2006 (5) TMI 483 - HC - FEMA

Summary

Issues Involved:
1. Applicability of Standards of Weights and Measures Act, 1976, and the Enforcement Act, 1985 to sun glasses.
2. Whether sun glasses are considered a "pre-packed commodity" under the Act and Rules.
3. Legality of the seizure and compounding process undertaken by the respondents.

Issue-wise Detailed Analysis:

1. Applicability of Standards of Weights and Measures Act, 1976, and the Enforcement Act, 1985 to sun glasses:
The petitioner contended that no notification has been issued under Section 1(3)(c) of the Act or the Enforcement Act that would apply the provisions of these Acts to sun glasses. The court examined the notification dated 26th September 1977, which brought into force Sections 1, 2, 3, 39, and 83 of the Act. It was determined that once these sections are in force, there is no need for separate notifications for different classes of goods. Thus, the court rejected the petitioner's argument, stating that all pre-packaged commodities covered by the Act and the Rules would be governed by the applicable sections.

2. Whether sun glasses are considered a "pre-packed commodity" under the Act and Rules:
The court analyzed the definitions under Section 2(b) of the Act and Rule 2(1) of the Rules. A "commodity in packaged form" is defined as a commodity packaged in units suitable for sale. A "pre-packed commodity" is one where the quantity has a predetermined value that cannot be altered without opening the package. The court found that sun glasses do not meet these criteria as their value does not change whether they are inside or outside the package, and they are not sold in a sealed package. The court referenced judgments from other cases, such as *Philips India Ltd. v. Union of India* and *Eureka Forbes Limited v. Union of India*, which supported the view that the Act is intended for commodities sold by weight, measure, or number, and not for items like sun glasses that are sold individually and not necessarily in a packaged form.

3. Legality of the seizure and compounding process undertaken by the respondents:
The petitioner argued that the seizure of sun glasses and the compounding process were arbitrary, illegal, and conducted under duress. The respondents claimed that the petitioner voluntarily agreed to compound the offense and denied any coercion. The court, however, concluded that the seizure itself was without authority of law, as the Act and Rules did not apply to sun glasses. Consequently, the entire action by the respondents was deemed illegal.

Conclusion:
The court ruled that sun glasses do not fall under the definition of "pre-packed commodity" as per the Act and Rules. Therefore, the seizure and subsequent actions by the respondents were without legal authority. The petition was allowed, and the court made the rule absolute in terms of prayer clauses (a) and (b), with no order as to costs.