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India - Additional Duties (AB) - WorldTradeLawnet

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India - Additional Duties (AB) - WorldTradeLawnet

    WORLD TRADE WT/DS360/AB/R

    30 October 2008 ORGANIZATION

    (08-5255)

     Original: English

    INDIA ADDITIONAL AND EXTRA-ADDITIONAL DUTIES

    ON IMPORTS FROM THE UNITED STATES

    AB-2008-7

    Report of the Appellate Body

     WT/DS360/AB/R

     Page i

I. Introduction ................................................................................................................................. 1

    II. Arguments of the Participants and the Third Participants .......................................................... 6

    A. Claims of Error by the United States Appellant ......................................................... 6

    1. Interpretation and Application of Articles II:1(b) and II:2(a) of the

    GATT 1994 ....................................................................................................... 6

    2. Scope of the United States' Challenge to the Additional Duty and the

    Extra-Additional Duty .................................................................................... 16

    3. Conformity of the Additional Duty and the Extra-Additional Duty with

    Articles II:1(a) and II:1(b) of the GATT 1994 ................................................ 16

    B. Arguments of India Appellee .................................................................................... 22

    1. Interpretation and Application of Articles II:1(b) and II:2(a) of the

    GATT 1994 ..................................................................................................... 22

    2. Scope of the United States' Challenge to the Additional Duty and the

    Extra-Additional Duty .................................................................................... 31

    3. Conformity of the Additional Duty and the Extra-Additional Duty with

    Articles II:1(a) and II:1(b) of the GATT 1994 ................................................ 31

     C. Claims of Error by India Other Appellant ................................................................ 34

    D. Arguments of the United States Appellee ................................................................. 34

    E. Arguments of the Third Participants ............................................................................ 35

    1. Australia .......................................................................................................... 35

    2. Chile ................................................................................................................ 37

    3. European Communities ................................................................................... 37

    4. Japan ............................................................................................................... 38

    5. Viet Nam ......................................................................................................... 40

    III. Issues Raised in This Appeal .................................................................................................... 40

    IV. Introduction ............................................................................................................................... 41

    V. The Measures at Issue ............................................................................................................... 43

    A. The Basic Customs Duty ............................................................................................. 43

    B. The Additional Duty .................................................................................................... 44

    C. The Extra-Additional Duty .......................................................................................... 47

    VI. Scope of the United States' Challenge to the Additional Duty and the Extra-Additional

    Duty .......................................................................................................................................... 49

    VII. Article II:1(b) and Article II:2(a) of the GATT 1994 ............................................................... 52

    A. Interpretation of Article II:1(b) and Article II:2(a) ...................................................... 53

    1. Scope of Article II:1(b) ................................................................................... 55

    2. Article II:2(a) .................................................................................................. 59

    B. Conclusion ................................................................................................................... 64

WT/DS360/AB/R

    Page ii

    VIII. Burden of Proof ........................................................................................................................ 65 IX. Article 11 of the DSU ............................................................................................................... 69 X. Conformity of the Additional Duty and the Extra-Additional Duty under Articles II:1(a)

    and II:1(b) of the GATT 1994 .................................................................................................. 71

    A. The Additional Duty and the Extra-Additional Duty ................................................... 73

    B. Domestic Counterparts to the Additional Duty and the Extra-Additional Duty .......... 73

    1. State-Level Excise Duties on Alcoholic Beverages ........................................ 73

    2. The Sales Tax, Value-Added Tax, Local Tax, or Other Charges ................... 76 XI. India's Other Appeal ................................................................................................................. 79 XII. Findings and Conclusions ......................................................................................................... 82

     WT/DS360/AB/R

     Page iii

    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 16 February

    2001, DSR 2001:V, 1779

    Argentina Textiles and Appellate Body Report, Argentina Measures Affecting Imports of Footwear, Apparel Textiles, Apparel and Other Items, WT/DS56/AB/R and Corr.1, adopted

    22 April 1998, DSR 1998:III, 1003

     Australia Salmon Appellate Body Report, Australia Measures Affecting Importation of Salmon,

    WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327

     Canada Aircraft Appellate Body Report, Canada Measures Affecting the Export of Civilian

    Aircraft, WT/DS70/AB/R, adopted 20 August 1999, DSR 1999:III, 1377

     Canada Autos Appellate Body Report, Canada Certain Measures Affecting the Automotive

    Industry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000,

    DSR 2000:VI, 2985

    Canada Dairy Appellate Body Report, Canada Measures Affecting the Importation of Milk (Article 21.5 New Zealand and the Exportation of Dairy Products Recourse to Article 21.5 of the DSU and US) by New Zealand and the United States, WT/DS103/AB/RW,

    WT/DS113/AB/RW, adopted 18 December 2001, DSR 2001:XIII, 6829

     Canada Periodicals Appellate Body Report, Canada Certain Measures Concerning Periodicals,

    WT/DS31/AB/R, adopted 30 July 1997, DSR 1997:I, 449

     Chile Alcoholic Beverages Appellate Body Report, Chile Taxes on Alcoholic Beverages,

    WT/DS87/AB/R, WT/DS110/AB/R, adopted 12 January 2000, DSR 2000:I,

    281

     Chile Price Band System Appellate Body Report, Chile Price Band System and Safeguard Measures

    Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted

    23 October 2002, DSR 2002:VIII, 3045, and Corr.1

    Chile Price Band System Appellate Body Report, Chile Price Band System and Safeguard Measures (Article 21.5 Argentina) Relating to Certain Agricultural Products Recourse to Article 21.5 of the

    DSU by Argentina, WT/DS207/AB/RW, adopted 22 May 2007

    China Auto Parts Panel Report, China Measures Affecting Imports of Automobile Parts,

    WT/DS339/R, WT/DS340/R, WT/DS342/R, and Add.1 and Add.2, circulated

    to WTO Members 18 July 2008

     EC Asbestos Appellate Body Report, European Communities Measures Affecting Asbestos

    and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5 April 2001,

    DSR 2001:VII, 3243

     EC Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products

    (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998,

    DSR 1998:I, 135

    EC Tariff Preferences Appellate Body Report, European Communities Conditions for the

    Granting of Tariff Preferences to Developing Countries, WT/DS246/AB/R,

    adopted 20 April 2004, DSR 2004:III, 925

    EEC Minimum Import Prices GATT Panel Report, EEC Programme of Minimum Import Prices, Licences

    and Surety Deposits for Certain Processed Fruits and Vegetables, L/4687,

    adopted 18 October 1978, BISD 25S/68

    EEC Parts and Components GATT Panel Report, European Economic Community Regulation on

    Imports of Parts and Components, L/6657, adopted 16 May 1990,

    BISD 37S/132

WT/DS360/AB/R

    Page iv

    Short Title Full case title and citation

    EC Chicken Cuts Appellate Body Report, European Communities Customs Classification of

    Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R,

    adopted 27 September 2005, and Corr.1, DSR 2005:XIX, 9157

     EC Poultry Appellate Body Report, European Communities Measures Affecting the

    Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July

    1998, DSR 1998:V, 2031

     EC Sardines Appellate Body Report, European Communities Trade Description of

    Sardines, WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, 3359

    India Additional Import Panel Report, India Additional and Extra-Additional Duties on Imports from Duties the United States, WT/DS360/R, circulated to WTO Members 9 June 2008

     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 1 November

    1996, DSR 1996:I, 97

     Japan Apples Appellate Body Report, Japan Measures Affecting the Importation of Apples,

    WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, 4391

     Korea Dairy Appellate Body Report, Korea Definitive Safeguard Measure on Imports

    of Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000,

    DSR 2000:I, 3

    Korea Various Measures on Appellate Body Report, Korea Measures Affecting Imports of Fresh, Chilled Beef and Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January

    2001, DSR 2001:I, 5

     Turkey Textiles Panel Report, Turkey Restrictions on Imports of Textile and Clothing

    Products, WT/DS34/R, adopted 19 November 1999, as modified by Appellate

    Body Report, WT/DS34/AB/R, DSR 1999:VI, 2363

     US Carbon Steel Appellate Body Report, United States Countervailing Duties on Certain

    Corrosion-Resistant Carbon Steel Flat Products from Germany,

    WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, 3779

     US Certain EC Products Panel Report, United States Import Measures on Certain Products from the

    European Communities, WT/DS165/R, adopted 10 January 2001, DSR 2001:I,

    373

    US Customs User Fee GATT Panel Report, United States Customs User Fee, L/6264, adopted

    2 February 1988, BISD 35S/245

     US FSC Appellate Body Report, United States Tax Treatment for "Foreign Sales

    Corporations", WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III,

    1619

     US Gasoline Appellate Body Report, United States Standards for Reformulated and

    Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3

    US Section 211 Appellate Body Report, United States Section 211 Omnibus Appropriations Appropriations Act Act of 1998, WT/DS176/AB/R, adopted 1 February 2002, DSR 2002:II, 589

    US Section 337 Tariff Act GATT Panel Report, United States Section 337 of the Tariff Act of 1930,

    L/6439, adopted 7 November 1989, BISD 36S/345

    US Shrimp Appellate Body Report, United States Import Prohibition of Certain Shrimp

    and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998,

    DSR 1998:VII, 2755

     US Softwood Lumber IV Appellate Body Report, United States Final Countervailing Duty

    Determination with Respect to Certain Softwood Lumber from Canada,

    WT/DS257/AB/R, adopted 17 February 2004, DSR 2004:II, 571

     WT/DS360/AB/R

     Page v

    Short Title Full case title and citation

    US Wheat Gluten Appellate Body Report, United States Definitive Safeguard Measures on

    Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R,

    adopted 19 January 2001, DSR 2001:II, 717

    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, adopted 23 May 1997,

    and Corr.1, DSR 1997:I, 323

WT/DS360/AB/R

    Page vi

    ABBREVIATIONS USED IN THIS REPORT

    Abbreviation Description

    Additional Duty Duties imposed by India on imports of alcoholic beverages pursuant to

    authority under Section 3(1) of the Customs Tariff Act

    Basic Customs Duty India's basic customs duty imposed pursuant to authority under

    Section 12 of the Customs Act

    Customs Act India's Customs Act, 1962 (Act 52 of 1962) (Exhibits US-2 and

    IND-1)

    Customs Tariff Act India's Customs Tariff Act, 1975 (Act 51 of 1975) (Exhibits US-3A

    and IND-2A)

    DSB Dispute Settlement Body

    DSU Understanding on Rules and Procedures Governing the Settlement of

    Disputes

    Enabling Clause GATT 1979 Decision on Differential and More Favourable Treatment,

    Reciprocity, and Fuller Participation of Developing Countries, L/4903,

    28 November 1979, BISD 26S/203

    Extra-Additional Duty Duties imposed by India pursuant to authority under Section 3(5) of

    the Customs Tariff Act; the Panel and India referred to this measure

    as the "SUAD", an abbreviation based on the phrase "such additional

    duty"

    GATT 1947 General Agreement on Tariffs and Trade 1947

    GATT 1994 General Agreement on Tariffs and Trade 1994

    Harmonized System Harmonized Commodity Description and Coding System

    Hyderabad v. India Supreme Court of India, Hyderabad Industries Ltd. v. Union of India,

    1999 (108) E.L.T. 321 (S.C.) (Exhibit IND-11)

    OCDs "Ordinary customs duties" as referred to in Article II:1(b), first sentence,

    of the GATT 1994

    ODCs "Other duties or charges" as referred to in Article II:1(b), second

    sentence, of the GATT 1994

    Panel Report Panel Report, India Additional and Extra-Additional Duties on

    Imports from the United States, WT/DS360/R, circulated to WTO

    Members 9 June 2008

    SCM Agreement Agreement on Subsidies and Countervailing Measures

    VAT Value-added tax

    Vienna Convention Vienna Convention on the Law of Treaties, done at Vienna, 23 May

    1969, 1155 UNTS 331; 8 International Legal Materials 679

    Working Procedures Working Procedures for Appellate Review, WT/AB/WP/5, 4 January

    2005

    WTO World Trade Organization

     WT/DS360/AB/R

     Page 1

    WORLD TRADE ORGANIZATION

    APPELLATE BODY

     AB-2008-7 India Additional and Extra-Additional Duties

     on Imports from the United States

     Present:

    United States, Appellant/Appellee

    India, Appellant/Appellee Hillman, Presiding Member

     Sacerdoti, Member

    Australia, Third Participant Zhang, Member

    Chile, Third Participant

    European Communities, Third Participant

    Japan, Third Participant

    Viet Nam, Third Participant

I. Introduction

    1. The United States and India each appeals certain issues of law and legal interpretations developed in the Panel Report, India Additional and Extra-Additional Duties on Imports from the

    1United States (the "Panel Report"). The Panel was established to consider a complaint by the United

    23States concerning two specific dutiesthe "Additional Duty" and the "Extra-Additional Duty"

    4imposed by India at the border on imports of certain products entering its customs territory.

    2. The United States challenged the Additional Duty as imposed by India on imports of alcoholic liquor for human consumption (beer, wine, and distilled spirits, collectively "alcoholic

     1WT/DS360/R, 9 June 2008. 2In our discussion, we use the term "Additional Duty" to describe the customs duties imposed by India on imports of alcoholic beverages pursuant to authority under Section 3(1) of India's Customs Tariff Act of 1975 (Exhibits US-3A and IND-2A submitted by the United States and India, respectively, to the Panel). Further details regarding the Additional Duty may be found in Panel Report, paras. 7.10-7.16. 3In our discussion, we use the term "Extra-Additional Duty" to describe the customs duties imposed by India on imports of alcoholic beverages pursuant to authority under Section 3(5) of India's Customs Tariff Act. We note that the Panel and India refer to this measure as "SUAD", an abbreviation based on the phrase "such additional duty" found in Section 3(5) of India's Customs Tariff Act. Further details regarding the Extra-Additional Duty may be found in Panel Report, paras. 7.17-7.24. 4Panel Report, para. 7.2. India applies these duties in addition to the basic customs duties it imposes pursuant to authority under Section 12 of India's Customs Act of 1962 (Exhibits US-2 and IND-1 submitted by the United States and India, respectively, to the Panel). In our discussion, we use the term "Basic Customs Duty" to refer to the latter duties imposed under Section 12. Further details regarding India's Basic Customs Duty may be found in Panel Report, paras. 2.2, 7.2, and 7.6-7.9.

WT/DS360/AB/R

    Page 2

     5beverages"). The United States also challenged the Extra-Additional Duty imposed by India on imports of alcoholic beverages and other products, including agricultural products (such as milk, raisins, and orange juice) and industrial products falling mainly under chapters 84, 85, and 90 of the

    6Harmonized Commodity Description and Coding System (the "Harmonized System"). The factual

    7aspects of the challenged measures are set out in greater detail in the Panel Report and in Section V

    of this Report.

    3. Before the Panel, the United States claimed that the Additional Duty and the Extra-Additional Duty are inconsistent with India's obligations under Articles II:1(a) and II:1(b) of the General

    Agreement on Tariffs and Trade 1994 (the "GATT 1994") because the Additional Duty and the Extra-

    Additional Duty subject imports to ordinary customs duties ("OCDs") or other duties or charges

    8("ODCs") in excess of those specified in India's Schedule of Concessions.

    4. In response, India contested the characterization of the Additional Duty and the Extra-Additional Duty as an OCD or an ODC within the meaning of Article II:1(b), arguing instead that the Additional Duty and the Extra-Additional Duty are charges equivalent to internal taxes imposed consistently with Article III:2 of the GATT 1994 in respect of like domestic products and, as such, fall

    9within the scope of Article II:2(a). India further claimed that the Additional Duty is levied in lieu of state excise duties imposed in respect of like alcoholic beverages produced or manufactured in the state imposing the duty, while the Extra-Additional Duty is imposed to counterbalance sales taxes,

    10value-added tax ("VAT") and other local taxes and charges.

    5. The Panel defined the issue presented in this case as whether the residual category of charges imposed on the importation of a productODCs under Article II:1(b), second sentenceshould

    comprise any and all duties and charges other than OCDs, or only a subset of all such duties and

     5Panel Report, para. 7.11. The rates of Additional Duty on alcoholic beverages are specified in India's Customs Notification 32/2003 of 1 March 2003. (Exhibits US-6 and IND-5 submitted by the United States and India, respectively, to the Panel) See also Panel Report, paras. 2.1 and 7.15. On 3 July 2007, India issued Customs Notification 82/2007 (Exhibit IND-6 submitted by India to the Panel). Through this notification, India exempted from the Additional Duty all goods listed in Customs Notification 32/2003. (Panel Report, para. 7.16) The Panel found that its terms of reference did not extend to Customs Notification 82/2007 and, consequently, declined to rule on the Additional Duty on alcoholic liquor as modified by that notification. (Panel Report, paras. 7.71 and 7.72) 6Panel Report, para. 7.19. The Extra-Additional Duty is imposed by India at a rate of four per cent

    ad valorem pursuant to Customs Notification 19/2006 of 1 March 2006. (Exhibits US-7 and IND-7 submitted by the United States and India, respectively, to the Panel) See also Panel Report, para. 2.1. On 14 September 2007, India issued Customs Notification 102/2007, that exempted, subject to certain conditions, certain products from the Extra-Additional Duty when imported into India for subsequent sale. (Panel Report, para. 7.24) The Panel found that its terms of reference did not extend to Customs Notification 102/2007 and, consequently, declined to rule on the Extra-Additional Duty as modified by that notification. (Panel Report, paras. 7.99 and 7.100) 7Panel Report, paras. 7.2-7.24. 8Ibid., para. 7.5. 9Ibid., paras. 7.30 and 7.150.

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