Govt. isn't abusing its powers if it requires employees to travel via Air India to avail of LTC

Where Government employees were asked by Government to undertake air travel under LTC from OP airlines, Government being consumer enjoyed liberty to exercise its choice of airlines and no case of contravention of sections 3 and 4 was made out against Government and OP airlines

Facts:

a)  The informant, a Government employee, filed information against Air India, its subsidiaries and the Government of India alleging contravention of section 4 of Competition Act, 2012

Valuation of DTA clearances of 'tea' by EOU to be valued as per Excise law: Apex Court

Central Excise: Where, as per exemption notification, DTA clearances by EOU are liable to excise duty equal to duty on clearances by non-EOUs, said DTA clearances are to be valued as per Central Excise Valuation rules.

Facts:

a)     Assessee was a 100% EOU engaged in manufacture of instant tea. It cleared tea manufactured wholly out of indigenous raw materials, to its sister concerns in EOU.

b)   Since, as per Notifications 8/97 and 23/2003, said clearance of tea was liable duty equal to ‘excise duty’ and any excess was exempted, assessee valued said tea as per rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.

c)    Department argued that since DTA clearances by EOU are liable to excise duty equal to ‘customs duty leviable’, tea was to be valued as per customs law.

d)   Tribunal decided in favour of assessee and aggrieved department filed civil appeal in Apex Court.

Apex Court decided in favour of Assessee as under:

1) There is no doubt that the duty of excise leviable under Section 3 would be on the basis of the value of like goods produced or manufactured outside India as determinable in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975. However, the notification states that duty calculated on the said basis would only be payable to the extent of like goods manufactured in India by persons other than 100% EOUs.

2)    It is clear that in the absence of actual sales in the wholesale market, when goods are captively consumed and not sold, Rule 8 of the Central Excise Rules would have to be followed to determine what would be the amount equal to the duty of excise leviable on like goods.

3)   It is also clear that the said notification has been framed by the Central Government, in its wisdom, to levy only what is levied by way of excise duty on similar goods manufactured in India, on goods produced and sold by 100% EOUs in the domestic tariff area if they are produced from indigenous raw materials.

4)    Therefore, DTA clearances by assessee are rightly valued as per Central Excise Valuation rules. Appeal is, accordingly, dismissed - Commissioner of Central Excise v. Nestle India Ltd.

[2015] 63 taxmann.com 312 (SC) 

'Walt Disney' didn't abuse its dominance by requiring release of its movies in India only via Digital Cinema platform

Where informant filed complaint against ‘Digital Cinema Initiatives’ and ‘Walt Disney Company India’ (‘Opposite Parties’) for releasing their movies in India only through Digital Cinema Initiatives (DCI) compliant servers and projectors and DCI compliant format was found to be better than non-DCI compliant format, Opposite parties s had not contravened sections 3 and 4 of Competition Act, 2002 (‘the Act’)

Facts:

a)The informant was a Digital Cinema Service provider. Its business mainly involved digital projection and screening of films in India through a specific technology known as its proprietary Sky Cinex Technology.

b)The informant filed complaint against opposite parties alleging that they had entered into an anti-competitive agreement amongst themselves to release their movies in India in digital form only through Digital Cinema Initiatives (DCI) compliant servers and projectors.

The Competition Commission of India held as under:

1)It was found that DCI compliant server was better than non-DCI compliant format, as far as quality and security were concerned

2)The Informant failed to show that the alleged conduct of opposite parties was likely to have appreciable adverse effect on the competition

3)Since no material was placed on record to infer anti-competitive agreement as envisaged under section 3 of the Act and the opposite parties were not dominant in the relevant market, no case of contravention of sections 3 and 4 of the Act was made out against them.– K SERA SERA DIGITAL CINEMA (P.) LTD. V. DIGITAL CINEMA INITIATIVES, LLC [2015] 57 TAXMANN.COM 443 (CCI)

Subway doesn't have dominant position in fast foods restaurant chains due to presence of Pizza Hut, KFC, etc: CCI

Competition Act: Due to the presence of many competitors in the market of fast food restaurant chains, like Pizza Hut, KFC, Mc. Donald's, Cafe Coffee Day, etc., consumers have several options to choose from. Subway neither has strength to operate independently of its competitors, nor the ability to affect its competitors and consumers. Therefore, Subway does not enjoy a dominant position in the relevant market of fast food restaurant chains.

Facts:

a)The Informant and Subway Systems India Private Limited ('Subway') entered into a franchise agreement for operating "Subway" at Chennai. The Informant alleged that certain clauses of the franchise Agreement contravened the provisions of section 4 of the Competition Act, 2002 ('the Act').

b)The Informant alleged that the market share of Subway in the market of fast food restaurant chain exceeded 30%, thus, Subway had abused its dominant position by imposing unfair conditions in franchisee agreement.

c)Based on the above allegations, the Informant prayed for initiation of an investigation against the Subway under section 26(1) of the Act

The Competition Commission of India held as under:

1)Commission observed that these allegations did not have any appreciable adverse effect on the competition in the market of fast food restaurant chains since the size of such market was huge as compared with the market size of Subway. Therefore, the impact of alleged unfair conditions in franchise agreement, if any, was negligible. Thus, conduct of Subway would not contravene any provision of section 3 of the Act

2)Due to the presence of many competitors in the market of fast food restaurant chains, like Pizza Hut, KFC, Mc. Donald's, Cafe Coffee Day, etc., consumers had several options to choose from. Subway neither had strength to operate independent of its competitors, nor the ability to affect its competitors and consumers. Therefore, Subway did not enjoy a dominant position in the relevant market of fast food restaurant chains. - RAMAMURTHY RAJAGOPAL V. DOCTOR'S ASSOCIATES INC (2015) 57 TAXMANN.COM 357 (CCI)

Aluminium dross and skimmings aren't manufactured goods; decision of larger bench of CESTAT reversed

Aluminium dross and skimmings and similar non-ferrous metal drosses and skimmings which arise as by-products in process of manufacture of aluminium/non-ferrous metal products are "not manufactured goods" and, hence, not liable to excise duty.

Facts:

a)The assessee was a manufacturer of aluminium sheets and coils falling under heading 7607 1190 of the Central Excise Tariff Act using major raw material 'aluminium ingots'.

b)In the course of manufacture of aluminium sheets/coils, aluminium dross/skimmings emerge as by products. The assessee sold these by products on a regular basis.

c)The department raised demand of duty on "aluminium dross/skimmings" on ground that it was a manufactured product and liable to excise duty in view of Explanation to section 2(d) of the Central Excise Act, 1944. The Tribunal's Larger Bench held in favour of revenue.

d)Assessee argued that 'aluminium dross/skimmings' were not 'manufactured goods' and were not, therefore, liable to duty. It further argued that the Explanation was inserted in section 2(d) in order to clarify that the goods which could be bought and sold in the market were deemed to be marketable. The explanation deals only with the marketability aspect of the question and does not say that even non-manufactured goods are deemed to be manufactured goods.

The High Court held in favour of assessee as under:

1)In case of Indian Aluminium Co. Ltd. v. A. K. Bandyopadhyay 1980 (6) ELT 146 (Bom.), it was held that dross and skimmings are not manufactured goods.

2)In Union of India v. Indian Aluminium Co. Ltd. 1995 (77) ELT 268 (SC), the Supreme Court agreed with the reasons and conclusions of the Single Judge and confirmed the view taken in case of A.K. Bandyopadhyay (supra).

3)Further, the Supreme Court has held in Grasim Industries Ltd. v. Union of India 2011 (273) ELT 10(SC) that the conditions contemplated under section 2(d) and section 2(f) have to be satisfied conjunctively in order to entail imposition of excise duty under section 3 of the Act, therefore the impugned judgment of the Tribunal could not be agreed with. The larger Bench's decision did not take into account the fact that the authoritative pronouncement by the Supreme Court was binding on it.

4)Merely because the goods satisfying the test of being maerketable and saleable, it does not mean that the test of being manufactured in India has been satisfied. The Supreme Court had in aforesaid cases rejected argument of addition of dross, cinder, skimmings, etc. in the list of the items to the Schedule to the Central Excise Tariff and also held 'that is not safe to make it excisable as it has to pass further test of manufactured or produced in India.'

5)Fact that the revenue did not wish to abide by them would not mean that the Tribunal was justified in not following them. The issue stood completely covered by the Judgments of the Supreme Court and which had been totally disregarded by the Tribunal.

6)All Circulars impugned in this Writ Petition brought to the notice of this Court would not survive after the legal position had been set out as above – Hindalco Industries Ltd. v. Union of India (2015) 53 taxmann.com 156 (Bombay).

CCI imposes Rs 2,500 crore penalty on Car Cos for indulging in unfair trade practices in spare part markets

Competition Commission of India imposed Rs 2,500 crore penalty on Car Companies for indulging in practices resulting in denial of market access to independent repairers.

Facts:

a)The informant approached the Commission alleging anti-competitive conduct by Car manufactures (i.e., opposite parties). It was alleged that opposite parties abused their dominance by restricting the supply of genuine spare parts of automobiles.

b)The informant pleads before the commission to hold an enquiry against opposite parties. The Competition Commission of India held as under:

1)Each ‘original equipment manufacturer’ (OEM) was a 100 per cent dominant entity in aftermarket for its genuine spare parts and correspondingly for repair services for its brand of automobiles.

2)In most cases, the owners of various brands of automobiles are completely dependent on authorized dealer’s network of OEMs and they are not in a position to exercise option of availing services of independent repairers.

3)OEMs used their dominance in relevant market of supply of spare part to protect other relevant market namely after sales services and maintenance thereby violating section 4(2)(e) of Competition Act, 2002 (‘the Act’).

4)OEM’s have contravened provisions of sections 3 and 4 of the Act. They had to allow Original Equipment Suppliers to sell spare parts in open market without any restriction, including on prices.

5)The opposite parties may develop and operate appropriate systems for training of independent repairer/garages, and also facilitate easy availability of diagnostic tools.

6)Thus, penalty of around Rs 25,00 crore was imposed on opposite parties (computed as percentage of total turnover of respective opposite parties in India) – SHAMSHER KATARIA V. HONDA SIEL CARS INDIA LTD. [2014] 48 TAXMANN.COM 300 (CCI)