Nishantha Jayaweera - Deputy Minister of Economic Development

¶ 01 Mr. Speaker, today we are to approve (i) the Rules under the Excise Ordinance amending Excise Notification No. 962 concerning excise on liquor production, and (ii) an Order under the Special Commodity Levy Act revising the levy on imported potatoes and big onions to ensure fair prices for local farmers.

¶ 02 Under the Excise framework, producers must remit excise every two weeks: production from the 1st–15th is due by month-end; production from the 16th–end is due by the 15th of the following month. A 3% monthly late fee applies to delayed payments, and persistent non-payment may lead to licence cancellation.

¶ 03 Previously, Notification 962 allowed up to six months to pay arrears without immediate licence cancellation. Many small producers exploited this, delaying payments. After the NPP Government took office, we issued notices to settle long-overdue arrears immediately; many paid, and some licences were cancelled for non-compliance—the first such cancellations in Excise history for non-payment.

¶ 04 Currently, Excise arrears total Rs. 10.5 billion: Rs. 4.7 billion in principal excise and Rs. 5.8 billion in accumulated 3% late fees. Due to legal constraints, recovery has been difficult. We therefore amend Notification 962 to tighten timelines: if excise due is not paid within one month of the due date, the production licence will be cancelled. However, producers may still sell existing stock to settle arrears. If arrears persist beyond 90 days, all related licences will be cancelled. This replaces the earlier six-month grace provision and strengthens recovery and administration.

¶ 05 We also recognize structural legal gaps: unlike the Inland Revenue Act, the Excise Ordinance lacks robust recovery tools (e.g., bank garnishee, seizure and sale of movable/immovable property, civil recovery). We are expediting a comprehensive repeal-and-replace bill for Excise with full recovery powers; drafting is at its final stage, and a dedicated team is working on it.

¶ 06 We are modernizing administration: the Excise Department has long relied on manual processes. We are implementing the Revenue Administration System for Excise Department (RASED), approved by Cabinet and now under development, with POS integration so that retail liquor sales are captured real time in the Department’s system. We have also developed a mobile app to verify tax-paid bottles versus counterfeits; after successful officer trials, it will be released to the public.

¶ 07 On the Special Commodity Levy: we raise the SCL on imported potatoes from Rs. 60/kg to Rs. 80/kg and on big onions from Rs. 10/kg to Rs. 50/kg to protect local farmers. Early signs show reduced imports and increased market space for local produce. I request support to approve both measures.

¶ 08 Thank you.