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Legal Capsule by Economic Laws Practice

Legal metrology laws in India – Issues and challenges

Authors: Stella Joseph, Sweta Rajan, Prakhil Mishra, Suhasini Joshi

INTRODUCTION

The Legal Metrology Act, 2009 (LMA) and Legal Metrology (Packaged Commodities) Rules, 2011 (PCR) are the primary instruments available to the Government for protecting consumer interest and ensuring consumer awareness. LMA and PCR prescribe the mandatory declarations required to be made on retail packages, including details such as Maximum Retail Price (MRP), name and address of the manufacturer, packer and importer, contents and size of the commodity, month and year in which the commodity is packed or imported, contact details in case of consumer complaints etc.
Manufacturers, packers and importers are accordingly required to obtain registrations under the LMA. This article analyzes the recent amendments to LMA by the government, impediments faced by the industry, cost of non-compliance (especially in light of the recent increase in traction from Legal Metrology Department or LMD) and effective mitigation strategies.

RECENT AMENDMENTS
The PCR have witnessed periodic amendments, with the latest amendment coming into effect from 1 January 2018. Key developments include:
  • Introduction of obligation on e-commerce entities to make mandatory declarations 
  • Declaration requirements being extended to medical devices notified as ‘drugs’
  • Increase in the prescribed font size, with grandfathering provided up to 31 July 2018
  • Prohibition of declaration of different MRPs (dual MRP) on an identical pre-packaged commodity
  • Declarations required on food products being harmonized with labelling requirements under Food Safety (FSS) laws

CONSEQUENCE OF NON-COMPLIANCE

Ensuring compliance with LMA and PCR becomes crucial inlight of the following factors:
  • The enactment governs aspects which are directly perceived by the end-customer and thus the reputational risks involved are high
  • Applicable fines in case of multiple offences lead to larger pecuniary consequences
  • The time-cost of the top officials (i.e. directors, etc.) for attending proceedings etc. would be high
  • While a remote possibility, one also needs to be mindful of the consequence of prosecution and imprisonment in case of a third or subsequent offence
As regards consequence in case of sale of non-standard packages which do not conform to the mandatory declarations, (i) a fine of up to INR 25,000 is prescribed for the first offence, (ii) a fine up to INR 50,000 for the second offence, and (iii) for subsequent offences, a fine between INR 50,000 to INR 100,000 is payable  and/or punishment with imprisonment (which may extend to one year). Prosecution may also be initiated if no response is received in relation to a particular notice.  Equal penalties are also prescribed for the directors of the companies (however, in cases where a company nominates a director under LMA, these penalties are imposable only on that particular director).



AVENUES OF MITIGATION

In cases of non-compliance, there are mitigating steps which can be explored.
  • Compounding of offence is allowed for certain offences under the Act, including incorrect declaration on the package. For this purpose, the necessary compounding fees, (which cannot be more than the applicable penalty), can be paid which will ensure that there are no further proceedings initiated in relation to the offence. However, once compounding of an offence is done, there is an embargo on opting for compounding for the same offence if committed within three years. Compounding may help a defaulting company to avoid prosecution, imposition of consequent penalties and imprisonment of designated directors.
  • Clubbing: Though not prescribed under the law, manuals issued by certain States provide for a mechanism of ‘clubbing’ of offences. If several cases are booked within a State in relation to the same commodity of the same entity by different inspectors for violation of the same section/rule under the LMA and Rules, all such cases may be clubbed together and treated as a single offence and compounded. 8 If available, this avenue is advisable to opt for in order to avoid multiple proceedings at different locations in relation to the offences booked for the same commodity.

CONCLUSION

While the purport of LMA is to benefit consumers, in view of the inherent ambiguities, its enforcement may result in placing trade and commerce at a disadvantage. It would indeed be helpful for businesses if the concerned authorities can define specific aspects that can lead to non-compliance and clarify the ambit of various notices and proceedings, so that a concerted and harmonious stand is adopted before various departmental officers across the country and the avenues of clubbing and compounding of offence are availed in the most prudent and efficient manner.

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