Whirlpool
of India Ltd Vs. Union of India & Ors [2007] Insc 1121
(2 November 2007)
Ashok
Bhan & H.S. Bedi & V.S. Sirpurkar
CIVIL
APPEAL No.7417 OF 2001 V.S. SIRPUKAR, J
1. The
short but interesting question as to whether Refrigerator is a packaged
commodity falls for consideration in this appeal. The appellant is engaged
in manufacturing Refrigerators. The Central Government issued a Notification
No.9 of 2000 dated 1.3.2000 under Section 4A(1) & (2) of Central Excise Act
(for short the Act) and specified the goods mentioned in Column 3 of
the said notification. Entry No.48 pertains to the refrigerators whereby the
Refrigerators invited valuation under Section 4A of the Central Excise Act with
the abatement of 40%. Section 4A(1)&(2) of the Central Excise Act require
that any goods included in the notification shall be valued on the basis of the
Maximum Retail Price (for short MRP) which is required to be printed
on the packages of such goods. The five conditions for inclusion of the goods
are:
i)
The goods should be excisable goods;
ii)
They should be such as are sold in the package;
iii)
There should be requirement in the SWM Act or the Rules made thereunder or any
other law to declare the price of such goods relating to their retail price on
the package.
iv)The
Central Government must have specified such goods by notification in the
Official Gazette;
v) The
valuation of such goods would be as per the declared retail sale price on the
packages less the amount of abatement.
2. The
appellant felt aggrieved by the fact the Refrigerators were covered and
included in the aforementioned notification dated 1.3.2000 as, according to the
appellant, the Refrigerator is not such a commodity which is sold in a package.
Significantly, the appellant is not aggrieved by its valuation of being under
Section 4A(1)&(2) of the Act. The only complaint that the appellant made is
that the appellant should not be required to print the MRP on the package of
the Refrigerator manufactured by it. The appellant, therefore, filed a Writ
Petition before the High Court of Punjab and Haryana praying, inter alia, for a
writ of certiorarified mandamus restraining the authorities for taking any
coercive measures against the appellant or its Directors, Officers, Servants or
Agents for not declaring the MRP on the Refrigerators manufactured and cleared
by the appellant from its factory. The notification dated 1.3.2000 was
challenged to this limited extent only. Before the High Court the appellant
pleaded that Refrigerator is not such a commodity which can be termed to be a
packaged commodity and further the provisions of The Standards of
Weights and Measures Act, 1976 (for short SWM Act) or the Rules made thereunder
are not applicable to the Refrigerator at all. It was, therefore, prayed that
the notification was liable to be quashed only to the extent that it included
the Refrigerator and the requirement of declaring MRP on the Refrigerator.
3, The
Respondent Authorities, however, maintained that the Refrigerator was in fact
sold in a package of polythene cover, thermocol, hardboard cartons etc., and
thus it falls in the category of pre-packed commodity. On that basis
it was contended that since every packaged commodity was included in the SWM
Act and the Rules made thereunder, there can be no escape from printing the MRP
on the package. The High Court rejected the contention and dismissed the
petition filed by the appellant. Hence the present appeal before us.
4.
Learned counsel very vehemently contended that a Refrigerator, as a matter of
fact, is not sold in a packaged form. The thrust of the argument is that even
if it is sold in the packaged form, when it is displayed by the dealers, it is
not in the packaged form and the customers can take the inspection of the
Refrigerator and atleast for that purpose the package has to be opened and,
therefore, there would be no question of the Refrigerator being included in the
SWM Act or the Rules made thereunder. The submission is quite incorrect. When
we see various provisions of the SWM Act and the Rules made thereunder, it is
clear that Section 2(b) defines commodity in packaged form. The
definition says:
commodity
in packaged form means commodity packaged, whether in any bottle, tin,
wrapper or otherwise, in units suitable for sale, whether wholesale or
retail. It was not disputed before the High Court and also before us that
the appellant-manufacturer has to sell the Refrigerators which are packed in
polythene cover, thermocol, etc., and placed in hard board cartons. In fact the
appellant had so pleaded before the High Court in para 3 to which a reference
has been made by the High Court. Once that position is clear, then the
Refrigerator clearly becomes a commodity in the packaged form.
The
use of the terms or otherwise in the definition would suggest that a
commodity if packed in any manner in units suitable for sale, whether wholesale
or retail, becomes a commodity in packed form. In the year 1977 The
Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (for short
SWM (PC) Rules). Rule 2(l) defines pre packed commodity
which is as under:
pre-packed
commodity with its grammatical variations and cognate expressions, means a
commodity or article or articles which, without the purchaser being present, is
placed in a package or whatever nature, so that the quantity of the product
contained therein has a pre-determined value and such value cannot be altered
without the package or its lid or cap, as the case may be, being opened or
undergoing a perceptible modification and the expression package,
wherever it occurs, shall be construed as a package containing a pre-packed,
commodity. Explanation I- Where, by reason merely of the opening of a
package no alteration is caused to the value, quantity, nature or characteristic
of the commodity contained therein, such commodity shall be deemed, for the
purposes of these rules, to be a pre-packed commodity, for example, an electric
bulb or fluorescent tube is a pre-packed commodity, even though the package
containing it is required to be opened for testing the commodity.
Explanation
II Not relevant. A glance at this provision and more particularly to
Explanation I would suggest that the Refrigerator is covered under the term
pre-packed commodity. Even if the package of the Refrigerator is
required to be opened for testing, even then the Refrigerator would continue to
be a pre- packed commodity. There are various types of packages
defined under the Rules and ultimately Rule 3 specifically suggests that the
provisions of Chapter II would apply to the packages intended for retail
sale and the expression package would be construed accordingly.
It is not disputed before us that the sale of the Refrigerator is covered under
the retail sale.
Once
that position is clear Rule 6 would specifically include the Refrigerator and
would carry along with it the requirements by that Rule of printing certain
information including the sale price on the package. Thus it is clear that by
being sold by the manufacturer in a packaged form, the Refrigerator would be
covered by the provisions of SWM Act and SWM (PC) Rules and it would be
imperative that the MRP has to be printed in terms of Rule 6 which has been
referred to above. The High Court has also made a reference to Rule 2(l) and
more particularly, the Explanation to which we have referred to earlier. In our
view the reliance by the High Court on Rule 2(l) is correct. Learned counsel
tried to urge that every customer would like to open the package before
finalizing to purchase the Refrigerator. He would atleast get it tested and for
that purpose the package would be destroyed. That may be so but it does not
change the position as rightly observed by the High Court.
5. It
was tried to be suggested that the MRP would be different depending upon the
area in which it is being sold. That may be so, however, that cannot absolve
the manufacturer from displaying the price, i.e., the MRP on the package in
which the Refrigerator is packed.
Whatever
be the situation, it is clear that a Refrigerator is a packaged
commodity and thus is covered under SWM Act and SWM (PC) Rules and
therefore, the notification dated 1.3.2000 cannot be faulted on that ground.
It is
significant to note that the appellant has not otherwise challenged the validity
of the notification dated 1.3.2000 on any other ground. All that is challenged
is the applicability of the commodity like the Refrigerator.
6.
Once the notification included the Refrigerator, unless the validity of the
notification was challenged, the appellant cannot get out of the scope of the
notification. The notification cannot be faulted merely because the appellant
feels that the Refrigerator is not a packaged commodity. We have already shown
that the Refrigerator is a packaged commodity and once it is included
in the notification, unless the notification is faulted on any other ground,
the effect of the notification would remain intact in so far as Refrigerator is
concerned. On that ground also the appeal has to be rejected.
7. In
fact the question regarding the assessment of the Refrigerator was considered
by this Court in Jayanti Food Processing (P) Ltd. vs. Commissioner of Central
Excise, Rajasthan [2007 (10) SCALE 223] where it was held that the
Refrigerators have to be assessed under Section 4A of the Act and not under
Section 4 of the Act. The present contention, however, was not raised in that
case.
7. In
the result the Judgment of the High Court is confirmed and the appeal is
dismissed with costs.
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