INDIA – CERTAIN TAXES AND OTHER MEASURES ON IMPORTED WINES AND SPIRITS
Document: Request for Consultations by the European Communities Addendum
Date: 18 November 2009
Document codes: WT/DS380/1/Add.3; G/L/855/Add.3; G/SCM/D79/1/Add.3
Complainant: EU
Respondent: India
Dispute stage: Consultation
Agreements cited: Art. III:2, III:4, XI, XVII  GATT 1994Art. 3.1(b), 3.2, 4.2  Subsidies and Countervailing Measures (SCM)

INDIA – CERTAIN TAXES AND OTHER MEASURES ON
IMPORTED WINES AND SPIRITS

Request for Consultations by the European Communities

Addendum

 The following communication, dated 16 November 2009, 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.

 The European Communities hereby re quests supplementary consultations
1 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 discriminat ory taxation applied on imported bottled wines and spirits by the
National Capital territory of Delhi as well as the di scriminatory practices of the state-owned Andhra
Pradesh Beverages Corporation and of the Tamil Nadu State Marketing Corporation Limited, in
supplying and distributing wines and spirits. These measures adversely affect exports of wines and
spirits (codes 22.04, 22.05, 22.06 and 22.08 of the Harmonised System) from the European
Communities to India.

Discriminatory taxation applied by Delhi

 The European Communities understands that the National Capital territory of Delhi applies
the "vend fee" on wines and spirits in a way that su bjects imported wines and spirits to internal taxes
in excess of domestic like products. Pursuant to No tification No F.10(13)/fin.(T1E)/2008-09 of 4 June
2009 the "vend fee" appears to apply on imported wi nes and spirits at higher rates than on domestic
like products and in accordance with a different stru cture and taxable basis, as compared to the "vend
fee" on domestic wines and spirits, as laid down in Notification No F10 (27)/2001 Fin
(E-1)(i)/223/kha of 29 June 2001.

1 This request supplements the request of consultations entailed in document WT/DS380/1, G/L/855,
G/SCM/D79/1 dated 25 September 2008 as well as the supplementary request entailed in document
WT/DS380/1/Add.1, G/L/855/Add.1, G/SCM/D79/1/Add.1 dated 17 D ecember 2008 and the subsequent
request entailed in document WT/DS380/1/Add.2, G/L/855/Add.2, G/SCM/D79/1/Add.2 of 6 May 2009 with
regard to measures not mentioned in the previous requests.

 The measures in question include but are not limited to:

– Sections 34 and 58 of the Punjab Excise Act 1914
– The Delhi Liquor Licence Rules, 1976, as amended;
– Notification F10(27)/2000 Fin E-1/ 781 of 28 September 2000
– Notification F10(27)/2001.Fin(E-1)(i)/223/kha of 29 June 2001
– Notification No F.10(13)/fin.(T1E)/2008-09 of 4 June 2009
 The European Communities considers that these measures are inconsistent with Article III ,
paragraph 2 of the GATT 1994. In particular:

– The "vend fee" is inconsistent with I ndia's obligations under Article III:2 of the
GATT 1994, because it subjects imported bottled wines and spirits to internal taxes
that are in excess of internal taxes applied on domestic like products.
The discriminatory practice of the Andhra Pradesh Beverages Corporation

 Rule 4 of the Andhra Pradesh (Regulation of wholesa le trade and distribution and retail
trade in India liquor, wine and beer) Act, 1993 establishes the Andhra Pradesh Beverages Corporation
Limited (APBCL) as a corporation wholly owned and controlled by the Government of Andhra
Pradesh that has the exclusive privilege of impor ting, exporting and carrying out the wholesale trade
and distribution of inter alia Indian liquor, foreign liquor and wine , on behalf of the Government for
the whole of the state.

 However, APBCL's practice appears to stock predominantly domestic wines and spirits for
general sale and does not afford the European enterprises adequate opportunities to compete for
participation in APBCL's purchases and sales. Nota bly, no tenders to supply imported wines and
spirits from outside India appear to have been issu ed to date. This practice seems to be confirmed by
the information available on the official website of APBCL about the Corporation's main functions, as
well as by the indication that tenders for procurement of wines and spirits issued so far are related to
the supply of domestic wines and spirits only.

 The measures in question include but are not limited to:

– Section 68-A of the Andhra Pradesh Excise Act, 1968;
– The Andhra Pradesh (regulation of wholesale trade and distribution and retail trade in
India liquor, wine and beer) Act, 1993, as amended;
– The Andhra Pradesh prohibition Act , 1995 (Act 17 of 1995), as amended;
– Andhra Pradesh Act 5 of 1997;
– The procurement policy of the Andhra Prad esh Beverages Corporation limited as
published under
http://www.apbcl.gov.in/tenders&notis.html;

– The Andhra Pradesh Beverages Corporation Limited "Information hand book" as
published under
http://india.gov.in/allimpfrms/allannouncements/3424.pdf;
– APBCL practice
The European Communities considers that the meas ures are inconsistent with India's obligations
under the GATT 1994, in particular:

– India fails to accord imported wines and spir its treatment no less favourable than that
accorded to like products of national origin in respect of all laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation
distribution or use in breach of Article III:4 of the GATT 1994 or alternatively of
Article XI of the GATT 1994, by maintain ing prohibitions or restrictions on the
importations of products imported into the territory of India from other members;
– the APBCL fails to act in a manner consis tent with the general principles of non-
discriminatory treatment prescribed by Article XVII of the GATT 1994, by failing to
make the purchases and sales of wines a nd spirits solely in accordance with
commercial considerations and by failing to afford the enterprises of the other
contracting parties adequate opportunity to compete for participation in its purchases
or sales.
 The discriminatory practice of the Tamil Nadu Marketing Corporation Limited

 The Tamil Nadu Marketing Corporation Lim ited (TASMAC) appears to be granted the
exclusive privilege of supplying by wholesale and selling by retail domestic wines and spirits and, by
virtue of the recent Act 22 of 200 7 and Government Order No 40 of 1 July 2008, imported wines and
spirits from outside India. However, despite an isolated limited order, which took place in October
2008, wholesale and retail of imported wines and spirits for general sale have been de facto denied in
Tamil Nadu. TASMAC purchases and sales do not app ear to be made solely in accordance with
commercial considerations. Furthermore, the Eur opean enterprises do not seem to be provided with
adequate opportunities to compete for participation in TASMAC's purchases and sales, including with
regard to brands registration, as a condition to participate in TASMAC's tenders. This practice appears
to contrast with the conditions applied for the registration of domestic brands.

 The measures in question include but are not limited to:

– The Tamil Nadu Prohibition Act, 1937, as amended;
– The Tamil Nadu Liquor (Licence and Permit) Rules, 1981, as amended;
– The Tamil Nadu Indian–made foreign spir it (supply by wholesale) Rules, 1983, as
amended;
– Government Order Ms. No 39, Home, Prohibition and excise (VIII), 1st July 2008;
– Government Order Ms. No 40, Prohibition and Excise (VIII), 1st July 2008;
– The Tamil Nadu Liquor Retail vending (i n Shops and Bars ) Rules, 2003, as
amended;

– TASMAC practice
 The European Communities considers that the measures are inconsistent also with
Article XVII:1 (a) and (b) of the GATT 1994. In particular:

– the TASMAC fails to act in a manner consistent with Article XVII of the
GATT 1994, by failing to make the purchases a nd sales of wines and spirits solely in
accordance with commercial considerations a nd by failing to afford the enterprises of
the other contracting parties adequate opportunity to compete for participation in its
purchases or sales.
 The European Communities considers that these measures also nullify or impair the benefits
accruing to the European Communities under the GATT 1994.

 For each of the measures referred to in this document, the request for consultations also
covers any amendments, replacements, extensions, implementing measures and the 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 Communiti es is ready to consider with India mutually convenient dates to
hold consultations.