Court exempts Duty-Free Shops from Weights & Measures Act: Goods not cleared through customs not bound.

The court concluded that the Standards of Weights and Measures Act, 1976, and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, do not apply to goods sold at Duty-Free Shops as these transactions are outside the Acts' scope since the goods are not cleared through customs and sold to the general public. The court emphasized that the goods sold at Duty-Free Shops are distinct from those sold within the country, and therefore, the compliance requirements under the Acts do not extend to these transactions. Consequently, the court allowed the writ petition and quashed the orders passed by the respondents.

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Issues Involved:
1. Applicability of the Standards of Weights and Measures Act, 1976 (SWM Act) and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (Packaged Commodities Rules) to goods sold at Duty-Free Shops.
2. Definition and completion of "import" under the Customs Act and SWM Act.
3. Nature of transactions at Duty-Free Shops as inter-State, intra-State, or in the course of import/export.
4. Compliance requirements for packaging and declarations under the SWM Act and Packaged Commodities Rules.

Detailed Analysis:

1. Applicability of the SWM Act and Packaged Commodities Rules:
The petitioner argued that the goods sold at Duty-Free Shops are not subject to the SWM Act or Packaged Commodities Rules because these goods are not imported into India in the conventional sense. The goods sold at the departure terminal are taken out of India without being cleared for home consumption, and those at the arrival terminal are sold to incoming international passengers who import them upon clearing customs. Therefore, these transactions do not constitute local sales within Karnataka.

The respondents contended that the SWM Act and Rules apply to any pre-packed commodity offered for sale within the State, including those at the Duty-Free Shops. They emphasized that the Act and Rules are intended to protect consumers and do not exempt goods sold to international travelers.

The court concluded that the SWM Act and Packaged Commodities Rules do not apply to the petitioner's goods as they are not cleared through customs and sold to the general public. The goods sold at Duty-Free Shops are distinct from the mass of goods sold within the country, and the transactions are outside the ambit of the Acts and Rules.

2. Definition and Completion of "Import":
The petitioner referenced the Supreme Court's interpretation in Garden Silk Mills Limited v. Union of India, which held that import is complete only when goods cross the customs barrier and mix with the mass of goods within the country. Therefore, goods at the departure terminal are not imported as they are taken out of India by outgoing passengers. Similarly, goods at the arrival terminal are imported only when incoming passengers clear them through customs.

The court agreed with this interpretation, stating that the definition of "import" under the Customs Act and SWM Act is identical. Import is complete when goods cross the customs barrier and mix with the mass of goods within the country. Goods sold at the departure terminal are not imported, and those at the arrival terminal are imported only when cleared by incoming passengers.

3. Nature of Transactions at Duty-Free Shops:
The petitioner argued that the transactions at Duty-Free Shops are sales in the course of import or export and not inter-State or intra-State sales. The Supreme Court's ruling in State of Karnataka v. B.M. Ashraf and Co. supported this view, stating that the nature of the transaction does not change based on the geographical location of the sale.

The court found that the transactions at Duty-Free Shops are distinct and separate from inter-State or intra-State sales. Sales at the arrival terminal are in the course of import, and those at the departure terminal are in the course of export. The Legislature deliberately chose not to cover such transactions under the SWM Act or SWM (Enforcement) Act.

4. Compliance Requirements for Packaging and Declarations:
The petitioner contended that it is not feasible to comply with the packaging and declaration requirements under the SWM Act and Packaged Commodities Rules, as the goods are under customs supervision and the petitioner has no control over the packaging. Additionally, the goods are sold in foreign currency, making it impractical to mark prices in rupees.

The court acknowledged the physical impossibility of complying with the Rules and noted that the petitioner's goods are not subject to the SWM Act and Packaged Commodities Rules. The Rules apply only to goods cleared through customs and sold to the general public.

Conclusion:
The court allowed the writ petition and declared that the SWM Act, SWM (Enforcement) Act, and Packaged Commodities Rules are not applicable to the petitioner's goods sold at Duty-Free Shops. Consequently, the orders passed by the respondents were quashed.

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