## Facts

- India applied a basic customs duty on imported goods and also imposed two further charges at the border: an “Additional Duty” and an “Extra-Additional Duty.”
- The measures applied to various imports from the United States, including alcoholic and other beverages (such as wines and spirits).
- The United States claimed the Additional Duty and Extra-Additional Duty resulted in duties or charges on importation in excess of India’s tariff bindings in its Schedule of Concessions, contrary to GATT 1994 Article II, and were not justified as permissible border tax adjustments.
- India argued the challenged duties were not ordinary customs duties subject to Article II:1(b) ceilings because they operated as charges “equivalent to” internal taxes imposed on like domestic products, permitted by GATT Article II:2(a) when applied consistently with Article III:2.
- The panel largely accepted India’s characterization of the measures as border tax adjustments and rejected significant parts of the U.S. complaint.
- The United States appealed aspects of the panel’s findings, including the panel’s approach to the legal relationship between Articles II:1(b) and II:2(a), and the panel’s handling of evidence on equivalence.
- India appealed certain findings as an other appellant. The Appellate Body report was adopted by the Dispute Settlement Body on November 17, 2008, together with the panel report as modified.

## Issues

1. Whether the U.S. panel request and submissions identified the challenged duties and their application with sufficient clarity to fall within the panel’s terms of reference.
2. How to assess border charges imposed “on the importation” under GATT Article II:1(a) and II:1(b), and what role Article II:2(a) plays in that assessment.
3. What a Member must show to establish that a border charge qualifies under GATT Article II:2(a) as a charge “equivalent to” an internal tax applied consistently with Article III:2, including the allocation of the burden of proof.
4. Whether India demonstrated that its Additional Duty and Extra-Additional Duty matched identifiable internal taxes on like domestic products so that the duties could be permitted under Article II:2(a).

## Decision

- The Appellate Body found that the United States’ panel request, read as a whole, sufficiently identified the Additional Duty and Extra-Additional Duty and their challenged operation so the dispute properly included those measures.
- The Appellate Body rejected the view that Article II:2(a) removes a measure from the disciplines of Article II:1(b). Instead, Article II:2(a) describes a limited category of charges that may be imposed at the border, subject to the conditions stated in Article II:2(a), including consistency with Article III:2.
- The Appellate Body stated that once a complainant establishes a prima facie case that a charge is imposed on importation in addition to bound ordinary customs duties, the responding Member bears the burden of showing the charge satisfies Article II:2(a).
- Applying that approach, the Appellate Body found India did not provide sufficiently specific evidence showing that the Additional Duty and Extra-Additional Duty were equivalent to particular internal taxes on like domestic products and applied consistently with Article III:2.
- The Appellate Body therefore concluded the challenged duties were inconsistent with India’s obligations under GATT Article II:1(a) and Article II:1(b), and were not justified under Article II:2(a), reversing or modifying the panel’s contrary conclusions.

## Legal Principles

- GATT Article II:1(a) and II:1(b) establish binding limits on duties and charges imposed on importation; charges above the bound levels breach Article II unless authorized by the GATT.
- GATT Article II:2(a) permits a narrow form of border tax adjustment: a charge on imports that is equivalent to an internal tax imposed on like domestic products, and applied consistently with Article III:2.
- Article II:2(a) is not a stand-alone escape from Article II:1(b); it operates as a defined authorization with conditions that must be proven by the Member invoking it.
- “Equivalence” under Article II:2(a) requires more than a general policy link; it requires identification of the internal tax being adjusted for, and a comparison showing the border charge does not exceed the internal tax burden on like domestic products.
- In WTO dispute settlement, when a responding Member relies on a justificatory provision such as Article II:2(a), it bears the burden of demonstrating that the provision’s requirements are met once the complainant has made a prima facie showing of inconsistency.
- A panel request is assessed in its overall context; it must give adequate notice of the measures and legal basis of the complaint, but it need not catalogue every administrative application of a measure with perfect precision.

## Conclusion

The Appellate Body held that India’s Additional Duty and Extra-Additional Duty were charges imposed on importation that breached GATT Article II because India did not prove they qualified as permissible border tax adjustments under Article II:2(a), which requires demonstrated equivalence to specific internal taxes on like domestic products and consistency with Article III:2.


India–Additional and Extra-Additional Duties on Imports from the United States, WT/DS360/AB/R (November 17, 2008)