Sri Lanka’s alcohol manufacturers have objected to a decision by the Excise Department to cut the permitted wastage allowance for alcohol lost during production and storage, and are calling for the regulation to be reviewed.
The department introduced the change through Excise Notification No. 991, issued on July 24. Officials said the amendment was based on wastage calculations relating specifically to arrack, coconut spirit and palmyrah spirit production. It reduces the allowance set out in the previous Excise Notification No. 151.
Industry representatives said the revised limit could impose a significant financial burden on producers, who between them contribute around Rs. 23 billion a year in tax revenue. They warned that companies may end up paying tax a second time on alcohol volumes already lost through unavoidable stages of manufacturing and storage.
Manufacturers said evaporation routinely occurs during both production and storage, with substantial losses when spirits are transferred to bottling machines and during automated bottling. They also noted that stocks taken into custody by Excise Department officials — including samples sent to the Government Analyst for testing — are assessed under the same wastage allowance system.
The producers have formally told the Excise Department that operating under the new regulation has become increasingly difficult.
They criticised the reduction as having been made without adequate consultation or scientific assessment, and called for a full scientific and practical study before the revised limit is enforced. Such a study, they said, should examine the actual causes of alcohol wastage, the conditions under which it occurs and the scientific factors driving evaporation.
