AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2008 (2) TMI 645
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....fore this Court being Writ Petition No. 394 of 2007. Minutes of order came to be tendered and the petition came to be disposed off by order dated 10-3-2007. In terms of the Minutes of order, the petitioners were to make an application to respondent No. 6 who considering the provisions of the Standards of Weights & Measures Act, hereto referred to as the "Act" and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, hereto referred to as the "Rules" framed thereunder, was to decide whether the provisions of the said Act and rules are applicable to the seized goods. At this stage itself, we may refer to the Circular No. 625/16/2002-CX., dated 28th February, 2002 issued by the Central Board of Excise and Customs, New Delhi. The Circular came to be issued as doubt has been raised regarding the mode of valuation adopted in respect of goods notified under Section 4A of the CEA which were partly sold at the retail price printed on the packages and partly sold without printing the retail price on the packages. The Circular sets out that on examination of Section 4A of CEA, the section would be applicable in respect of only those cases where the manufacturer is legally ....
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....the package. Reliance is placed on the judgment of this Court and other High Courts. Though the definition of "pre-packed commodity" has been substituted effective from 14-1-2007 it does not in anyway alter the law as the amended definition of "pre-packed commodity" is the same as in the un-amended definition. Amended definition of pre-packed commodity merely seeks to include the explanation contained in the un-amended definition in the main part of the definition. Both unamended and amended definitions of pre-packed commodity can only be covered by the definition if the package contains the commodity having predetermined value. The switch gear products manufactured by the petitioners do not have a pre-determined value. Pre-determined value in the definition refers to the quantity viz. 100 ml., 10 Nos. or 100 gms. The value referred to in the definition in regard to the quantity of commodity contained in the package either by weight, measure or number. Placing reliance on the judgment of this Court in Titan Industries Ltd. v. U.O.I. reported in AIR 2006 Bom. 336, it is submitted that there is no material change in the definition of pre-packed commodity both, before and after the am....
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....l engineers/contractors who have domain knowledge of the equipment - both technical and commercial. They go by the technical parameters before purchasing the goods. The goods can never be used as a stand-alone but are used in conjunction with other protective devices. These are non consumer goods and are not within the purview of the rules. The entire object of the Act is to protect the consumer from mal-practices by the packers and it is applicable or intended to be made applicable to non-industrial commodity in packaged form. 8. Reply has been filed on behalf of the respondent No. 6. It is contended that in terms of the rules, if the goods are pre-packed commodity the packer is required to comply with the provisions of the rules. Items manufactured by the petitioners need not be used for industry only but can also be used for shopping malls, large residential complexes, commercial buildings etc. As such the seized products are required to comply with the provisions of the rules. On the goods which are packaged, on the packet there is a declaration and the quantity is shown as one number. Pre-packed commodity as set out provides that even when packages are open and commodity....
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.... had come up for consideration before this Court. We may make reference firstly to the judgment in the case of Subhash Arjandas Kataria (Mumbai) v. State of Maharashtra & Ors. reported in 2006 (4) AIR Bom. R. 570. In that case sunglasses were seized on the basis that they are pre-packed commodities. This Court after noting the various provisions of the Act and the Rules and also considering the view taken by other High Courts, held that the pre-packed commodity would be a commodity which is packed and the commodity packaged has pre-determined value and that value cannot be altered without the package being sold or opened at the time of sale. The issue once again came up for consideration in Titan Industries Ltd. v. Union of India (UOI) and Ors. reported in AIR 2006 Bom. 336. The earlier view taken was further explained as also the meaning of the explanation and Rules. This Court also noted the judgment of the Madras High Court in Philips India Ltd. v. Union of India reported in 2002 Writ LR 140 and the Judgment of the Andhra Pradesh High Court in Eureka Forbes Ltd. v. Union of India reported in AIR 2003 Andh. Pra. 275. This Court held that to decide whether the package is a pre-pac....
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.... unit which is packed in polythene cover, thermocol etc. and placed in hard board cartons is a pre-packed commodity under the old rule considering the language of the rule as substituted, there can be no escape from holding that the goods seized from the stockists of the petitioners are a pre-packed commodity. The first contention therefore, advanced on behalf of the petitioners would have to be rejected. 10. The next question which arises for consideration is whether the goods seized can be said to be sold by weight, measure or number. We have already noted the finding recorded by respondent No. 6 that on the package description it is mentioned as one unit. Though the Supreme Court did not address itself directly to that issue, it would be apparent that by holding that refrigerator to be pre-packed commodity which is sold as one unit, the Supreme Court has rejected the contention as urged before us on behalf of the petitioners herein may be sub silentio. We may mention that in Eureka Forbes Ltd., (supra) the learned Judge of the Andhra Pradesh High Court had taken a view that a single unit could not be said to be sold by weight, measure or number. In our opinion, this would ....
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....to be looked into while considering the other provisions of the chapter which speak about retail sale and other definitions. 12. We now proceed to consider some of the relevant definitions in the rules for the purpose of our discussion. We may reproduce Rule 2(o), 2(p), 2(q) and 2(r). The definitions read as under :- 2(o) "retail dealer" in relation to any commodity in packaged form means a dealer who directly sells such packages to the consumer and includes, in relation to such packages as are sold directly to the consumer, a wholesale dealer who makes such direct sale; 2(p) "retail package" means the packages which are intended for retail sale to the ultimate consumer for the purpose of consumption of the commodity contained therein and includes the imported packages PROVIDED that for the purposes of this clause, the expression "ultimate consumer" shall not include industrial or institutional consumers; 2(q) "retail sale" in relation to a commodity, means the sale, distribution or delivery of such commodity through retail sales agencies or other instrumentalities for consumption by an individual or a group of individuals or any other consumer; 2(r) "....
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....ectricity Rules, 1956. Next reference is placed on the Bureau of Indian Standards (BIS) Act, 1986 and the orders, clarifications and notifications issued therein. By an order of 17th February 2003 passed under the BIS Act, electrical appliances, protection devices and accessories mentioned in the schedule to that order were prohibited from being manufactured or sold or distributed unless they duly confirmed to the specified standards and bore the standard mark of the Bureau and after obtaining the certification marks license. Representations were made to the authorities under the BIS Act to delete the aforesaid items on the ground that these products were not purchased by the ultimate consumers but only purchased by highly trained and technical persons for industrial applications. The BIS authorities accepted the said representation and by notification dated 5-2-2004 deleted inter alia the items from the schedule. The office order refers to minutes of 8-3-2004 wherein it was recorded as under : "Consequent to the issue of this order (dated 17th February, 2003) some representations from Industrial Association were received for deleting 7 items from the purview of the order on the g....
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....e is that the package contains a declaration that the goods are not meant for individual consumer. In our opinion, the rules required the MRP to be shown only if it is a pre-packed commodity. A mere declaration under Rule 34(a) since deleted, that it is not meant for consumption by an individual by itself cannot result in holding that it is not a retail package. Stress however was sought to be placed on the 3rd type of definition in the judgment of the Supreme Court which was "A statement of required conduct by a third party". The declaration made by the petitioners it was submitted is of the 3rd type and the Supreme Court has held in such a case that the assessing officer cannot question the basis of the said declaration. This argument could have been considered if Rule 34(a) was in force in the matter of declaration but the same has been omitted w.e.f. 13-1-2007. Apart from that what the rule will mean is that the package as a prepacked package is meant for use by industrial consumer as explained in Rule 2A explanation or for purpose of servicing any industry mine or quary. The proviso also sets out to whom the rule will not apply and that includes any package containing a commod....
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....on of the said provision." 14. Do the seized packages fall within the definition of the expressions retail package and retail sale. Does the explanation to Rule 2(A) restrict itself to that rule alone and the definition of industrial and institutional consumer as explained there cannot be read into the proviso to Rule 2(p) and if not, what is the meaning of the expression industrial or institutional consumer under the proviso to Rule 2(p). Rule 2A sets out to what packaged commodities the provisions of Chapter 2, would not apply. Rule 2A reads as under :- 2A. Applicability of the Chapter - The provisions of this chapter shall not apply to :- (a) packages of commodities containing quantity of more than 25 kg or 25 litre excluding cement and fertilizer sold in bags upto 50 kg; and (b) packaged commodities meant for industrial consumers or institutional consumers. Explanation : For the purpose of this rule, - (a) Institutional consumer - Means those consumers who buy packaged commodities directly from the manufacturers/packers for service industry like transportation [including airways, railways] hotel or any other similar service industry. (b) Industrial Co....
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.... The object therefore appears to be disclosure of the sale price to a customer for consumption, whether such consumer be individual, group of individual but excludes industrial or institutional consumer. An industrial consumer who purchases a retail package by retail sale would be normally a consumer in the absence of the proviso. The question is who are the industrial or institutional consumers under the proviso to Rule 2(p) who are excluded from the definition of ultimate consumer. Can there be a distinction between a consumer who directly purchases the product and consumes the product or a consumer who purchases the product say for individual use or an industrial consumer for making another product, say a switch board and who does not fall within the explanation to Rule 2A namely a purchaser not purchasing directly from the manufacturer or packer. Are such consumers excluded from the expression ultimate consumer as set out in the proviso to Rule 2(p) or other consumer as set out in Rule 2(q) or for that matter consumer under Rule 2(o). That the package is a pre-packed commodity in no longer res integra after Whirlpool (supra). Therefore, Chapter II would apply only to pre-packed....
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....ho purchases directly from manufacturers or packers. If the contentions of the petitioner are accepted then firstly it would have to be read that Chapter II speaks of two kinds of industrial or institutional consumers. One covered by the explanation to Rule 2A to whom the chapter would not apply and the second category covered by the proviso to Rule 2(p) to whom also the chapter would not apply. Such a construction would defeat Rule 2A(b). The explanation only excludes a class of consumers who in the absence of the explanation or Rule 2A would be consumers. The industrial or institutional consumers for the purpose of Rule 2(p), should be the same as in the explanation to Rule 2A. If this construction is not accepted it would amount to saying that although to consumers described in Rule 2A, Chapter II will not apply, yet also there are still other industrial or institutional consumers to whom the chapter will not apply. If that was the intention of the rule making authority, it could have defined industrial or institutional consumers independently and not provided an explanation to Rule 2A for the purpose of that chapter. Bad phraseology should not defeat the intent of the rule maki....