United Spirits Limited has secured a significant victory in a long-standing tax dispute. The Customs, Excise & Services Tax Appellate Tribunal (CESTAT) in Bangalore ruled in favor of the company regarding excise duty demands pertaining to the fiscal years 1997-2005. The tribunal confirmed the company’s valuation methodology, leading to the complete deletion of the entire excise duty demand, including interest and penalties totaling approximately ₹140.50 crores.
Favorable Tax Tribunal Ruling Announced
United Spirits Limited (USL) announced on 3rd March 2026 that it has received a favorable order from the Custom, Excise & Services Tax Appellate Tribunal (CESTAT), Bangalore. This ruling pertains to the legal challenge concerning the excise duty levied for the financial years spanning FY 1997-2005.
Key Findings and Valuation Upholding
The core of the dispute involved the valuation methodology used for products. The Tribunal has upheld the valuation methodology followed by the Company. Crucially, the order ruled that the royalty received from Contract Bottling Units (CBUs) has no nexus with the price of food flavours sold to these units. This judicial clarity resulted in the complete deletion of the entire excise duty demand previously raised against USL.
Financial Impact: Full Relief Granted
The impact on the Company’s finances is assessed as NIL, as the favorable order grants full relief on the contested amounts. The original total demand consisted of:
- Central Excise Duty of INR 79.80 crores plus applicable interest, which now stands deleted to NIL.
- Penalty amounting to INR 60.70 crores, which also stands deleted to NIL.
The official communication confirming this outcome was received by the Company on 2nd March 2026.
Source: BSE
