Denatured Spirit and Varnish (French Polish) Rules, 1959 regulate the use of spirit for various purposes.

ETHANOL BLENDED PETROL PROGRAMME

Pursuant to the decision of the Government of India to introduce Ethanol-doped-Petrol for use as fuel in Tamil Nadu, five distilleries were permitted to manufacture ethanol (Anhydrous Alcohol) in the State for supply to Oil Companies, for blending with petrol. The programme was initially implemented only in 9 Districts. The Oil Companies have proposed to extend the programme of blending ethanol with petrol to all the Districts of Tamil Nadu. Consequently, action will be taken to create facilities for the production of ethanol in all sugar mills.

INDIAN MADE FOREIGN SPIRITS AND BEER UNITS

There are Indian Made Foreign Spirit units approved under the Tamil Nadu Indian Made Foreign Spirits (Manufacture) Rules, 1981 and Beer units approved under the Tamil Nadu Brewery Rules, 1983 supplying IMFS and Beer products to the Tamil Nadu State Marketing Corporation Limited. Ninety varieties of IMFS and thirteen varieties of Beer are thus being supplied for sales by TASMAC.

STATE EXCISE LABELS

Polysterised Hologram Excise Labels, with duplication-proof, security features are now being used to prevent the illicit movement / sale of spurious liquor in the State and thus to safeguard the excise revenues to the Government. The new Excise Labels are machine-compatible, designed with more security features and their application on the Indian Made Foreign Liquor and Beer bottles is done by mechanical applicators.

COMPUTERISATION IN EXCISE ADMINISTRATION

Computers with Printers were available in the office of Assistant Commissioners (Excise) in only eight districts namely Chennai, Coimbatore, Madurai, Tiruchirapalli, Tirunelveli, Salem, Erode and Kancheepuram. The Government have now decided to provide funds to the tune of Rs.13.50 lakhs for the installation of Computers with Printers for the remaining districts and to upgrade Computers at headquarters in the current financial year.

IV. PROHIBITION ENFORCEMENT WING

The Prohibition Enforcement Wing (PEW) functions with the committed objective of eradicating totally, illicit distillation, transportation, possession and sale of illicit liquor / spurious and seconds IMFS and preventing smuggling of it from other States. The Wing is headed by the Additional Director General of Police, Enforcement, who is assisted by four Superintendents of Police, viz., Superintendent of Police, Central Investigation Unit (CIU) and Superintendents of Police, Enforcement at Chennai, Salem and Madurai. The Superintendent of Police CIU heads the CIU (Central Investigation Unit), which is primarily an intelligence set-up with 2 Deputy Superintendents of Police, 6 Inspectors, 8 Sub-Inspectors and 1 Head Constable. (Organisation chart of Prohibition Enforcement Wing is given in Annexure – III).

There are 94 PEW units throughout the State, each headed by an Inspector of Police. In addition, there are 38 Additional Superintendents of Police and 38 Deputy Superintendents of Police in the Prohibition Enforcement Wing who specifically supervise this work all over the State. These Units and Officers are placed under the control of the District Superintendents of Police and Commissioners of Police, on whom the responsibility of prohibition enforcement falls primarily. The PEW Units are declared as Police Stations to enforce the Tamil Nadu Prohibition Act, 1937.

Stringent action is being taken against prohibition offenders and smugglers of illicitly distilled arrack, rectified spirit and spurious / non-duty paid IMFS. In order to firmly curb the smuggling of non-duty paid / spurious IMFS, Rectified spirit and ID arrack from Karnataka, Pondicherry and Andhra Pradesh, the functioning of the existing 21 sanctioned check posts and 6 mobile check parties are being made fully effective and temporary check posts also established wherever necessary.

Notorious prohibition offenders are being detained under the Tamil Nadu Act XIV of 1982. The seizure of illicit distilled arrack and vehicles carrying smuggled/ illicit distilled arrack is being carried out with greater vigour. Thus, all efforts are being taken to curb the prevalence of illicit liquor which adversely affects the poor and downtrodden families, in particular.

Award of medals in the name of "Uttamar Gandhi", to police personnel who perform outstanding work in curtailing illicit liquor was a scheme commenced in the year 1996. Since then, these medals are being presented on the occasion of Republic Day. It has now been decided to enhance the value of the cash prize being given with the medal from Rs.10,000/- to Rs.20,000/- and christen this award as "Gandhiadigal Police Award".

Rehabilitation Committees are functioning in the Districts with a view towards providing alternative means of livelihood to those prohibition offenders willing to reform themselves. These Committees are headed by the District Collectors. A sum of Rs.2.5 crores has been provided in the budget for the current financial year as a rehabilitation fund to provide an alternative means of livelihood for persons who were earlier engaged in the distillation and sale of illicit liquor.

V. NARCOTICS INTELLIGENCE BUREAU

The Government of India enacted the Narcotic Drugs and Psychotropic Substances Act, 1985 (Central Act 61 of 1985) for the control and regulation of operation relating to Narcotic Drugs and Psychotropic Substances, to provide for the forfeiture of property derived from, or used in illicit traffic in Narcotic Drugs and Psychotropic Substances, to implement the provisions of the international conventions on Narcotics Drugs and Psychotropic Substances. This Act along with Rules framed thereunder came into force with effect from 14th November, 1985. Every offence punishable under this Act is cognizable and non-bailable.

The Government of India have also enacted another law, namely, Prevention of Illicit Traffic in Narcotics Drugs and Psychotropic Substances Act, 1988 (Central Act 46 of 1988) which came into force with effect from the first day of July, 1988, according to which the Central and the State Governments have been empowered to detain persons engaging in illicit traffic in Narcotics Drugs and Psychotropic Substances for a minimum period of one year and a maximum period of two years from the date of detention.

The District Police, Railway Police, Prohibition Enforcement Wing and Narcotics Intelligence Bureau, C.I.D., under the control of the State Government enforce these laws relating to Narcotic Drugs and substances while under the Central Government the Narcotic Control Bureau, the Collector of Customs and the Directorate of Revenue Intelligence enforce them.

The State Narcotic Intelligence Bureau, C.I.D., is headed by a Superintendent of Police and assisted by one Additional Superintendent of Police, 12 Deputy Superintendents of Police, 16 Inspectors, 17 Sub-Inspectors and 126 other police personnel. There are 15 Narcotic Intelligence Bureau, C.I.D., Units in the State stationed at Chennai, Madurai, Tiruchirapalli, Salem, Dindigul, Theni, Villupuram, Toothukkudi, Vellore, Ramanathapuram, Coimbatore, Nagapattinam, Kancheepuram, Sivagangai and Kanyakumari.

NIB CID Tamil Nadu is taking effective steps for detection and prevention of Narcotics Drugs and Psychotropic Substances in Tamil Nadu. In the first quarter of this financial year, the NIB CID Units detected 308 cases, arrested 321 persons and seized 636.650 kgs of Dry Ganja, 700 gms. of Heroin, 400 gms. of Amphetamines, 500 gms. of Methaqulone, 30 vials of Diazepam, 50 vials of Buprenorphine and 500 Kgs. of Green Ganja. The total approximate value of these drugs seized and destroyed works out to Rs.1.31 crores.

VI. TAMIL NADU STATE MARKETING CORPORATION (TASMAC)

The Tamil Nadu State Marketing Corporation Limited is a Corporation wholly owned and controlled by the State Government and was registered on 23.05.1983 under the Companies Act, 1956. The registered office of this Corporation is situated in Chennai which monitors the purchase and sale of IMFS and Beer products throughout the State. A Board comprising of an ex-officio Chairman, Managing Director and three ex-officio Directors directs and controls the activities of the Corporation. (Organisation chart of TASMAC is given in Annexure – IV).

TASMAC has been granted the exclusive privilege of wholesale and retail vending of IMFL for the whole of the State of Tamil Nadu, as per Sections 17-C(1-A)(a) and 17-C(1-B) of the Tamil Nadu Prohibition Act, 1937 (Tamil Nadu Act X of 1937).

REGIONS AND DEPOTS

There are 5 Regional Offices at Chennai, Coimbatore, Madurai, Salem and Tiruchirappalli headed by Senior Regional Managers in the cadre of District Revenue Officers. There are 41 IMFS Depots situated throughout the State.

DISTRICT MANAGERS' OFFICES

There are 33 District Managers' offices, 3 at Chennai, 2 at Coimbatore and the balance 28 at the rate of one per district. The posts of District Managers were previously held by officers appointed on contract basis with a consolidated pay of Rs.10,000/- per month. In view of the large volume of cash transactions and considering the enormous responsibility attached to these posts, they have been replaced by Deputy Collectors.

DISTRIBUTION AND SALE

The Corporation has its 41 wholesale depots and conducts retail vending through 6,697 retail shops situated in different parts of the State. 3,264 retail shops are located in urban areas and 3,433 retail shops are located in rural areas. 6,652 shop supervisors and 17,326 salesmen who have been appointed on contract basis are working in these shops. There are 2,963 bars attached to the retail shops in urban areas and 2,223 bars attached to the retail shops in rural areas. 1,424 bar supervisors and 4,766 bar tenders who have also been appointed on contract basis are working in these bars.

The printing of the Maximum Retail Price (MRP) on the brand labels affixed on the IMFS bottles was made mandatory by the Government from 1.12.1997. This stipulation helps to prevent the sale of liquor at higher prices thus protecting the consumer from being overcharged.

CONSTRUCTION OF MODERN GODOWNS

There are 41 IMFS depots in the State. Initially these depots were functioning in rented buildings. Now 21 depots are functioning in godowns owned by TASMAC. Steps are being taken to construct godowns in a few other places. This will help to avoid a stock out situation of fast moving items due to space constraints, and also reduce the waiting time for the trucks transporting liquor and beer to the depots. The godowns will be equipped with better material handling equipments for easy handling of stock at depots by loadmen. The handling loss at the godowns will thus be minimized. Further, proper stocking of various items will facilitate better inventory management.

A proposal to computerise operations of TASMAC retail shops in a phased manner is under active consideration. Sensors and computers will be provided in the retail shops for automatic generation of bills for the items sold. This will help in ensuring proper accounting of cash for the sales effected and also help in servicing the customers quickly. The provision of computers at the shops will help in transmission of sales data on a daily basis to the concerned depots. By this, misappropriation of funds can be prevented and an integrated computer linkage will enable online monitoring of stocks and inventory at the shops and depots.

REVENUES TO GOVERNMENT

The volume of Indian Made Foreign Spirit sold during the year 2005-2006 was 229.22 lakh cases. The revenue earned through excise and sales tax on liquor from April – July 2006 was Rs.2,293.09 crores as against a revenue of Rs.1,961.90 crores earned during the same period in the previous year. The earnings through the Prohibition and Excise Department in the first four months inspires complete confidence in the ability of the Government to realize the revenue projected in the budgetary estimates under this head in the current financial year.

DETENTION OF "SAND OFFENDERS"

The illicit quarrying, transportation and storage of sand by the "Sand offenders" is an act prejudicial to the maintenance of the public order. Such illicit and haphazard sand mining has led to the deepening of river beds, widening of the rivers, damage to civil structures, depletion of ground water table, degradation of ground water quality, sea water intrusion in coastal areas, and damage to river systems apart from causing health hazards and environmental degradation. Considering the environmental damages caused by the said offenders, loss of lives suffered by officials when they try to apprehend the persons involved in illicit quarrying, transportation, storage of sand and considering the loss of revenue suffered by the Government, the Tamil Nadu Prevention of Dangerous Activities of Bootleggers, Drug-offenders, Forest-offenders, Goondas, Immoral Traffic offenders, Slum-grabbers and Video Pirates Act, 1982 (Tamil Nadu Act 14/1982) has been amended by an ordinance dated 5th July 2006, promulgated by the Governor of Tamil Nadu to include "sand offenders" so that they can be detained under the Act. A Bill has been introduced by replacing the Ordinance in the current session of the Tamil Nadu Legislative Assembly.

VII. CONCLUSION

The main thrust of the Government will be in providing better excise administration so that illicit distillation, diversion of spirit for illicit purposes and the transportation and sale of spurious / seconds liquor are curbed. This will help to prevent loss of life due to illicit liquor tragedies and also maximize excise revenue to Government. The activities of TASMAC (Tamil Nadu State Marketing Corporation Limited) will be streamlined with an eye on transparency and orderly and co-ordinated functioning.

Tamil Nadu enjoys an unique status, in that the State is self-sufficient in the production of molasses required for manufacturing the entire requirement of IMFS. Keeping in mind the volume of IMFS being sold in the State and the requirement of molasses for (a) production of ethanol to cover the State as a whole under the ethanol blended petrol programme and (b) other uses, it will be useful to evolve a policy that provides for an integrated supply chain linking up the sugar mills, distilleries, ethanol production units and IMFS units. The State will endeavour to frame such a Policy that satisfies the needs of the sugarcane growers, the sugar mills, the distilleries and TASMAC in a harmonious

M. KARUNANIDHI CHIEF MINISTER