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New labeling rules could agitate businesses

01 JUN, 2018

NFS Correspondent
labeling

The Legal Metrology (Packaged Commodities) Rules, 2011 which govern the pre-packed commodities, were amended vide Notification Number G.S.R. 629 (E) dated 23rd June 2017 and the said amendments have become effective from 01.01.2018. In the Lok Sabha, such amendments were touted as an aim towards balancing with the requirement of ease of doing business.

 

Since the amended Rules have now become effective, let us have a look at some of the amendments which will have an impact on the trade practices and see whether the same will truly ease the way of doing business.

 

Country of Origin

 

The new rules require a declaration of ‘country of origin’ or ‘country of manufacture’ or ‘country of assembly’ on the imported products. Whereas, the terms ‘manufacture’ and ‘assembly’ have developed a jurisprudence under excise and income tax laws, however, a doubt may arise as to the meaning of the term ‘origin’ used in the aforesaid rules. In many cases, it may happen that the importer is oblivious of the country where the product has undergone manufacturing or the country where it was assembled. Therefore, can the said importer declare the country from where the product is last sourced/received as the “country of origin” so as to comply with the amended rules? Here, it is pertinent to note that this is not the first time the declaration of ‘country of origin’ is being contemplated, rather in several other labelling legislations (both domestic and foreign), the said declaration is already required. However, in such legislations, the requirement is to mention only the ‘country of origin’. Whether the ratio obtained from such legislations would truly hold good in the amended PC Rules is something which needs to be analysed as the amended rule envisages origin, manufacture and assembly separately.

 

Amendment to ‘institutional consumer’

 

The definition of ‘institutional consumer’ has been further amended to prevent any scope for transactions effected for commercial or trade purposes. Though, the retail sale of commodities will constitute as trade, however, what is to be looked at are the transactions that would get covered under the scope of “commercial purpose”. The Supreme Court, for the purposes of the Consumer Protection Act (“COPRA”), has held that a person who purchases goods "with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit" will be treated as if he has obtained such goods for commercial purpose.  Whether the principles, laid down by apex court under COPRA, can be applied in the context of the PC Rules is something that requires examination. Suppose an institution (say, dealer) is sourcing a commodity (say, spare parts) for use by that institution by way of rendering services (say, repairs and servicing) to the public, whether the transaction would get hit by ‘commercial purpose’?

 

Goods in stock

 

A doubt may also arise about the status of packages which are in stock as on 31.12.2017. Whether the said stock, if bearing the old declarations, is required to comply with the amended rules?

In this regard, we may refer to Circular (WM-10(65)/2017) dated 19.12.2017 which allows the industry to utilize the old packaging material till 31.

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