- The CAG report found lakhs of litres of liquor spirit missing at a Kerala distillery
- 20,386 litres of alcohol were illegally sold in Madhya Pradesh, causing Rs 2.20 crore loss
- A shortage of 4,60,659 litres at the distillery caused a Rs 49.68 crore revenue loss
In a shocking case of alleged misappropriation, a Comptroller and Auditor General (CAG) report tabled at the Kerala assembly has found that lakhs of litres of liquor spirit went unaccounted for at a distillery, some of it allegedly sold off in Madhya Pradesh during the time of the erstwhile Pinarayi Vijayan government.
As per the CAG audit, former Kerala Excise Minister MB Rajesh treated it as routine wastage and recovered only a fraction.
Alchohol Disappearance Story
When two tanker lorries rolled toward the Travancore Sugars and Chemicals Ltd (TSCL) distillery in Thiruvalla on June 30, 2021, excise officials stopped them and found a problem that would eventually expose a hole of nearly Rs 52 crore in the state's revenue. Between the two tankers, 20,386 litres of extra neutral alcohol, the industrial spirit from which Indian-made foreign liquor is made, had simply vanished in transit.
The drivers, according to the audit, admitted the spirit had been illegally sold in Madhya Pradesh, allegedly with the involvement of some distillery employees. But instead of retrieving the loss to the exchequer, the excise department's response was to release the rest of the consignment after collecting a fine of Rs 6,76,072, treating the missing spirit as ordinary "transit wastage". A case was also filed by the police, as per the audit report.
Shortage Of 4.6 Lakh Litres
Once the theft surfaced, officials checked the spirit held inside the distillery's own storage tanks. On September 7, 2021, they recorded a staggering shortage of 4,60,659 litres of extra neutral alcohol (ENA) and issued a demand for Rs 1.54 crore.
Then the demand shrank. The company replied that it had never claimed its permitted storage wastage allowance of 0.5 per cent a quarter, because the mandatory quarterly stock checks had not been carried out.
On that basis, the department granted the distillery nine years of backdated wastage, covering 2013-14 all the way to 2021-22. After that allowance was deducted, the demand collapsed from Rs 1.54 crore to just Rs 48,70,858, which the company duly paid on June 14, 2022.
Here is what the CAG flagged as indefensible. A joint physical verification on March 31, 2021, signed off by excise officials and company staff, had shown no discrepancy in the ENA stock at all. Yet, within months, the department handed the distillery nearly a decade of retrospective "wastage" with no verification records to support it.
The CAG called the retrospective allowance irregular and noted that the June 30 theft was likewise quietly regularised as normal transit loss.
The numbers behind the loss are staggering. ENA is brought into Kerala for one purpose, to make liquor, which earns the state excise duty, sales tax and turnover tax. The 4,60,659 litres missing from the tanks could have produced about 1,14,048 cases of liquor, a revenue loss of Rs 49.68 crore to the government.
The 20,386 litres lost in transit account for another Rs 2.20 crore. Together, the unrecovered loss to the exchequer comes to Rs 51.88 crore.
Against that, the shocking part is that what is revealed in the CAG report is the state collected roughly Rs 55 lakh in fines, a little over one per cent of what it lost.
The audit also pointed to a detail that undercuts the wastage explanation entirely.
Once the theft was detected and scrutiny tightened, bottling wastage at the distillery stayed low for six months and remained under 250 litres for nearly two years. In other words, when someone was watching, the spirit stopped disappearing.
Confronted with the findings in June last year, the government replied in July that strict orders had been issued for surprise and independent stock verification and that it would propose a real-time tracking system for ENA in transit and a technology-based system to monitor spirit used and lost during bottling.
On the central question, recovering the Rs 51.88 crore, the reply said nothing. The CAG recorded that the government's response was not acceptable.
Two and a half years after the company settled its Rs 48.7 lakh bill, the rest of the money remains exactly where it has been since the spirit went missing. Gone, and with no accountability.
