At last, Inter-connected undertaking defined in section 4 of CEA, 1944 - crutches of dead MRTP Act, 1969 finally avoided

By TIOL News Service

NEW DELHI, MAR 16, 2012: RECOGNIZING the important linkages between trade and economic growth, the Government of India, after India became a party to the WTO agreement, took steps to integrate the Indian economy with the global economy. Consequently, the country opened up its economy removing controls and resorting to liberalization. This also saw India enact its first anti-competitive legislation in 1969, known as the Monopolies and Restrictive Trade Practices Act (MRTP Act), and made it an integral part of the economic life of the country.

Finding the ambit of MRTP Act inadequate for fostering competition in the market and eliminating anti-competitive practices in the national and international trade, the Government of India acting on the report of the Raghavan Committee enacted the new Competition Act, 2002 which has replaced the earlier MRTP Act, 1969.

What has this got to do with the Central Excise law, one may ask?

Nothing much, except that the new section 4 of the CEA, 1944 brought into being from 01.07.2000 continues to advert to the definition of “inter-connected undertaking” as assigned to it in Clause (g) of section 2 of the Monopolies and Restrictive Trade Practices Act, 1969.

However, since the MRTP Act, 1969 is no longer in force, without going into intricacies as to whether the General Clauses Act, 1897 would help in assisting the section 4 in expanding its definition of “related persons”, the Central Government has found it prudent to virtually lift word by word the definition of “inter-connected undertakings” contained in the said erstwhile MRTP Act and insert the same in section 4 of the CEA, 1944.

For this cut and paste exercise, apart from using the definition of “inter-connected undertakings” contained in section 2(g) of the MRTP Act, 1969, the definition of “group” as appearing in section 2(ef) of the said Act, 1969 has also been used. To lend originality, the alphabets in capitals “A” to “G” have been used in place of “i” to “vii”.

The above amendment is proposed by clause 129 of the Finance Bill, 2012 and will soon see the light of the day.

Ten years late, but as they say, better late than never!