A country imposes an internal tax on alcoholic beverages, regardless of the percentage of the alcohol in the beverage, of $2 per 40 ounces of beverage.

Domestic manufacturers of whiskey pay this tax once the distillery process is finished and the alcohol is in a barrel. The strength of the alcohol and the barrel is 80%.

Once the taxes are paid, the domestic producers mix the whiskey containing 80% alcohol with water, thereby reducing its strength to 40% alcohol, before bottling and selling it.

On the other hand, importers of whiskey into the country, which whiskey is produced in Scotland, pay their $2 tax on importation into the country on each 40 ounce 40% strength bottle of whiskey.

The importer's claim that this system is unfair.

It would be possible for these importers to import strong whiskey from Scotland e.g. whiskey containing 80% alcohol, and then dilute it locally in the country, but then the labels on the bottles could not claim "produced and bottled in Scotland". Is this tax system in the country in violation of any GATT rules? Why?