Excise Officials Inspect Itc Factories

Excise inspectors yesterday inspected ITCs Saharanpur factory, its marketing office in Delhi and its Calcutta office in connection with exports of Classic cigarettes.

The inspection which sparked off major countrywide rumours about an excise raid on ITC and sent the stock markets into a tizzy was prompted by reports that Classic cigarette exports to markets in Afghanistan, United Arab Emirates and Russia were being smuggled back into the country.

Top ITC officials denied that it was a raid and said officials from the government agency merely visited the factory in connection with transactions relating to exports of the Classic brand.

 

Excise officials also confirmed to Business Standard that the visit was only a routine inspection to collect statistical data.

ITC officials also denied that any factory of the company was shut. All the factories are running better than ever, a top ITC executive said.

ITC officials claim the tobacco major has been physically picking up these stocks and storing them with the ultimate intention of destroying them and preventing them from affecting domestic sales of Classic. So far, ITC has collected one million such exported Classic cigarettes, which are now lying with the company in New Delhi.

According to top-level sources in ITC, between May-June, the company had started noticing that the exported Classic cigarettes were being smuggled back into the Indian market. ITC had last exported Classic in June 1996, and the cigarettes were therefore old, but were clashing with the domestic brand, causing problems for the tobacco major. The pack design is different, and it is tailored to local tastes, explained ITC sources. Their coming back to India is causing severe harm to the domestic brand.

Last month, the ITC board discussed the issue, after which the company moved the government, giving them the background to the problem and informing them of their intention to pick up and destroy the exported Classic cigarettes which had come back.

The excise inspectors sought information on the export transactions with parties on the Classic brand, which ITC will provide shortly. They also sought some documents related to this issue like shipment and other reports.