As India stated at the previous TPR meeting held in May 2007, Education Cess imposed by India's Customs "is in the nature of a tariff and is consistent with the WTO obligations so long as the tariff plus the customs education cess does not exceed the bound rates." (quote from the previous TPR record) This warrants the Education Cess to be subject to the disciplines of Article II 1 of GATT 1994. Since the Education Cess is imposed on every imported item, it is possible that the total amount of duty, including Education Cess, exceeds the bound rate of duty appearing in the WTO Schedule of Concessions of India. If such a case arises, the amount exceeding the bound rate of duty would be inconsistent with Article II 1. What is India's view on this?
Reply: Such a situation is unlikely as, generally speaking, the WTO bound tariffs for India are much higher than the applied tariffs and the education cess is charged as a percentage of the applicable customs duty (and not ad valorem). However, in keeping with its WTO obligations, India has ensured that wherever the applied tariff plus education cess on an item exceeds the bound rate, a suitable exemption from the applied tariff or education cess is provided. For instance, wines have been exempted from education cess as the applied tariff on wines is at par with the bound rate of 150%. In this manner, it has been ensured that the education cess is consistent with the discipline of Article II.1.
