India Additional and Extra-Additional Duties on Imports from the United States

WT/DS360/R
Page 169

World Trade
Organization
WT/DS360/R
9 June 2008
(08-2558)
Original: English

India – Additional and Extra-additional Duties on Imports from the United States

Report of the Panel

WT/DS360/R
Page 169

TABLE OF CONTENTS

Page

I. INTRODUCTION 1

II. FACTUAL ASPECTS 2

III. Parties' Requests for Findings and Recommendations 2

IV. ARGUMENTS OF THE PARTIES 3

A. First written submission of the United States 3

1. Introduction 3

2. Legal argument 3

(a) Introduction 3

(b) The Additional Customs Duty on alcoholic beverages is inconsistent with ArticleII:1(b) andII:1(a) of the GATT1994 4

(i) ArticleII:1(b) of the GATT1994 – Ordinary Customs Duty or Other Duty or Charge 4

(ii) ArticleII:1(b) of the GATT1994 – in excess of 5

(iii) ArticleII:1(a) of the GATT1994 7

(i) ArticleII:1(b) of the GATT1994 – Ordinary Customs Duty or Other Duty or Charge 7

(ii) ArticleII:1(b) of the GATT1994 – in excess of 8

(iii) ArticleII:1(a) of the GATT1994 9

3. Conclusion 10

B. First written submission of India 10

1. Introduction 10

2. Factual background 10

(a) Mischaracterization of Indian duties as OCD and ODC 11

(b) Misinterpretation of the statutory basis for Indian duties 11

(d) Failure to acknowledge the valid removal of the AD on alcoholic beverages 11

3. Legal challenge 11

(a) Incorrect challenge of measures "as such" 12

(b) Neither the AD nor the SUAD is inconsistent with ArticleII:1(a) and (b) of the GATT1994 12

(i) The AD and the SUAD are not OCDs 12

(ii) Failure to discharge burden of proof 13

(iii) The AD and the SUAD are not ODCs 13

(iv) The AD and the SUAD are not "in excess of" the rates in India's Schedules 13

(v) The AD and the SUAD are not inconsistent with ArticleII:1(a) of the GATT1994 14

(i) The SUAD is equivalent to the Sales Tax/Value Added Tax (collectively referred to as "VAT") 15

(ii) SUAD is equivalent to the Central Sales Tax (CST) 15

(iii) The SUAD is equivalent to other local taxes and charges 15

(iv) The AD and SUAD are imposed consistently with ArticleIII:2 of the GATT1994 16

(d) The SUAD is consistent with ArticleIII:2 of the GATT1994 17

(i) The US has failed to discharge its burden of proof 17

(ii) Notwithstanding the US failure to discharge its burden of proof 17

4. Conclusion 17

C. Oral statement of the United States at the first substantive meeting of the Panel 17

1. Ordinary Customs Duties 18

2. AD and EAD exceed WTO-bound rates 19

3. ArticleII:2(a) of the GATT1994 – general 19

4. ArticleII:2(a) of the GATT1994 – EAD 19

5. ArticleII:2(a) of the GATT1994 – AD 20

6. Terms of reference 21

7. AD – M/D 21

8. Concluding remarks 21

D. Oral statement of India at the first substantive meeting of the Panel 23

1. Factual issues 23

(a) Mischaracterization of AD and SUAD as OCD and ODC 23

(b) Misinterpretation of the statutory basis for Indian duties 23

(d) Failure to acknowledge the valid removal of the AD on alcoholic beverages 24

2. Legal challenge 24

(a) Neither the AD nor the SUAD is inconsistent with ArticleII:1(a) and (b) of the GATT1994 24

(i) Ordinary Customs Duty 24

(ii) Other Duties and Charges (ODC) 25

(b) The AD and the SUAD are equivalent to internal taxes under ArticleII:2(a) of the GATT1994 25

(d) The SUAD is consistent with ArticleIII:2 of the GATT1994 26

(e) Incorrect challenge of measures 26

E. Second written submission of the United States 27

1. Introduction 27

2. The AD and EAD are each inconsistent with ArticleII:1(b) of the GATT1994 27

3. Neither the AD nor the EAD are charges within the meaning of ArticleII:2(a) of the GATT1994 29

4. Terms of reference 32

5. The AD and EAD are mandatory, not discretionary 33

6. Conclusion 34

F. Second written submission of India 35

1. SUAD is equivalent to the VAT, CST and other taxes and charges 35

(a) The SUAD is quantitatively equivalent to VAT, CST and other internal taxes and charges 35

(b) The structure, design and effect of the SUAD 36

2. AD is equal to the excise duty 38

3. AD is validly removed 38

4. The distinction between mandatory vs. discretionary 39

5. The United States has failed to make out a prima facie case 40

(a) Definition of an OCD as applied to the AD and the SUAD 40

(b) Definition of an ODC as applied to the AD and the SUAD 40

G. Oral statement of the United States at the second substantive meeting of the Panel 41

1. Opening statement 41

(a) Point 1 41

(b) Point 2 42

(d) Point 4 42

(e) Point 5 43

(f) Point 6 43

(g) Point 7 44

(h) Conclusion 45

2. Concluding remarks 45

H. Oral statement of India at the second substantive meeting of the Panel 47

1. OCD/ODC or charge equivalent to internal taxes? 47

2. The AD and the SUAD are equivalent to internal taxes 48

(a) AD is equal to the excise duty 48

(b) SUAD is equivalent to the VAT, CST and other taxes and charges 48

3. Terms of reference 49

4. The distinction between mandatory vs. discretionary 50

5. The United States has failed to make out a prima facie case 50

6. Conclusion 50

V. ARGUMENTS OF THE THIRD PARTIES 50

A. Australia 50

1. Introduction 50

2. Removal of the additional duties 51

3. Consistency of the AD and "such additional duties" as would counterbalance taxes such as Sales Tax, Value-Added Tax, local tax or any other charges ("SUAD") with ArticleII:1 of the GATT1994 51

4. ArticleII:2 of the GATT1994 51

5. Mandatory vs. discretionary legislation and "as such" claims 52

B. Chile 52

1. The measures in force prior to 3 July 2007 and amendments thereto 52

2. India's arguments with respect to ArticleII of the GATT1994 53

3. Conclusion 53

C. European Communities 54

1. Introduction 54

2. Review of a measure withdrawn after panel establishment 54

3. Border duty or internal taxes? 54

4. ArticleII:1 of the GATT1994 54

5. Articles II:2(a) and III:2 of the GATT1994 55

6. Conclusions 55

D. Japan 55

1. Customs duty or internal tax? 55

2. ArticleIII of the GATT1994 applies to the SUAD 56

3. Alternatively, ArticleII of the GATT1994 applies to the SUAD 58

4. Conclusion 59

E. Viet Nam 59

1. Withdrawal of additional duties after Panel establishment 59

2. Challengeable nature of mandatory vs. discretionary legislation 59

3. Indian additional duties in relation to the provision of ArticleII:2(a) 60

VI. INTERIM REVIEW 60

A. Background 60

B. Parties' requests for changes to the interim report 60

1. Comments by the United States 60

2. Comments by India 72

C. Other changes to the interim report 72

VII. FINDINGS 72

A. Measures at issue 72

1. General 73

2. The Basic Customs Duty ("BCD") 73

3. The Additional Duty ("AD") 74

4. The SUAD 76

B. Overview of the Parties' claims and arguments 77

C. Preliminary matters 79

1. New measures adopted by India after the establishment of the Panel 79

(a) Customs Notification 82/2007 79

(i) Arguments of the Parties 79

(ii) Analysis of the Panel 82

Whether the Panel's terms of reference are sufficiently broad to include the new measure 82

Whether CN82/2007 changed the essence of the old measure 83

Whether one or both Parties object to a ruling on the new measure 84

Whether a ruling on the new measure is appropriate to secure a positive solution to the dispute 85

(iii) Conclusion 86

(b) Customs Notification 102/2007 86

(i) Arguments of the Parties 86

(ii) Analysis of the Panel 88

Whether the Panel's terms of reference are sufficiently broad to include the new measure 88

Whether CN102/2007 changed the essence of the old measure 89

Whether one or both Parties object to a ruling on the new measure 89

Whether a ruling on the new measure is appropriate to secure a positive solution to the dispute 90

(iii) Conclusion 91

2. Discretionary vs. mandatory nature of the measures at issue 91

D. US claims of violation of Article ii:1(b) of the gatt 1994 93

1. Relationship between Articles II:1(b) and II:2 of the GATT 1994 93

(a) General 96

(b) Case-specific 102

2. ArticleII:2(a) of the GATT 1994 107

(a) General 107

(b) "equivalent" 109

3. Consistency of the AD on alcoholic liquor with ArticleII:1(b) of the GATT 1994 119

(a) Ordinary customs duty (or "other duty or charge") 125

(b) Equivalence to internal taxes 130

4. Consistency of the SUAD with ArticleII:1(b) of the GATT 1994 142

(a) Ordinary customs duty (or "other duty or charge") 149

(b) Equivalence to internal taxes 152

E. US claims of violation of Article ii:1(a) of the gatt 1994 165

F. References by the United States to Article iii:2 of the gatt 1994 166

VIII. CONCLUSIONS AND RECOMMENDATIONs 170

WT/DS360/R
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TABLE OF WTO CASES CITED IN THIS REPORT

Short Title / Full Case Title and Citation /
Argentina – Hides and Leather / Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and Import of Finished Leather, WT/DS155/R and Corr.1, adopted 16February 2001, DSR2001:V, 1779
Argentina – Hides and Leather / Award of the Arbitrator, Argentina – Measures Affecting the Export of Bovine Hides and Import of Finished Leather – Arbitration under Article21.3(c) of the DSU, WT/DS155/10, 31August 2001, DSR2001:XII, 6013
Argentina – Textiles and Apparel / Panel Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/R, adopted 22April 1998, as modified by Appellate Body Report, WT/DS56/AB/R, DSR1998:III, 1033
Argentina – Textiles and Apparel / Appellate Body Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/AB/R and Corr.1, adopted 22April 1998, DSR1998:III, 1003
Canada – Periodicals / Appellate Body Report, Canada – Certain Measures Concerning Periodicals, WT/DS31/AB/R, adopted 30July 1997, DSR1997:I, 449
Chile – Alcoholic Beverages / Appellate Body Report, Chile – Taxes on Alcoholic Beverages, WT/DS87/AB/R, WT/DS110/AB/R, adopted 12January2000, DSR2000:I,281
Chile – Price Band System / Panel Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/R, adopted 23October 2002, as modified by Appellate Body Report, WT/DS207AB/R, DSR2002:VIII, 3127
Chile – Price Band System / Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R and Corr.1, adopted 23October 2002, DSR2002:VIII, 3045
Chile – Price Band System (Article21.5 – Argentina) / Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products – Recourse to Article21.5 of the DSU by Argentina, WT/DS207/AB/RW, adopted 22 May 2007
Dominican Republic – Import and Sale of Cigarettes / Panel Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/R, adopted 19May 2005, as modified by Appellate Body Report, WT/DS302/AB/R, DSR 2005:XV, 7425
EC – Poultry / Panel Report, European Communities – Measures Affecting the Importation of Certain Poultry Products, WT/DS69/R, adopted 23July 1998, as modified by Appellate Body Report, WT/DS69/AB/R, DSR1998:V, 2089
EC – Sardines / Appellate Body Report, European Communities – Trade Description of Sardines, WT/DS231/AB/R, adopted 23October 2002, DSR2002:VIII, 3359
EC – Selected Customs Matters / Appellate Body Report, European Communities – Selected Customs Matters, WT/DS315/AB/R, adopted 11 December 2006.
Japan – Alcoholic Beverages II / Appellate Body Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1November 1996, DSR1996:I, 97
US – 1916 Act / Appellate Body Report, United States – Anti-Dumping Act of 1916, WT/DS136/AB/R, WT/DS162/AB/R, adopted 26September 2000, DSR2000:X, 4793
US – Certain EC Products / Appellate Body Report, United States – Import Measures on Certain Products from the European Communities, WT/DS165/AB/R, adopted 10January 2001, DSR2001:I, 373
US – Corrosion-Resistant Steel Sunset Review / Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9January 2004, DSR2004:I, 3
US – Gasoline / Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20May 1996, DSR1996:I,3
US – Line Pipe / Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea, WT/DS202/AB/R, adopted 8March 2002, DSR2002:IV, 1403
US – Offset Act
(Byrd Amendment ) / Panel Report, United States – Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/R, WT/DS234/R, adopted 27January 2003, as modified by Appellate Body Report, WT/DS217/AB/R, WT/DS234/AB/R, DSR2003:II, 489
US – Wool Shirts and Blouses / Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R and Corr.1, adopted 23May 1997, DSR1997:I, 323

TABLE OF GATT CASES CITED IN THIS REPORT

Short Title / Full Case Title and Citation /
Canada – Provincial Liquor Boards (US) / Panel Report, Canada – Import, Distribution and Sale of Certain Alcoholic Drinks by Provincial Marketing Agencies, adopted 18February 1992, BISD39S/27
EEC – Animal Feed Proteins / Panel Report, EEC – Measures on Animal Feed Proteins, adopted 14March1978, BISD25S/49.
EEC – Parts and Components / Panel Report, European Economic Community – Regulation on Imports of Parts and Components, adopted 16May1990, BISD37S/132.
US – Customs User Fee / Panel Report, United States – Customs User Fee, adopted 2February1988, BISD35S/245.
US – Superfund / Panel Report, United States – Taxes on Petroleum and Certain Imported Substances, adopted 17June1987, BISD34S/136.

WT/DS360/R
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