TaxTMI 
TaxTMI 
2008 (10) TMI 348
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....fee within fifteen (15) days. Petitioners contend that the Act and Package Rules have no application to electronic printers (inkjet/laser/DOT Matrix printers etc.) manufactured and marketed by them and that impugned communications are without authority or jurisdiction. Thus the case involves an interesting question as to whether electronic printers manufactured and marketed by TVS Electronics are ''packaged commodities" within the meaning of Package Rules and for non­compliance with Rules and specifications, TVS Electronics has committed compoundable offence as contended by Department of Legal Metrology, Government of Andhra Pradesh. The following brief fact of the matter is necessary to appreciate the question involved. TVS Electronics (a company registered under the Companies Act, 1956) is engaged in the business of import manufacture, distribution and sale of computer peripherals like inkjet printers, DOT Matrix printers, printer cartridges etc., which are marketed in various States including Andhra Pradesh. Printers which are imported and/or assembled in their manufacturing unit in Tamil Nadu are distributed through their marketing outlets in various States, to retail deale....
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....t and Package Rules. Union of India, first respondent, filed counter affidavit opposing writ petition. The contents thereof are as follows. Personal Computers (PCs). Printers and Printer accessories marketed and distributed by petitioners in pre-packed form, attract provisions of Package Rules. The products are manufactured in one State and sold throughout country. Therefore they come under inter-State transactions. Petitioners require to comply with provisions of the Act and Rules. Even if petitioners' products are sold as a single piece, they attract provisions of the Rules. Therefore it is necessary to make declaration on the package with regard to name and address of manufacturer, name of commodity, quantity, month and year of package as well as retail sale price in the form of MRP inclusive of all taxes. Petitioners have not complied with provisions of Rules 4 and 6 of Package Rules and therefore action initiated against them is legally valid. The PCs and printers of petitioners fall under the definition of "pre-packed commodity" as per Rule 2(l) of Package Rules. Non-compliance with provisions of the Act attracts penal provisions. Third respondent filed counter affidavit. Var....
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.... printers supplied by TVS Electronics to retailers do not comply with provisions of Rules 2(l) and 2(p) of Package Rules and therefore petitioners are liable. Learned Government Pleader relies on ITC Ltd v. Commissioner of Central Excise - 2004 (171) E.L.T. 433 (S.C.) = 2004 (7) SCC 591. Titan Industries Ltd (supra) and Whirlpool of India Ltd v. Union of India - 2008 (1) ALD 105 (SC). Points for determination (1) Whether provisions of the Act and Rules made thereunder including Package Rules can be applied and enforced even in the absence of any specific notification under Section l (3)(d) of the Act? (2) Whether electronic printers manufactured, distributed and marketed by TVS Electronics or their retail dealers can be treated as "commodities in packaged form" and/or "pre-packed commodities" for the purpose of the Act and Package Rules? Whether the Act has come into force with reference to electronic printers? The ingenuous argument of petitioners that the Act cannot be enforced in respect of electronic printers imported and/or manufactured by them draws strength and support from Section 1 especially Section 1(3) of the Act.....
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....point different dates for bringing into force different provisions of the Act or persons/subject matters to which such Act applies. 4. A perusal of sub-section (3) of Section 1 of the Act as above would show that Central Government is given power to bring into force the provisions of the Act. It also confers power to appoint different dates for enforcement of the Act for different areas, classes of undertakings, classes of goods, classes of weights and measures or classes of users of weights and measures. The legislative choice to use the word 'OR' after end of Section 1(3)(e) of the Act would clinchingly show that a notification appointing the date for the purpose of enforcing the provisions of the Act takes within its fold all other aspects of the matter. So to say, when once notification is issued bringing into provisions of the Act, there need not be separate notification with reference to the areas, classes of undertakings, classes of goods etc. 5. The Government of India vide their notification No. G.S.R. 620(E), dated 26-9-1977 appointed the said date as the date on which Sections 1 to 3, 28, 29, 31(b), 39, 48(2), 54, 63, 67, 69, 70 to 74, 78 and 83 shall com....
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....es of undertakings, (d) classes of goods, (e) classes of weights and measures, or (f) classes of users of weights and measures. In other words, what it implies is that the provisions of the Act may be made applicable by notification on one day and/or different dates may be fixed for different provisions of the Act to come into force for various areas, classes of undertakings, etc., as set out earlier. In the instant case the Notification dated 26th September. 1977 has brought into force the various provisions as set out therein viz., Sections 1, 2, 3 and 39 as also 83. Once those sections have come into force, there is no requirement that there must be a different notification specifying the different dates for different provisions of the Act to be brought into force for various areas, etc. The submission, therefore, made on behalf of petitioners that different dates have to be notified for various areas, classes of undertakings, etc., is devoid of merit considering the notification. All pre-packaged commodities covered by the Act and the Rules, will be governed by the sections which have been brought into force to the extent applicable. 7. Whether electronic printer is a c....
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....ures electronic printers and transfers them to distribution centre/office in Hyderabad, who in turn sell through a network of retail dealers. According to learned counsel, transfer of electronic printers from Tamil Nadu to Hyderabad office does not amount to inter-State trade or commerce. The submission is misconceived. In case of marketing strategy as adopted by first petitioner, even though there was no consideration paid by Hyderabad office to first petitioner's manufacturing facility at Tamil Nadu, sale price consequently goes to first petitioner and it can be presumed that the invoice raised by Hyderabad office would be invariably in the name of first petitioner. Though a retail dealer pay sale price to Hyderabad office of TVS Electronics, ultimately it is intended to reach their office at Chennai. This satisfies description of inter-State trade or commerce, as defined in Section 2(m) of the Act. which reads as under : 2(m) "inter-State trade or commerce", in relation to any weight or measure or other goods which are bought, sold, supplied, distributed or delivered by weight, measure or number, means the purchase, sale, supply, distribution or delivery which - (i) ....
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....r-State trade or commerce. Be that as it is, as per Rule 2A of Package Rules, Package Rules have no application to packages intended for retail sale, if such packages contain commodities more than 25 kg or 25 liters excluding cement and fertilizer sold in bags of 50 kg. Package Rules also have no application to packaged commodities meant for industrial consumers and institutional consumers. The Rules in Chapter II stipulate conditions or requirements subject to which pre-packed commodities can be sold. These include the display of quantity in terms of standard unit of weight or measure, the month and year of manufacturing and the like. Any contravention of the Package Rules attracts penalties under Rule 39 of Package Rules. Rule 34 of Package Rules, on which considerable reliance is placed by learned Government Pleader grants immunity to package containing a commodity weighing ten grams or 10 milliliters or less, if sold by weight or measure, any package containing fast food items packed by restaurants/hotels, agricultural farm produce in packages of above 50 kg and drug formulations covered under the Drugs (Price Control) Order 1995. All the provisions of the Act and the Rules, ho....
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....nsumer. When this system is properly enforced, levying tax on MRP according to the notification clearly does not lead to absurd consequences. 12. If an electronic printer can be sold providing necessary insulation in a cardboard box (so as to protect it from damage) can it be covered under the definition of commodity in packaged form' attracting Package Rules because it becomes pre-packed commodity. The High Courts of Andhra Pradesh, Madras and Bombay considered such a question in relation to vacuum cleaners, wristwatches and electrical components/TV sets and VCRs, radios, tape recorders and sunglasses. 'Whether a commodity is incapable of sale in any manner other than in a packaged form' was the test applied by these High Courts while deciding the cases. Applying the test, Madras High Court in Philips India Limited v. Union of India - (2002) 1 MadLW (Cri.) 211 held that television sets of Philips India, which are packed for the purpose of protection during storage, handling and safe transportation, for the convenience of the customers, are not pre-packed commodities, and therefore, the Package Rules do not apply to the same. In Eureka Forbes Limited (supra), I considered t....
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....er nature, so that the quantity of the product contained therein has a predetermined value and such value cannot be altered without the package or its lid or cap, as the case may be, being opened or undergoing a perceptible modification, and the expression "package", wherever it occurs, shall be construed as a package containing a pre-packed commodity; Explanation I - Where, by reason merely of the opening of a package, no alteration is caused to the name, quantity, nature or characteristic of the commodity contained therein, such commodity shall be deemed, for the purposes of these rules, to be a pre-packed commodity, for example, an electric bulb or fluorescent tube is a pre-packed commodity, even though the package containing it is required to be opened for testing the commodity. Explanation II - Where a commodity consists of a number of components and these components are packed in one, two or more units for sale as a single commodity, such commodity shall be deemed, for the purpose of these rules, to be a pre-packed commodity. 14. Thus an electronic printer which is packed (may be for the purpose of insulation and protection from damage) in the absence of custome....