India's Directorate of Revenue Intelligence (DRI) has objected to the takeover of Seagram Manufacturing India by Pernod Ricard, the result of the Diageo/Pernod acquisition of Seagram last year, because of an alleged failure by Seagram to pay duties.

The problem stems back to a show cause notice issued to Seagram by the DTI in January that accused Seagram of mis-declaring and undervaluing bulk Scotch concentrates and evading customs duties of Rs38 crore ($8.4m) over a five year period.

In January, reported that local estimates had calculated that although the total evasion amounted to Rs38 crore ($8.4m), taking into account the interest due, the 100% penal charges and a 25%-30% redemption fine, the company could face a bill of Rs100 crore ($22.2m).

The DTI has told its government that Seagram should not be allowed to transfer any assets until a decision is taken on the show cause notice. Sources in India say that the DTI fears that Pernod Ricard may take over Seagram's operations without taking over any of Seagram's liability.

A spokesperson for Seagram told; "Seagram is working closely and in full cooperation with the Indian government and steps are being taken to satisfy all parties."