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New law to weigh heavy on cos

Legal Metrology Act To Take It Up Where Predecessor Left Off

THE LEGAL METROLOGY ACT,2009,enacted on January 13,2010,which is to be notified shortly along with rules, will not only affect the trade practices related to weights and measures but will also be relevant for the central excise law. The new law seeks to repeal the over three-decade-old cumbersome Standards of Weights & Measures Act,1976.The new Act will have such impact because Section 4A of the Central Excise Act,1944,levies duty on specified goods that are mandatorily required to carry the retail sales price (RSP) under the present Standards of Weights & Measures Act,1976,on the pre-package commodities.
The significant changes that are discernible between the earlier and the new leaner version of the legislation include pre-packaged commodities being defined in the Act itself rather than in the rules, and the same now being linked with the quantity rather than the value.
Other salient features include appointment of government-approved test centres for verification of weights and measures. The test centres will verify weights and measures made in India as well as imported ones. A wrongful reporting by such centres will attract a penalty under the Act.
No imported weight and measure can be used in the country once the Act is enforced without being subjected to such verification. Further, the import of non-conforming standard weights and measures is prohibited even if it is imported singularly or as part of component of a machine. This means that no weighing machine giving measurement in pounds can be imported.
There is also a requirement under Section 18(2) that every advertisement about a commodity while mentioning the price should also quote the net quantity. Therefore, for the first time, an attempt is being made to even regulate advertisements in relation to price and quantity.
An interesting feature of the new Act is that Section 49 deals with offences by companies. It provides for nomination of a separate director to deal with matters relating to the new Act and to be made responsible for a violation under the Act. Such nomination is required to be communicated to the controller or other authorised officer. This may mark a new beginning in the drafting of new legislation, whereby the responsibility through nomination can be fixed even on the higher management. The experience gained through the Satyam episode is finding expression in legal drafting.
Apart from simplifying the definition of prepackaged commodities by excluding from its purview packages meant for testing, examining or inspecting the commodity, the new Act also has stringent penalties in place for manufacturers, packers, importers, sellers and distributors of non-standard pre-packaged commodities, with the penalty for third-time offenders at 1 lakh or one year imprisonment or both.
The Act also has an overriding provision contained in Section 3 through a non-obstante clause. However, as far as Section 4A of the Central Excise Act,1944,is concerned, an amendment in the text is desirable because of the likely change in nomenclature of the legislation. The excise law mentions the old Standards of Weights and Measures Act,1976,that is set to be repealed.
But even with the mention of the repealed Act and rules made there under, the legal position may not change much under excise law because the repeal clause contained in Section 57 of the Legal Metrology Act,2009,has saving sub-clauses contained in Section 57(2) and (3) that protect all notifications, rules and orders made under the old Act as continuing to have effect even under the new dispensation.
Therefore, the changes brought in by the Legal Metrology Act,2009,are unlikely to have an effect on those assessees of the central excise who are computing their duties on the basis of retail price quoted on the packages, even with or without immediate amendment.

Economic Times, New Delhi, 08-01-2010


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