US wins wine and spirit duty case against India at WTO

India suffered a setback in a wine and spirit dispute with the US as the WTO appellate body ruled in favour of the American contention that New Delhi is levying excess duties on the alcoholic drinks than allowed by the multilateral agency.     

The appellate body of the global trade referee on yesterday reversed the June 2008 decision of the WTO Dispute Settlement Panel, which had gone in India's favour.     

The panel had stated that the US "had failed to establish that the additional duty and the extra-additional duty are inconsistent with India's WTO obligations".     

While the highest appeals court of WTO found the duties imposed by India inconsistent with the rules, it did not offer any recommendations for New Delhi.     

Hailing the appellate body's ruling, US Trade Representative Susan Schwab said, "We are continuing to monitor the effect" of a mechanism under which India had modified the extra-additional duty by establishing a refund system.     

The US had argued that on top of its basic customs duties, India imposed an 'additional duty' and an 'extra additional duty' on imports of wine and distilled spirits, resulting in aggregated duties on these imports ranging from 150 to 550 per cent.     

In its defence, India said that the duties were permitted because they simply offset certain internal taxes such as value-added taxes.     

"This is an important decision for all WTO members, particularly at a time when they are negotiating tariff commitments... the appellate body reversed a deeply flawed panel report and reaffirmed a fundamental WTO rule that members cannot impose duties on imports that exceed their tariff commitments," Schwab said in a statement posted on the USTR website.