The World Trade Organization's highest appeals court -- the Appellate Body -- on Thursday upheld the United States' challenge against India's imposition of 'additional duty' and 'extra additional duty' on imported alcoholic beverages.
It maintained these two duties are inconsistent with the trade body's core scheduled tariff commitment rules as they result in the imposition of duties in excess of those committed by the Indian government in its schedule of tariff concessions.
However, the Appellate Body declined to make any recommendations to the WTO's dispute settlement body what India should do in the light of its ruling.
The government has already removed the additional duty on wines and spirits last year. Similarly, it exempted various products from the extra duty, making the case redundant.
But the US went on to challenge these two duties before the Appellate Body after a disputes settlement panel pronounced that Washington had failed to establish that the two duties imposed by India are inconsistent with Articles II:1(a) and II:1(b) of the GATT 1994.
Now, the Appellate Body reversed the panel's findings and upheld Washington's complaint that both these duties levied by the Indian customs authorities are inconsistent with Articles II: 1(a) and II: 1(b).
Under these two provisions -- Articles II:1(a) and II:1(b), WTO members cannot impose duties more than ordinary customs duties that are spelt out its tariff schedules.
India also challenged some aspects of the panel's conclusions, while the European Union, Australia, Chile, Japan and Vietnam participated as third parties.
At the core of the dispute is whether India can impose duties in the form of additional duty or other duties