In a major setback to the US, a WTO panel today ruled that America has no case in its complaint that India has put excessive duties on import of wine and liquor. “The United States has failed to establish that the additional duty on alcoholic liquor is inconsistent with WTO rules,” the panel ruled as reported by the Press Trust of India. The story was picked up by the Telegraph in Calcutta as well.
In 2007, India removed a special additional import duty on foreign liquor, including wine, in keeping with its commitment to the World Trade Organization. Following this measure, the EU withdrew its case. The US was not satisfied with India cutting import duties and persisted with the case.
The additional duty amounted to 20 to 75 per cent of the value of beer and wine imports — with the higher tax charged on cheaper wines — and from 25 to 150 per cent of imports of distilled spirits.
The US and the EU had filed complaints at the WTO arguing that the layers of custom duties on wines and spirits ran counter to New Delhi’s WTO commitments.
India removed the additional customs duties on imported liquor, which ranged between 20-150 per cent. This was over and above the basic customs duty of 150 per cent allowed by the WTO.
The multiple duties took the overall taxes on wine and spirits up to 550 per cent in some cases. The US had filed the complained against India in May 2007 claiming that additional duties on alcoholic beverages were as high as 550 per cent of the value of the product.