A federal judge has ordered US customs to take samples of Pepsi concentrate from Cork in an alleged $100 million (€74 million) tax-evasion case.
A federal court in White Plains, New York, has said customs should take samples to check if Pepsi is telling the truth about its concentrate classification scheme.
A former employee has claimed Pepsi deliberately misclassified massive quantities of concentrate imported from its plant in Little Island, Cork, to avoid $100 million in US taxes.
Judge Charles Brieant refused Pepsi's motion to have the case dismissed after reviewing allegations made by former Pepsi distribution analyst Scott Winslow.
Mr Winslow is taking the case under the US False Claims Act that allows alleged whistleblowers to take a case on behalf of the US government if the government has lost money to fraud.
If proved correct, Pepsi could face fines of up to $300 million and Mr Winslow could earn millions of dollars for reporting the case. He decided to take the case after the US Customs Service declined to take action.
Mr Winslow's lawyer, Mark Carey, said that he has received a number of e-mails from Ireland about the case but said he is still looking for the "smoking gun" from the Cork plant.
However, Pepsi's US spokesman, Dave DeCecco, said that the company was pleased with the judge's decision to take samples from the Cork concentrate.
"We're pleased with the decision since the court will now leave it up to the US Customs Agency to confirm that our duty classification for concentrate is correct," Mr DeCecco said. "Customs has agreed with our classification in the past and we're confident they'll confirm that it is correctly classified.
The company claims Mr Winslow was fired for poor performance. The judge has adjourned the case for six months to allow customs to have samples analysed. Pepsi manufactures Pepsi Mug root beer and other concentrates in Cork and imports them to the US duty free as an "odoriferous substance" that contains a secret Pepsi formula.
However, Mr Winslow has argued that the concentrate is mostly made up of sugar and water and is subject to a 6.4 per cent tax by weight. He claims there was an ongoing attempt by Pepsi to hide the truth, a claim that Pepsi strongly denies.