9911796707
TMI Blog2011 (9) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... oner is engaged in manufacturing welding products such as electrodes, brazing rods, powders and fluxes and selling thereof. These welding products are used mainly in repairs and maintenance work on costly industrial equipments and these are not meant for use in conventional fabrication work. A specialized welding technology process which has been patented as "Eutectic Castolin Welding Process" is used. The first petitioner is selling the products to its associate company and selling agent, the second petitioner. The business division of the second petitioner is selling these products to a network stockist spread all over India. The third petitioner is one such stockist in Bangalore. These products are packed in plastic containers known as dripacks in the industry. The dripicks contained the marked quantities and bear on them the declaration "for industrial use only". 3. The second petitioner is selling these products with the help of a core team of sales/service engineers trained in the specialized "Eutectic Castolin Welding Process". These sales/service engineers meet the technical personnel of the industrial units and ascertain their requirements for reconditioning, remakin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the third respondent on 5-11-2007 and orally explained the legal position. They also filed their reply. It is thereafter they have preferred these writ petitions challenging the notices issued to them and the aforesaid provisions. 5. The petitioners contend that the Rules apply only if the packaged products are sold through retail sales agencies. The stockist are not retail sales agencies as is commercially understood. The consumers of the petitioner buy the subject products on the basis of technical specification and upon recommendation of application specialist. More than 90% of the sales are generated by the sales team of second petitioner. The stockist themselves are in capable of effecting sales. Therefore they are not retail dealers within the meaning of the Rules. Hence, the said Rules do not apply. 6. In the alternative, it is contended that even if the stockist were treated as retail dealers, in terms of the Rules, there is specific exemption for industrial products. Rule 3 states that the provisions of Chapter-II, which are alleged to have been violated by the petitioners, apply to packages intended for retail sale. Rule 2(p) defines 'retail package' to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay to day basis. The provision of Rule 2(p) and Rule 2-A has to be interpreted harmoniously for proper understanding and applicability of law. One cannot interpret the law in isolated manner to make the same for his convenience. They do not deny that the provisions of Rule 2(p) that the ultimate consumer shall not include industrial or institutional consumer, provided that the same package is bought by such consumer directly from the manufacturer/packer for using the product in their industry for production, etc., as provided in Rule 2-A(b). In Rule 2(p) 'retail package', the provision read as 'provided that for the purposes of this clause' is only applicable to the clause, whereas the applicability of Rule 2-A is for entire Chapter II, which is totally applicable for packages intended for retail sale. Therefore, the petitioners have to follow all the applicable provisions of the Act and Rules. 10. The objects and reasons for introduction of the Act, nowhere it is mentioned that the Act does not cover the goods which are used for commercial purposes as mentioned by the petitioners. It is misleading by the petitioners by highlighting what is not mentioned in the law. They deny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of objections and the reason for introduction of the Act. They have given dictionary meaning of the word, 'consumer', 'consumer product', 'consumer goods' and contend that petitioners' product are not consumer goods. Rules apply to goods used by the consumers and not to those used by institutions or industries. The product of the petitioners are not meant to be used in households. They are used in industries. The persons who purchase these products are engineers and contractors. They go by the technical parameters before purchasing the goods. Being non-consumer goods, the products manufactured and sold by the petitioner are not within the purview of PC Rules. Since ordinary consumer goods are sold by weight, volume or other measure in packed condition, certain information is required to be declared on the package so that the consumer can make buying decision. He can also compare products of different manufacturers on the basis of unit sale price based on such price and quantity declaration. Rule 6 requires the name and address of the manufacturer, the common generic name of the commodity, net quantity in terms of the standard unit of weight or measure, the month of manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in explanation to Rule 2-A are excluded from the operation of the Rules and all other persons have to comply with the requirement of law. Admittedly, in the instant case, the petitioners having sold their goods to an industrial consumer or institutional consumer directly; Rule 6 is attracted which hardly have violated and therefore there is no merit in this writ petition. 14. In the light of the aforesaid facts and rival contentions, the point that arise for consideration in this writ petition is as under :- "Whether the requirement of Rule 6 is to be complied with by a manufacturer who sells his packaged goods to an industrial consumer through a stockist?" 15. The statement of objects and reasons contained in the Act, gives the background for the passing of this enactment. Paragraphs 5 and 6 of the statement of objects and reasons reads as under : "5. The Bill further provides for consumer protection in respect of packaged commodities by providing, in pursuance of the recommendations of the OIML, for the proper indication on the package of net quantity by weight, measures or number, the identity to the commodity contained therein, name of the manufacturer, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a producer or manufacturer or a whole sale dealer who buys goods is excluded in common parlance. In fact, the Apex Court, had an occasion to consider the purpose of enacting this law and the mischief sought to be prevented and the object sough to be achieved. In the case of India Photographic Co. Ltd. v. H.D. Shourie, (1999) 6 SCC 428, at paragraph 4 and 5 it held as under : 4. The Consumer Protection Act, 1986 has been enacted to provide for better protection of the interests of the consumers by making provisions for the establishment of consumer councils, other authorities for the settlement of consumer disputes and for matters connected therewith. The Act was enacted as a result of widespread consumer protection movement. On the basis of the report of the Secretary General on Consumer Protection dated 27-5-1983, the United Nations Economic and Social Council recommended that the world Governments should develop, strengthen and implement a coherent consumer protection policy taking into consideration the guidelines set out therein. Each Government was obliged to set its own priorities for the protection of consumers in accordance with the economic and social conditions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the commodity is pre-packed bears thereon or on a label securely affixed thereto such declaration as is required to be made under the rules." 18. The Apex Court in the aforesaid case of India Photographic Co. Ltd. held that the various enactment such as Contract Act, the Standards of Weights and Measures Act, the Motor Vehicles Act, the Monopolies and Restrictive Trade Practices Act, the Food Adulteration Act etc., were found to be inadequate in providing the relief to the consumers. In discharge of the international obligations and to protect the interest of the consumer in the country, the Consumer Protection Act, 1986 was enacted. Therefore, in the Consumer Protection Act, the word 'consumer' has been defined under Section 2(d) as under : 2(b) "consumer" means any person who, - (i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of List II (VII Schedule) of the Govt. of India Act is a nomen juris and shall be construed in its legal sense. The legal sense can only be what it has in the law relating to sale of goods and therefore the said expression shall bear the same meaning as it has in Indian Sale of Goods Act. When the term is not defined in the taxation law (I.T. Act), the definition in the law governing the subject-matter ought to be adopted, more so when there is no basic difference between the statutory definition and the ordinary legal concept. 21. Therefore, when the word 'consumer' is not defined under the Act, when the various provisions in the Act excludes institutional consumer and industrial consumer from the purview of the Act, the definition of consumer contained in the Consumer Act could be adopted when there is no basic difference between statutory definition and the ordinary legal concept. The definition of consumer excludes a person who obtains such goods for resale or for any commercial purpose. The word 'commercial purpose' has been further explained by stating that it does not include use by a person of goods bought and used by him and services availed by him exclusively for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e package or where the commodity is packed or sold by number, the number of the commodity contained in the package; (d) the month and year in which the commodity is manufactured or pre-packed [or imported] : [Provided that for packages containing food articles, the provisions of the Prevention of Food Adulteration Act, 1954 (37 of 1954) and the rules made thereunder shall apply :] [Provided further that nothing in this clause shall apply in case of packages containing seeds which are labeled and certified under the provisions of the Seeds Act, 1966 (54 of 1966) and the rules made thereunder: [Provided also that a manufacturer may indicate the month and year using a rubber stamp without overwriting :] [Provided also that for packages containing cosmetic products, the provisions of the Drugs and Cosmetic Rules, 1945 shall apply.] (f) the (retail sale price) of the package: [Provided that for packages containing alcoholic beverages or spirituous liquor, the State Excise Laws and the rules made thereunder shall be applicable within the State in which it is manufactured an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mentioned on the package, there shall be printed on the packages the words [maximum or max. retail prices]......inclusive of all taxes [or in the form MRP Rs....Inclusive of all taxes] Clause (a) of Rule 34 of the Rules which omitted by GSR 425(E) dated 17th July, 2006 with effect from 13th January 2007, reads as under : "The marking on the package unambiguously indicates that it has been specifically packed for the exclusive use of any industry as raw material or for the purpose of servicing any industry, mine or quarry: Provided that this exemption shall not be available in respect of- (i) any yarn which is sold in hanks to handloom weavers; (ii) any component, part or material used in any workshop, service station or any other place where servicing or repairing of any bicycle, tricycle or motor vehicle within the meaning of the Motor Vehicles Act, 1939 (4 of 1939) is undertaken; (iii) any package containing a commodity of net content of 5 kilograms or 5 litres or less and displayed for sale at the retail outlet; (iv) any package contained a commodity to be sold by number or length ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re excluded from the application of this Rule. In other words, the protection given to the consumer under the Act was not extended to these institutional consumers and industrial consumers. Consequently, the persons who are manufacturing or producing these packaged commodities meant for institutional consumer and industrial consumer were not required to comply with the requirement of Rule 6. Similarly, in the definition of retail package. It was made clear that it is only those 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, Rule 6 is attracted. The proviso makes it clear that the expression, 'ultimate consumer' used in the definition 'retail package' did not include industrial or institutional consumer. Therefore, the legislature has again expressly excluded from the operation of these Rules, the industrial or institutional consumer. 26. Now the dispute is, are the words, industrial or institutional consumer used in proviso to Section 2-A(b) to be given the same meaning as given in the explanation to Rule 2-A. In case of Rule 2-A, as is clear from the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d industrial consumer, such legislative intent is to be respected. If the interpretation sought to be placed by the Revenue is accepted, it would do violence to the Rules. The difference between the definition of institutional consumer and industrial consumer in Rule 2-A and Rule 2(p) appears to be thus : 29. In Rule 2-A industrial consumer or the institutional consumer are purchasing the packaged commodities directly from the manufacturer. In the case of retail package, the manufacturer of goods meant for industrial use may not be able to supply the goods directly. Therefore, they may take the assistance of a stockist. If the customers are speared over the country and if the manufacturing unit is in one part of the country and they want to concentrate on manufacturing activity, they may not have resource or ability to arrange for the sale of their product through out the country. In those circumstances, it is quite but natural that they need middle men or stockist as distributors, through whom they would distribute their product or sell their products to an industrial or institutional user. In such an event, that packaged commodity cannot be construed as a retail package. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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