Concept to Commercialisation

e-Commerce and the Legal Metrology Act

The internet has opened new avenues in the realm of commerce by allowing buying and selling of goods and services through different electronic mediums. However, the existing legislation that was in place for the governance of how goods are bought and sold virtually was not enough, particularly in the domain of pre-packaged goods. 

Imagine that you walked into a shop looking for a specific product that you wish to purchase. Since the product is premade it comes packed in a box and the nature of this product is such that any form of tampering could cause problems in using it and the seal cannot be broken until the product is purchased. The only understanding you would have of what’s inside the box will be through:

  1. Printed information on the box.
  2. Information provided by the shopkeeper. 
  3. Your experience and estimation.

You purchased the product and opened it at home but to your dismay, you find that the actual quantity of the product in the box (you paid for) falls short of the quantity indicated on the packaging of the box. 

In another situation, you are looking or avoid (as the case may be) purchasing a product that was manufactured in a particular country due to some reason. Due to the global presence of many big brands today, it may be difficult for consumers to ascertain the originality of the products they buy. For example, Apple is an American company but most of the manufacturing work carried out to bring an iPhone to your hands is done in Shenzhen, China [1].

Such situations are detrimental to both buyers and sellers. An error in the weight, measure or number of items paid for and the number of items received can have severe implications. 

Taking a third situation, where you pay for 2 units of Montblanc pens and only receive 1 unit, or if you’re the seller who agreed to sell 1 unit of a pen and accidentally pack 2 units. It may also be detrimental in terms of quality, for example, if you were in the market for a new smartphone and also knew that Thailand is notorious for the manufacturing of counterfeit smartphones [2], then you would probably avoid those smartphones that were shipped from Thailand.

Pre-packed goods have always posed a Schrödinger’s cat situation – the quality and the quantity of the goods that you are paying money for cannot be ascertained until you open the package, and in most situations, the package cannot be opened without purchasing it. Hence you cannot know the actual content in the box until the money is paid. In order to arm consumers with the power to make such decisions, there exists The Legal Metrology Act, 2009 (the ‘LMA’) and the relevant rules vis-a-viz The Legal Metrology (Packaged Commodities) Rules, 2011 (the ‘LMPC’). 

The term ‘Metrology’ refers to the science of weights and measures across disciplines and includes the theoretical as well as the experimental study of the same. Whereas ‘Legal Metrology’ is a branch of law that governs the standards of weight and measurement that are used within the country (like Kg (mass), A (electric current), K (Temperature), etc.) and lays down the guidelines of their usage. Imperfect and manipulated measurements can cause severe consequences. In India, the LMA’s purpose is to establish and enforce standards of weights and measures along with regulating the trade of those commodities that are sold based on weight, measure, number, or anything similar to that. The LMPC’s purpose is to create rules and regulations revolving around the sale of those goods that are ‘pre-packaged’ i.e., goods that are packed outside of the consumer’s presence. 

As per the LMPC, all pre-packed goods must have a label securely attached to them before they are sold, delivered, or distributed[3] and such label should bear the following declarations without miss[4]:

  • Name and Address of Manufacturer:
    • If the manufacturer is not the packer, then the name and address of the packer as well.
    • If the goods are imported then the name and address of the importer should also be mentioned.
  • Common or generic names of the commodity contained in the package:
    • In the case of packages with more than one commodity, the name and number or quantity of each product shall be mentioned on the package.
  • Net quantity, in terms of standard unit of weight or measure of the commodity, contained within the package.
  • The Retail Sale Price of the commodity.
  • If the size of the packaged commodity is relevant (e.g., containers like lunch boxes, etc.) then the dimensions of such commodity and in case there are multiple articles in the same package, then dimensions of each.
  • Any other things that may be specified under LMPC.

These rules allowed the buyers and sellers of pre-packaged commodities to exercise better control over their purchase decisions and sales. However, these declarations were only visible on the packaging of the product which means that the declarations would only be available to viewing if the packaging was in the customer’s hands or in front of him. 

This is something that is not possible when buying through e-Commerce platforms like Amazon and Flipkart. The e-Commerce platforms (or ‘entities’ as referred to under the relevant laws) are internet-based service providers that facilitate the buying and/or selling of goods and/or services.

Ever since e-Commerce entities have started becoming more and more popular, the officers under the LMA have been trying to stretch the rules thereunder to deal with the virtual marketplace as well [5]. This tiresome activity came to a rest in 2017 when the Ministry of Consumer Affairs, Food, and Public Distribution passed the Legal Metrology (Packaged Commodities) Amendment Rules, 2017 (Amendment Rules, 2017). These rules brought E-commerce websites directly under the ambit of the LMA and the LMPC. Although the Amendment Rules do not specify the category under which goods sold through E-commerce platforms would fall, it can be assumed that they will fall under pre-packaged commodities as they are also packaged outside of the presence of the customer.

The most important amendment in the context of this article is the new sub-rule provided under Rule 6, LMPC which requires all e-commerce entities to provide a declaration on their web portals. If these rules are not followed then action can be taken against the entities under section 36 (1), LMA which provides the penalty for the selling of non-standard packages. 

Whoever manufactures, packs, imports, sells, distributes, delivers or otherwise transfers, offers, exposes or possesses for sale, or causes to be sold, distributed, delivered or otherwise transferred, offered, exposed for sale any pre-packaged commodity which does not conform to the declarations on the package as provided in this Act, shall be punished with…”

Further, Rule 32, LMPC, states that “Whoever contravenes any provisions of these rules, for which no punishment is provided, shall be punished with a fine of five thousand rupees”.

An e-Commerce entity or any other entity that falls within the purview of the LMA and its associated rules must comply with the rules stated thereunder and as such, they will be liable to checks and investigations by the relevant authorities to ensure that the rules are being complied with. Officers and employees working under LMA are empowered to inspect and verify weights, measures, or any documents or records relating to them or the net contents of any packaged commodity or for any other purpose for which inspection may be reasonable [6]. Any false information given during such inspection is also an offence and can be punished with a fine of five thousand rupees, and upon subsequent offence, the offenders could be punished with imprisonment for a maximum period of 6 months along with a fine[7].

Rule 19, LMPC covers the inspection of quantity and error (if any) in the package at the premises of the manufacturer and if the manufacturer is not the packer, then the separate packer as well. e-Commerce entities would fall under the heading of packer as they usually pack the goods in their own materials before delivery. 

During the inspection initiated by the officers and authorities under LMA, E-commerce entities should be mindful to:

  • Ensure that the person making such inspection is authorised under Section 15 of the LMA. 
    • Inspector must be either a Director, Controller, or Legal Metrology Officer.
    • Inspector must have a reason to believe that any weight, measure or other goods in relation to which any trade and commerce has taken place or is intended to take place is committing or likely to commit an offence under LMA. 
    • Inspector may enter the premises and search for and inspect any weight, measure, or other goods in relation to which trade and commerce have taken or is intended to take place, as well as any record, register, or other document relating thereto.
    • They may seize any weight, measure, goods, documents, records, or any article that may serve as evidence indicating that an offence punishable under LMA has been or is likely to be committed in the course of trade and commerce.
  • Maintain and produce on request every document or other record relating to the weight or measure mentioned above and the person having custody of such weight and measure must comply with such a request.
  • Ensure that search and seizure are being done in accordance with the provisions of the Code of Criminal Procedure, 1973 (CrPC).
  • Inspector may draw samples from any lot of packages in a manner prescribed by the fifth schedule of the LMPC[8]:
    • For the determination of the net quantity contained within a package stored in a warehouse or other place, the inspector must select randomly, packages from the top, bottom, left, right, centre, rear, and front of the stock. 
    • For the determination of the net quantity contained within a package from the place it is being filled, samples shall be drawn from the already filled packages, or unfilled packages will be taken and marked and reintroduced into the packing process after the empty weight of such package is noted. Once filled, the marked packages will be reclaimed and weighed again to check the net quantity.  
    • The size of the sample (i.e. number of packages inspected as a sample) will be decided on the basis of lot size. If the size of the lot is below 4000 units, then 32 units will be taken as samples otherwise 80 units shall be taken as samples.[9]
  • Throughout the inspection process, the entity must not cause any obstruction to the persons conducting the inspection. Entities should comply with the needs of the inspection and provide required assistance for their own benefit.
  • If an entity accepts that it has contravened some provisions under the LMA or LMPC then it can opt for the compounding of offences under Section 48 of the LMA. 

Conclusion

The Legal Metrology Act exists to standardise the way packaged goods are measured, weighed, and traded in our country. It extends to include those goods and services where a specific measuring unit is used. While buying unpackaged and loose products, there is a certain level of security in the minds of the buyers as the goods are packed in front of them. However, in the case of pre-packed products, the security has lessened because the consumers cannot verify the contents of the package until it is opened and most sellers prohibit the opening of packages before purchase. This is the reason behind enacting the Legal Metrology (Packaged Commodities) Rules, which regulated the sale of pre-packaged commodities in the interest of buyers. 

Packaging allows the carrying of goods over greater distances and adds a layer of security to the goods being sold as well as serves as an important tool for marketing[10]. The LMPC provides that a pre-packaged commodity could not be sold unless such packages were affixed with a label that bore relevant information like the origin, generic name of the product, etc. This allowed consumers to refer to such labels to confirm the contents of the package and if such contents were not accurate, they could hold the sellers of such packages liable. However, the LMPC in its initial form was only relevant if the consumer was able to examine the package before making a purchase. This was not possible in the case of goods purchased over the internet, through e-Commerce entities. The Amendment Rules solved this problem greatly and mandated that the information that was mentioned on the label must be mentioned on the web portal of the website as well. 

Citation:

Ishan Puranik, e-Commerce and the Legal Metrology Act, Metacept-Communicating the Law, accessible at https://metacept.com/e-commerce-and-the-legal-metrology-act


[1] Sam Costello, Where Is the iPhone Made? (It’s Not Just One Country!), Lifewire, 2021, https://www.lifewire.com/where-is-the-iphone-made-1999503 (last visited May 25, 2021).

[2] By Richard Ehrlich CNN for, The Secret Lives of Thailand’s Counterfeiters, CNN, 2015, https://www.cnn.com/travel/article/thailand-counterfeiters-fake/index.html (last visited May 25, 2021).

[3] §4 The Legal Metrology (Packaged Commodities) Rules, (2011).

[4] §5 Id.

[5] N.U. Subaya & Janini Somiah, E-Commerce And Legal Metrology (2017), https://www.mondaq.com/india/contracts-and-commercial-law/644002/e-commerce-and-legal-metrology (last visited May 25, 2021).

[6] § 42 The Legal Metrology Act, (2009).

[7] § 41 Id.

[8] Sch. 5, § 3, § 4 LMPC Rules, supra note 3.

[9] Sch. 5 § 1 Id.

[10] Ishan Puranik, Intellectual Property as a Marketing Tool, 8 Shodh Sarita 146–153 (2021).

Tags

Related Articles

Leave a Reply

Close