EU opposes Andhra levy on imported whisky

Says such a fee is not levied on Indian whisky.

The European Union today escalated its ongoing trade dispute with India over whiskies by pressing for additional consultations with New Delhi at the World Trade Organization (WTO).

In its latest legal challenge, the EU questioned the underlying rationale of the “assessment fee” levied by Andhra Pradesh, which subjects imported wines and spirits to additional taxes.

The assessment fee levied by Andhra Pradesh “appears to apply at rates which are inversely proportional to the assessable value of imported wines and spirits in the range of 100 per cent to 15 per cent ad valorem for imported wines and 200 per cent to 60 per cent ad valorem for imported spirits, respectively”, the EU claimed.

Brussels maintained that such a fee is not levied on similar products manufactured by Indian producers, adding that imported wines and spirits also appear to be subjected to an “import fee”.

Consequently, Brussels called for supplementary consultations with India under Article 4 of the WTO’s dispute settlement understanding (DSU).

The assessment fee, the EU said, “is inconsistent with India’s obligations under Article III:2 of the GATT 1994” because it subjects imported wines and spirits to internal taxes that are in excess of internal taxes applied on domestic products.

Under WTO rules, foreign products are required to be treated on a par with domestic products when internal taxes are levied under the principle of national treatment.

India has 60 days to respond to the EU request and if the two sides fail to amicably resolve the issue, Brussels can call for establishment of a WTO panel to adjudicate over its complaint against New Delhi.

Last year, Brussels called India for dispute settlement consultations on separate state levies imposed by Maharashtra, Goa and Tamil Nadu on imported wines and spirits.

The EU said the special fee imposed by Maharashtra on imported wines and spirits was much higher than that imposed on the domestic products.

Goa, the EU maintained, had added additional import and label recording fee to the cost of imported wines and spirits. This would further increase the overall duties on foreign wines, it alleged.

Besides, Tamil Nadu has not brought its overall taxes on foreign wines and spirits in line with the WTO ruling and continues to impose a special fee.

India is one of the biggest market for the EU, especially in whisky sales. With India’s growing middle class, the demand for Sctoch whisky continues to grow, analysts say.

Earlier, the EU had launched a trade dispute against India over its taxes on imported wines and spirits, but suspended the proceedings after the government removed the additional duties.