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Prashanth MURTHY Julien LEVET Florian HABERL Vinay GOPINATH Priyanka LONKAR Boris DSILVA

European Communities v/s IndiaCertain Taxes and Other Measures on Imported Wines and Spirits




Facts Chronology Arguments Law Applicable Analysis

CASE OVERVIEWCASE OVERVIEW

India Certain Taxes and Other Measures on Imported Wines and Spirits

DISPUTE SETTLEMENT: DISPUTE DS380

Complainant: European Communities

Respondent: India

Third Parties: Australia, United States Of America

Request f or Consultations received:22 September 2008






BACKGROUND FACTSBACKGROUND FACTS

Indias Tax policies on Imported Wines and Spirits

India imposes 150% f ixed duty on imported liquor. Added with State taxes, total duty on imported liquor ranges from 200%-790%

Constitution of India permits Individual States to separately impose excise duties

on all types of liquor.

Indian Market f or alcoholic products is one of the largest in the world at 130

million nine-liter cases.

Since 2007, sale of wines in duty-free shops in airports and luxury hotels have

grown by over 300%. American liquors have grown by over 200%

USA is 6th largest exporter of wine and 3rd largest exporter of spirits






Reasons for Claims

States of Maharashtra & Goa Discriminatory taxes on imported bottled wines

and spirits State of Tamil Nadu Restrictions on Retail Sale of imported wines and spirits

State of Karnataka Discriminatory taxation on imported bottled wines

States of Delhi and Andhra Pradesh Discriminatory taxation on imported bottled

wines and spirits






ChronologyChronology


Sep. 22, 2008 Oct. 2, 2008 Dec. 15, 2008Oct. 3, 2008

European Communities requested

consultations with India

(Maharashtra, Goa, Tamil Nadu)

Australia requested to join

the consultations

US requested to join the

consultations


supplementary consultations with India

(Karnataka)





ChronologyChronology


Dec. 23, 2008 May 4, 2009 Nov. 16, 2009May 15, 2009 Nov. 30, 2009

US requested to join

the consultations


the consultations


the consultations


supplementary consultations

(Dehli, Andhra Pradesh Beverages

Corp, Tamil Nadu State Market Corp)


supplementary consultations

(Andhra Pradesh)





WTO Panel investigating on measures applied by the States of Maharashtra, Goa, Karnataka, Delhi in India

Domestic industry f avouring protection policies concerning

wines and spirits

Case OutlineCase Outline






The European Communities claims that various aspects of States in India legislation

The importation into

Transportation within

Sale of wines and spirits within the States.

Panels objectivesPanels objectives






Consistent with India's obligations under Article III:4 of the

GATT 1994

Doesn't impair the benef its accruing to the European Communities under the GATT 1994

Consistent with Article III:2 and III:4 of the GATT 1994 as well with Article 3.1(b) and 3.2 of the SCM Agreement

IndiaIndia´́s Argumentss Arguments






Law ApplicableLaw Applicable

ARTICLES:

An article is a memorandum or minute of an agreement, reduced to

writing to make some future disposition or modif ication of property;

and such an instrument will create a trust or equitable estate






GATT ARTICLE

Article III:

Determination of Injury

III.(2)With regard to the volume of the dumped imports, the investigating

authorities shall consider whether there has been a signif icant increase in dumped

imports, either in absolute terms or relative to production or consumption in the

importing Member.

III.(4) The examination of the impact of the dumped imports on the domestic

industry concerned shall include an evaluation of all relevant economic f actors and

indices having a bearing on the state of the industry, including actual and potential

decline in sales, prof its, output, market share etc.






DSU ARTICLE Article IV:

Consultation.

IV.(4)All such requests f or consultations shall be notif ied to the DSB and the relevant Councils

and Committees by the Member which requests consultations.

IV.(11)Whenever a Member other than the consulting Members considers that it has a

substantial trade interest in consultations being held pursuant to paragraph 1 of Article XXII

of GATT 1994, paragraph 1 of Article XXII of GATS, or the corresponding provisions in othercovered agreements, such Member may notif y the consulting Members and the DSB, within

10 days af ter the date of the circulation of the request f or consultations under said Article, of

its desire to be joined in the consultations.






AnalysisAnalysis


The f ollowing States of India were accused in

this case:-

Karnataka

New Delhi

Maharashtra & Goa

Andhra Pradesh

Tamil Nadu





Karnataka:

Imposed an Additional Special Fee of Rs.300/bulk litre of

imported wine.

This did not apply to the domestic products.

Violated Article III-2 of GATT 1994 by being inconsistent towards domestic and imported products.






New Delhi:

It had imposed a additional Vend Fee on all imported wine

and spirits.

This f ee was also not applicable to the domestic products.







Maharashtra and Goa:

They also applied some additional duties on imported wines

and spirits.

These duties did not apply to domestic products.







Andhra Pradesh:

It had imposed a additional Assessment Fee on all imported wine and spirits.

Rates were inversely proportional to the assessable value of goods.

100%-15% ad valorem f or imported wines.

200%-60% ad valorem f or spirits.






This was not applied to the domestic products.

Violated Article III-2 of GATT 1994 by being inconsistent

towards domestic and imported products.






Andhra Pradesh Beverages Corporation Limited was f ormed.

Owned and controlled by government.

Exclusive privileges to import wine and spirits.

Concentrated on domestic products only.






It violated article III-4 of the GATT 1994 as it f avored domestic

products more than the imported products.

It violated Article XVII of the GATT as it did not show

commercial consideration to he imported products and did

not give it a chance f or competition in the market.






Tamil Nadu:

Tamil Nadu Marketing Corporation Limited.

Wholesaler and retailer of domestic wines and spirits.

Does not provide f air opportunity f or f oreign wines and spirits.

It violated Article XVII of the GATT as it did not show commercial consideration to he imported products and did not give it a chance f or

competition in the market.





ConclusionConclusion

This Case is still in dispute and no conclusion has been drawn

yet.

But according to our analysis we have f ound that the taxation is

indeed unf air on Imported wines and Spirits.

We recommend that India should revoke its taxes in order to comply with the GATT rules and regulations.




Links and Sources for ReferenceLinks and Sources for Reference

WTO Off icial Documents

http://www.wto.org/english/tratop_e/dispu _e/cases_e/ds380 _e.htm

Economic Times Articles

http://www.wto.org/english/tratop_e/dispu _e/cases_e/ds380 _e.htm

Mr. J Gregory-Commissioner of Customs, India




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