Retailers Association of India Representation on Packaged commodities rules To Government of Maharashtra 26 February 2014 Mumbai
In this section, we have set out a brief outline of the key issues faced by the retailers in Maharashtra relating to legal Metrology Act 2009. For convenience we have divided the section in the following parts: PART A: Back ground of Legal Metrology Act PART B: Need to make pc rules and act more pragmatic in implementation PART C: Issues and Suggestions 1. Intermediaries like retailer should not be held accountable for violation by manufacture / importer 2. Issuance of warrantee by manufacturers according to the provisions of food safety and standards act 3. Concept of pre packed commodity 4. Issue of de minimus violations of the pc rules 5. Arbitrariness in compounding fee
PART A: BACK GROUND OF LEGAL METROLOGY ACT The Legal Metrology Act, 2009 ( Metrology Act ) has been enacted by the Central Government for the purpose of enforcing standards of weights and measures, regulate trade and commerce in weights, measures and other goods which are sold or distributed by weight, measure or number. Particularly, The Legal Metrology (Packaged Commodities) Rules, 2011 ( Metrology Rules ) have been designed to administer the task of ensuring the correct quantities in weights and measures of packaged commodities. In terms of Section 53 of the Legal Metrology Act, the State Government has been empowered to make rules to carry out the provisions of the Act by notification, in consultation with the Central Government. In this representation we have pointed out issues which State Government should consider for implementation of the provisions of the Act.
PART B: NEED TO MAKE PC RULES AND ACT MORE PRAGMATIC IN IMPLEMENTATION A large modern trade outlet typically stores and sells hundreds of categories of products, each category being represented by multiple brands and each brand being represented by multiple Stock Keeping Units (SKUs). SKUs stocked and sold in a typical Modern Trade outlet would be in excess of thousands and logistics and supply chain management, both at the back end and front end in this format, is so complex that it can only be managed with IT based infrastructure. Most of the SKUs stocked and sold by Modern Trade are in pre-packaged form, which need to be compliant with the provisions of the Legal Metrology Act, 2009 and the Legal Metrology (Packaged Commodities) Rules, 2011. Organized retailers are dealing in thousands of products bought from hundreds of vendors. Sometimes a few items do not carry all the requisite declarations as mandated or there are some inadvertent miss-prints. It is practically impossible to check each and every SKU (Stock keeping unit) for the compliance under the provisions of Rules and the Act. These mistakes happen without any malafide intentions and are not detrimental to the interests of the consumers. E.g. 1. In case of products like shirts, trousers, television sets etc., customers are aware of its size in inches rather than centimeters. However the act only recognizes metric standards. Hence centimeter is the standard to be used and not inch. So when retailers showcase products with signages in inches they are harassed stating non compliance by legal metrology inspectors. 2. Likewise in footwear, the standard sizes viz 7,8,9 is what customers recognize. Again the same is prominently mentioned on the footwear and boxes. However the retailers are harassed and the products are confiscated. 3. Some retailers get harassed because the holding package of a pair of socks does not state Socks 2 numbers which signifies the quantity which is interpreted as mandatory to mention as per the act. Socks cannot be sold in inches and have to be sold as pairs.
PART C: ISSUES AND SUGGESTIONS 1. INTERMEDIARIES LIKE RETAILER SHOULD NOT BE HELD ACCOUNTABLE FOR VIOLATION BY MANUFACTURE / IMPORTER - AMENDMENT TO THE RULES The Legal Metrology Act, 2009 and the Legal Metrology (Packaged Commodities) Rules, 2011 stipulate that certain declarations / disclosures need to be made on packages of all pre-packed goods in the larger consumer interest. However, the provisions of the Act and the PC Rules also provide that, should there be a non-compliance with the requisite declarations required to be made on the pre-packed goods, it is not only the manufacturer/ packer/ importer who shall be liable but it is also the wholesalers/ retailers, [Section 36 and Rule 18(1)] who would be punishable for such non-compliance, if such non-compliance is detected in respect of inventory of goods with them. However, this provision is leading to some unintended consequences. a) The enforcement officials in various States visit the stores of retailers and pick up samples of products which, according to them, do not conform to the requirements of the Act and the PC Rules in the matter of declarations or the manner of making them on the products. They then initiate (even when such deficiency is wholly attributable to manufacturer / packer / importer and not to retailer) show cause notices and/ or prosecution proceedings against retailers including the directors, very often, overlooking the fact that the non-compliance is clearly attributable to a neglect or default on the part of the manufacturer/ packer/ importer and not on the part of retailers, whose only fault could be that their personnel failed to detect the non-compliance or deficiency on the part of the manufacturer/ packer/ importer before accepting the goods for display/ sale in their stores. The problem is compounded many fold by the fact that given the number of SKUs typically stocked and sold from each store, it is virtually impractical, if not impossible, for the members of the retail trade to scrutinize each and every pack from a compliance perspective of the Act and the PC Rules before putting them up for display and sale. We, therefore, believe that in keeping with the provisions of Explanation I & II of Rule 6 and Rule 19(7), notwithstanding the generic nature of liability contemplated by Section 36, the initial show cause notice/ prosecution for any non-compliance
with the label declarations should be initiated only and exclusively against the manufacturer / packer / importer responsible for such non-compliance. b) Our recommendation that action at the first instance should be initiated against the manufacturer / packer / importer, in accordance with Rule 19(7) of the PC Rules, has the added benefit of ensuring that the problem would get tackled and addressed at the root cause stage itself, whereas when action is initiated against members of the retail trade, the problem will not get addressed in full, particularly in respect of many other outlets storing identical goods where the deviation from requirement may remain undetected by the Inspectorate. We would also like to draw your attention to the Circular No. WM-10(8)/92 dated 26th February 1992 issued by Government of India to the Controllers of Legal Metrology of All States and Union Territories (copy enclosed), directing that: Any actions for non-compliance in the provisions of the Act and the Rules there-under are be taken against the Manufacturer/Packer/Importer and not against the retailer/wholesaler from whom the products were found/seized. Wholesale/retail dealer from whom the goods have been found could made co-accused or witness so as to establish the case against the Manufacturer/Packer/Importer. Similarly action against the wholesaler/retailer could be taken only for overcharging and not for other mandatory declarations. Accordingly, it is the responsibility of the manufacturer and/packer to comply with the provisions of the Act and Packaged Commodities Rules framed there under. However, the inspectors do not give cognizance to this Circular as this Circular is very old and was issued around 22 years back. We request your good offices to consider the practical difficulties we face in compliance with the Act and issue a similar communication as guidelines so that retailers do not face any problems in dealing with inspectors of Legal Metrology and are not penalized for things they do not control.
2. ISSUANCE OF WARRANTEE BY MANUFACTURERS ACCORDING TO THE PROVISIONS OF FOOD SAFETY AND STANDARDS ACT The provisions of Food Safety and Standards Act and the Food Safety and Standards Rules provide for issuance of warrantees by manufacturers / packers to downstream trade channels. A wholesaler or retailer, who has received such a warranty, and deals in such goods, in the same form in which he received it from the manufacturer / packer, has the legal protection that if the product is not found to be conforming to relevant standards of product quality or product label declarations or not compliant with applicable legal provisions, the wholesaler / retailer is entitled to plead the warranty issued to him by manufacturer / packer and once such a warranty is pleaded, the retailer / wholesaler is absolved of his responsibility for any contravention / noncompliance and it is the manufacturer / packer who is required to answer the charges and face prosecution and be punished, if found guilty. The law goes on to provide that an invoice issued by a manufacturer / packer shall be deemed to be a warranty for this purpose making the benefit of the provision not dependent on any technicality. A corresponding provision in respect of warranty from manufacturers / packers / importers to the effect that the pre-packaged product sold by them to wholesale / retail trade, is compliant with the provisions of Legal Metrology Act and the Rules, is missing in the Legal Metrology Act and the PC Rules. 3. CONCEPT OF PRE-PACKED COMMODITY Under section 2(I) of the Legal Metrology Act, pre-packed commodity is defined as a commodity which without the purchaser being present is placed in package of whatever nature, whether sealed or not, so that the product contained therein has a predetermined quantity. Rule 4 of the Legal Metrology Rules states that once a commodity is classified as a pre-packed commodity, it has to securely affix a label to it and make such declarations as are required to be made under the rules.
Issue The ambit of pre packed commodity is wide in nature and currently, it would even include items such as: (i) (ii) (iii) (iv) (v) Strawberries, mushrooms, corn, lassi etc. packed by the retailer for protection and hygienic purposes. Few Garments are packaged only to keep them dust free. Garments are sold openly after removing packing material, therefore merely the fact of keeping the same in plastic pack, the same should not be considered as pre pack commodities. Customer can try the same before buying of the garments. The sunglasses are tested by the buyer for his suitability. The footwear is always purchased after trying and satisfying about the size and quality. The footwear is not sold as pre packed commodity. Recommendation Central act consider above commodities as pre packaged commodity. It is recommended that State should adopt practical approach. PC rules and act are consumer welfare legislation and objectives of such legislation are to protect the rights of consumers. There is however a need to make PC Rules and Act more pragmatic in implementation. 4. ISSUE OF DE MINIMUS VIOLATIONS OF THE PC RULES Another aspect that we believe merits consideration and administrative action is the issue of de minimus violations of the PC Rules. To amplify, where all requisite declarations have been made on a pre-packed product but weight marking e.g. 50 gram instead of being marked as 50g or 1 kg or 100 ml as required by the Rules is marked as 50G or 1KG or 100ML or where the numbers contained in a package instead of being marked as 10 U or 10 N as required by the Rules are marked as 10 Nos. or 10 Unit, which are purely matters of technical non-compliance, and cause no substantive harm or non disclosure to the customer who fully comprehends the
requisite information, the Inspectorate still proceeds to issue show cause notices, prosecutions not only of the companies concerned but also their directors. In such cases of de minimus violation, retailers continue to receive show cause notices and prosecution notices from enforcement officials which is completely unwarranted, particularly because these are attributable to manufacturer / packer. We urge that such de minimus violations be either covered by a new rule providing for warning etc. to begin with, and extreme step of show cause / prosecution of manufacturers / packers etc. only when there are repeated violations despite warning etc., should be contemplated. This purpose could also be achieved by issuing suitable administrative guidelines to the Inspectorate and sharing these with the trade. 5. ARBITRARINESS IN COMPOUNDING FEE While Section 48(3) does provide that the question of compounding fee shall not be more than the maximum amount of fine for the relevant violation / deviation, it will be a good idea if the rates of compounding fee for different deviations are administratively laid down for staff of the Department, so that there is no arbitrariness in this matter. But unfortunately, the rules provide maximum penalty provided under the Act as compounding fee which is unfortunate. There should be graded or nominal compounding fee or else everybody will prefer litigation instead of compounding. Retailers have come across situations where compounding fee rates quoted for identical deviation could be Rs. 2000/- at one location and Rs. 2500/- at another depending upon need to meet the targets. In fact, the Inspectorate could initiate actions against the company, each of its directors, managers etc. to demand multiple compounding fee for the same lapse or deviation.