Dutch government inspectors said they would impose a fine on a store selling wine from the occupied West Bank city of Hebron that is labelled as 'Made in Israel'.
The warning was issued during an inspection on 10 July inspection at the Israel Products Centre in Nijkerk, an importer and retail outfit run by the pro-Israel group Christians for Israel.
The officials wanted to inspect if the wines are labelled as products from Israeli settlements and not "from Israel" in conformity with European Union Commission guidelines.
In 2015, the European Commission adopted regulations barring the labelling of products produced in areas occupied by Israel as "made in Israel", a decision it described as driven by a desire to give shoppers accurate information about product provenance.
In a statement, the centre said that two agents from the Netherlands Food and Consumer Product Safety Authority did not confiscate any products but threatened that the centre could face fines for violating labeling requirements.
The centre decided it would not comply and cited a statement by Dutch Chief Rabbi Binyomin Jacobs, claiming it was unfair to single out the Israeli products for labelling while there were no such rules for made in China goods from Tibet or made in Russia goods from Crimea.
Last year, in a much-anticipated decision, the European Court of Justice (ECJ) decided that European Union countries must identify products made in illegal Israeli settlements in the occupied Palestinian territory.
The ruling was welcomed by the Palestinian Authority, while Israel claimed it was discriminatory.