WORLD TRADE  
ORGANIZATION  WT/DS352/1 
G/L/804 23 November 2006 
 
(06-5653) 
 Original:   English 
  
 
INDIA – MEASURES AFFECTING THE IMPORTATION AND SALE 
OF WINES AND SPIRITS FROM THE EUROPEAN COMMUNITIES 
 
Request for Consultations by the European Communities
 
 
 
 The following communication, dated 20 November 2006, from the delegation of the European Communities to the delegation of India and to the Chairman of the Dispute Settlement 
Body, is circulated in accordance with Article 4.4 of the DSU. 
 
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  The European Communities hereby requests consu ltations with India pursuant to Article 4 of 
the Understanding on Rules and Procedures Governing the Settlement of Disputes  (DSU) and 
Article XXII:1 of the General Agreement on Tariffs and Trade 1994  (GATT 1994) regarding duties 
applied by India and restrictions on retail sale app lied by the Indian State of Tamil Nadu.  These 
measures adversely affect exports of wines and spirits (codes 2204, 2205, 2206 and 2208 of the 
Harmonised System) from the European Communities to India.  1. Duties applied by India
 
 
 The measures in question include, but are not limited to, the following:  
– Sections 2 and 3, and Schedule 1,  of the1975 Customs Tariff Act;   
 
– Customs Notification No. 5/2004 of 8 January 2004 on Basic Customs Duty applied 
to spirits (code 2208 of the Harmonised System); 
 
– Customs Notification No. 20/1997 of 1 March 1997 on Basic Customs Duty applied 
to wines (codes 2204, 2205 and 2206 of the Harmonised System); 
 
– Customs Notification No. 32/2003 of 1 Ma rch 2003 on Additional Duty applied to 
wines and spirits (codes 2204, 2205, 2206 and 2208 of the Harmonised System);  and 
 
– Customs Notification No. 19/2006 of 1 March 2006 (on Extra Additional Duty 
applied to, inter alia , codes 2204, 2205, 2206 and 2208 of the Harmonised System). 
 
Under Section 2 and Schedule 1 of the 1975 Customs Tariff Act, India applies a Basic 
Customs Duty to imported wines and spirits (codes 2204, 2205, 2206 and 2208 of the Harmonised 
System).  The Basic Customs Duty is applied pursuant to Customs Notification No. 20/1997 of 1 March 1997 to wines (codes 2204, 2205 and 2206) at a level of 100% ad valorem  and pursuant to 
Customs Notification No. 5/2004 of 8 January 2 004 to spirits (code 2208) at a level of 150% 
ad valorem .  Under Section 3 and Schedule 1 of the 1975 Customs Tariff Act, India also applies an 
Additional Duty and an Extra Additional Duty to im ported wines and spirits.  The Additional Duty is WT/DS352/1 
G/L/804 Page 2 
 
 
  applied pursuant to Customs Notification No. 32/20 03 of 1 March 2003 to wines at levels ranging 
from 20% to 75% (depending on the customs value of the wines imported), and to spirits at levels from 25% to 150% (depending on the customs value of  the spirits imported).  The Additional Duty is 
applied to the aggregate of customs value and B asic Customs Duty.  The Extra Additional Duty is 
applied pursuant to Customs Notific ation No. 19/2006 of 1 March 2006 to wines and spirits at a level 
of 4% ad valorem .  The Extra Additional Duty is applied to  the aggregate of customs value, Basic 
Customs Duty and Additional Duty.  The aggregate duty level resulting from the application of the Basic Customs Duty, the Additional Duty and the Extra Additional Duty ranges from 177.33% to 264% for imported wines and from 252.22% to 550% for imported spirits.  Those aggregate duty 
levels exceed the bound level of 150% ad valorem  for wines and spirits set forth in the WTO tariff 
schedule of India.  
The European Communities considers that these  measures are inconsistent with India's 
obligations under the GATT 1994. In particular, India has acted inconsistently with Article II:1(a) and 
(b), read in conjunction with Article III:2 of th e GATT 1994, by failing to accord to the commerce of 
another Member treatment no less favourable than th at provided for in India's tariff schedule annexed 
to the WTO Agreement.  India has failed to exempt  products, which are the products of territories of 
another Member, on their importation into India's te rritory, from ordinary cu stoms duties in excess of 
those set forth and provided in India's schedule.  India has failed to exempt such products from all 
other duties or charges of any kind imposed on or  in connection with the importation in excess of 
those imposed on the date of this Agreement or thos e directly and mandatorily required to be imposed 
thereafter by legislation in force in the importing territory on that date.   The European Communities consider that these me asures also nullify or impair the benefits 
accruing to the European Communities under the GATT 1994. 
 
2. Restrictions on sale applied by the Indian State of Tamil Nadu
 
 
The measures in question include, but are not limited to, the following: 
 
– Sections 3, 4, 17-B, 17-C, 17-E and 24 of the Tamil Nadu Prohibition Act, 1937 
 
– The Tamil Nadu Liquor (Licence and Permit) Rules, 1981 
  – The Tamil Nadu Liquor Retail (in Bars and Shops) Rules, 2003.  
 Under the above measures, the importation into , transportation within and sale within the 
State of Tamil Nadu of wines and spirits (cod es 2204, 2205, 2206 and 2208 of the Harmonised 
System) is prohibited, and punishable by fine or imprisonment.  Exceptions to this prohibition apply 
to holders of licences for importation, transportation and sale issued by the State of Tamil Nadu.  The 
above measures appear to establish a legal basis for awarding licences for the importation into, and 
transportation within, Tamil Nadu of wines and spir its produced in other Indian States as well as 
wines and spirits imported into India from other WTO Members.  The above measures appear to 
establish a legal basis for awarding licences for the sale (including wholesale and retail distribution) 
within Tamil Nadu of wines and spirits produced in other Indian States, but not for sale of wines and 
spirits imported into India from other WTO Members.  Moreover, the practice of the authorities of the 
State of Tamil Nadu confirms that the sale (includi ng wholesale and retail distribution) within Tamil 
Nadu of wines and spirits imported into India from other WTO Members is prohibited and that 
licences for such sale are not issued.   The European Communities considers that th ese measures are inconsistent with India's 
obligations under the GATT 1994.  In partic ular, India has acted inconsistently with:  WT/DS352/1 
 G/L/804 
 Page 3 
 
 
  – Article III:4 of the GATT 1994 by failing to accord to the products of the territory of 
other Members imported into the territory of India treatment no less favourable than 
that accorded to like products of Indian orig in in respect of all laws, regulations and 
requirements affecting  their internal sale, offering for sale, purchase, transportation, 
distribution or use;  or 
 
– Article XI of the GATT 1994 by maintain ing prohibitions or restrictions on the 
importation of products imported into the territory of India from other Members. 
 
 The European Communities consider that these me asures also nullify or impair the benefits 
accruing to the European Communities under the GATT 1994.   For each of the measures referred to in sections  1 and 2 above, this request also covers any 
amendments, replacements, extensions, implemen ting measures or other related measures.   
 
 The European Communities reserves the right  to address additional measures and claims 
under other provisions of the WTO Agreement regard ing the above matters during the course of the 
consultations.   The European Communities looks forward to receiving in due course a reply from India to 
this request.  The European Commun ities is ready to consider with India mutually convenient dates to 
hold consultations in Geneva.  
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