"Earlier, the government had proposed to levy a CVD on imports of liquor, but now it has decided against doing so because liquor is a state subject and CVD is levied only on items that come under the central excise,'' a senior official in the finance ministry told The Financial Express.

This decision was taken at an inter-ministerial meeting held recently represented by the commerce ministry, finance ministry, department of food processing and department of chemicals and petrochemicals.

He added, "The additional customs duty will be levied as per the stipulation of Customs Act 1975 Section 3(1). This act permits levying an additional customs duty on imports."

"The new additional customs duty will be decided keeping in view the different excise duties levied in different states. The quantum of the duty will be decided within the next couple of days and will be announced in the Exim policy,'' he added.

The decision was taken after discussing the recommendations and suggestions of the various liquor companies and the concerned ministeries.

According to the official, the additional duty will be fair to both domestic and foreign companies.

The finance ministry had asked the department of food processing, department of chemicals and petrochemicals and commerce ministry to send in their recommendations on the duty to be imposed on liquor imports.

There has been an ongoing clash between the domestic and foreign liquor companies on the duty structure for liquor imports. While the domestic players have been lobbying for a higher tariff on imports, the foreign companies have been asking to keep the tarriff at the lowest possible level.

Various foreign companies had suggested to the government to do away with CVD. They had pointed out that liquor is a state subject hence the government's decision to impose CVD was not justified.

The government has decided to impose the additional duty on imports to protect the interests of the domestic industry.

Besides CVD, the other issues that were discussed were: stocking, storing and distribution of imported liquor after the quantitative restrictions are lifted and liquor is put on the open general licence (OGL).