WHIRLPOOL OF INDIA LTD. v. UNION OF INDIA AND ORS

Citation: [2007] 11 S.C.R. 869

Court: Supreme Court of India

Bench: ASHOK BHAN, H.S. BEDI, V.S. SIRPURKAR

Case summary

WHIRLPOOL OF INDIA LTD. v. UNION OF INDIA AND ORS.pdf

Judgment text

~ ' '· ,. ,...... WHIRLPOOL OF INDIA LTD. v. UNION OF INDIA AND ORS. NOVEMBER 2, 2007 [ASHOK BHAN, H. S. BEDI AND V. S. SIRPURKAR, JJ. ] Central Excise Act 1944-s. 4 A (1) and (2)-Notification under- One ofthe conditionsfor inclusion ofthe goods in the Notification that it should be 'packaged good'-/nclusion of Refrigerator in the Notification-Challenged only on the ground that it is not a 'packaged . good'-Held: Reji-igerator is a 'packaged commodity' under Standards ofWeights andMeasures Act and Rules. framedthereunder-Hence its inclusion in Notification not wrong on this ground, unless validity of the Notification is challenged otherwise-Standards ofWeights and Measures Acf. 1976-s. 2(b)-Standards of Weights and Measures (Packaged Commodities) Rules, 1977-rr. 2(1), 3 and 6. By Notification No. 9 of2000 dated 1. 3.

2000 under section 4A (1) and (2) ofCentral Excise Act, the goods mentioned in Column 5 ofthe Notification were to be valued on the basis ofMaximum Retail Price which was required to be printed on the packages of such goods. Few of the Conditions for inclusion of the goods in the Notification was that the goods should be such as were sold in the package and there should be requirement in the Standards of j \Veights and Measures Act, 1976 or the Rules framed thereunder or any other law to declare the price ofsuch goods relating to their retail price on the package. Appellant (manufacturerofRefrigerator) was aggrieved by inclusion ofRefrigerator in the Notification on the ground that it should not be required to declare the MRP on the refrigerators as the same cannot be termed as a 'packaged commodity' and the provisions of Standards of Weights and Measures, Act, 1976 or the Rules made thereunder were not applicable to it. Appellant filed Writ Petition challenging the -\ ' ,,. , ~.

Notification to this limited extent. High Court dismissed the Writ Petition. Hence the present appeal. Dismissing the appeal~ the Court HELD: 1. Itwas not disputed that the appellant-manufacturer ~has to sell the Refrigerators which are packed in polythene cover, thermocol, etc. , and placed in hard board cartons. Once that position ""' is clear, then the Refrigerator clearly becomes a commodity in the packaged form. [Para 4] (873-D, E] 2. The use of the terms "or otherwise" in the definition of 'Commodity in packaged form' u/s 2 (b) ofStandards ofWeights and Measures Act 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". Even ifthe package ofthe Refrigerator is required to be opened for testing, even then the ~ Refrigerator would continue to be a "pre-packed commodity".

There r are various types ofpackages defined under the Rules and ultimately Rule 3 of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 specifically suggests that the provisions ofChapter II would apply to the packages intended for "retail sale" and the expression "package" would be construed accordingly. Once the position that the Refrigerator is not covered under the 'retail sale' is clear, Rule 6 would specifically include the Refrigerator and would carry along with it the requirements by that Rule ofprinting 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 ofthe Act and the Rules and it WOI:fld be imperative that the MRP has to be printed in terms of Rule 6. [Para 4] (873-E, F; 874-C, D, E, F] 3.

Even ifthe MRP would be different depending upon the a~ea in which it is being sold, that cannot absolve the manufacturer from ~tdisplaying the price, i. e. , the MRP on the package in which the Refrigerator is packed. A Refrigerator is a "packaged commodity" . ,f and thus is covered under the Act and the Rules and therefore, the notification dated 1. 3. 2000 cannot be faulted on that ground. The appellant has not otherwise challenged the validity ofthe Notification on any other ground. Once the Notification included the Refrigerator, unless the validity ofthe notification was challenged, the appellant cannot get out ofthe scope ofthe notification. The notification cannot be faulted merely because the appellant feels that the Refrigerator -1 is not a packaged commodity. [Paras 5 and 61 [875-A, B, CJ Jayanti Food Processing (P) Ltd. v. Commissioner of Central Excise, Rajasthan. (2007) 10 SCALE 223, relied on. I l CIVIL APPELLATE JURISDICTION·: Civil Appeal No. 7417 of , 2001.

q From the final Judgment and Order dated 13. 08. 2001 of the High Court ofPunjab & Haryana at Chandigarh in Civil Writ Petition No. 13697 of2000. Sanjeev Narula and Jay Kishor Singh (for Subramonium Prasad) for the Appellant. K. Radhakrishnan, B. Sunita Rao, P. S. Narsimha and Ajay Sharma (for B. Krishna Prasad and B. V. Balaram Das) for the Respondents. The Judgment ofthe Court was delivered by V. S. SIRPURKAR, J. 1. The sh011 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 w1der Section 4A(l) & (2) ofCentral Excise Act (for sh011 "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 ofthe Central Excise Act with the abatement of40%.

Section 4A(1)&(2) ofthe Central Excise Act require that any goods included in the notification shall be valued on the 1 basis ofthe Maximum Retail Price (for short "MRP") which is required to be printed on the packages of such goods. The five conditions for inclusion ofthe goods are: "(i) The goods should be excisable goods; .!.. .. ; ,_ \. \ \ ~ r (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 dedare the price ofsuch goods relating to their retail price on the package. (iv) The Central Government must have specified such goods by r- .... , notification in the Official Gazette; (v) The valuation ofsuch goods would be as per the declared retail sale price on the packages less the amount ofabatement. " 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 ofthe Refrigerator manufactured r by it. The appellant, therefore, filed a Writ Petition before the High Court of Punjab and Haryana praying, inter alia, for a writ of certioraritied 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 fmther the provisions ofThe 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 ofdeclaring MRP on the Refrigerator. 3. The Respondent Authorities, however, maintained that the ~ Refrigerator was in fact sold in a package ofpolythene cover, thermocol, hardboard caitons etc. , and thus it falls in the category of "pre-packed commodity". On that basis it was contended tl1at since every packaged conunodity was included in the SWM Act and the Rules made theretmder, j WHIRLPOOLOFINDIALTD. v. UNION OF INDIA 873 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 ofthe argument is that even ifit 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 ofthe 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 varioμs provisions ofthe SWM Act and the Rules made thereunder, it is cle. ar that Section 2(b) defines "commodity in packaged form". The definition says: "commodity in packaged form" means commodity packaged, D 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 iti polythene cover, thermocol, etc. , and placed in hard board cartons. Jn. 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 ofthe terms "or otherwise" in the definition would suggest that commodity ifpacked 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(1) 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 tlmt the quantity ofthe product contained therein has a pre-detemrined value and such value cannot be altered l ~ '-- "; ----- ~ <: 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 tpackage no alteration is caused to the value, quantity, nature or _..

, characteristic ofthe commodity contained therein, such commodity shall be deemed, for the purposes of these rules, to be a prepacked 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. " glance at this provision and more particularly to Explanation I would suggest that the Refrigerator is covered under the term "pre-packed -~ commodity". Even ifthe package ofthe Refrigerator is required to be ~ opened for testing, even then the Refiigerator would continue to be a "prepacked commodity". There are various types ofpackages defined under · the Rules and ultimately Rule 3 specifically suggests that the provisions ofChapter 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 ofthe Refrigerator is covered under the "retail sale".

Once that position is clear Rule 6 would specifically include l ~ the Refrigerator and would carry along with it the requirements by that /. ' Rule ofprinting certain infonnation including the sale price on the package. Thus it is clear that by being sold by the manufacturer in a packaged fonn, ~ 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 ofRule 6 which has been referred to above. The High Court has also made a reference to Rule 2(1) and more particularly, the Explanation to which we have referred to earlier. In our view the reliance by the High Court on Rule 2(1) 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 i:nay 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 ofthe notification dated 1. 3. 2000 on any other ground. All that is challenged is the applicability ofthe commodity like the Refrigerator. 6. Once the notification included the Refrigerator, unless the validity ofthe notification was challenged, the appellant cannot get out ofthe scope ofthe 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 ofthe 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 ofthe Refrigerator was considered by this Court in Jayanti Food Processing (P) Ltd. v. Commissioner ofCentral Exc_ise, Rajasthan, (2007) 10 SCALE 223 where it was held that the Refrigerators have to be assessed under Section 4A ofthe Act and not under Section 4 ofthe Act. The present contention, however, was not raised in that case. 8. In the result the Judgment ofthe High Court is confirmed and the appeal is dismissed with costs. K. K. T. Appeal dismissed.