Relevance of Legal Metrology Act in E-Commerce

Relevance of Legal Metrology Act in E-Commerce

Executive Summary:

• • • This article about the relevancy of the Legal Metrology Act in E-Commerce, and
    • Provides a summary of amended Rules of Legal Metrology that are now in place, while dealing in E-commerce and
    • How it ensures the consumer’s rights are protected while online purchase of goods and services through websites/portals.

Introduction:

Legal metrology was established over 5000 years ago with the development of civilizations that required constantly a wide range of measurements used in everyday life. To maintain uniformity, all measurements had to be obtained from (royal) standards, which is what we today refer to as traceability. In addition, moral commandments to maintain the integrity of the measurements were found in holy texts such as the Bible, and Koran, and Kautilya’s Arthashastra in early India.

The term ‘Metrology’ refers to the science of weights and measures, However ‘Legal Metrology’ is a branch of law that governs the standards of weight and measurement that are used within the countryand lays down the guidelines of their usage.

In the same context, to maintain uniformity in Commercial trades, to provide uniform standards of weights and measures, the Legal Metrology Act, 2009 enforced in India. The Act was implemented with effect from 1st April 2011.
The Act came into force with the following objectives:

• To regulate trade and commerce in weights and measures
• To set and enforce the standards of weight and measure
• To regulate the manufacture, sale, and use of goods by weights, measures, or numbers
• To rationalize the Metric system (meter, kilogram, etc.) to be used in India

Need for Amendments in Legal Metrology Act for E-Commerce:

As all we know, today’s world is of Internet. The internet has introduced new doors in the realm of commerce by allowing buying and selling of goods and services through different electronic mediums. However, existing rules for governing how commodities are acquired and sold proved insufficient, particularly in the realm of pre-packaged items.

The pandemic struck countries all around the world, prompting lockdowns to stop the virus from spreading. Online buying increased as a result of the lockdown. As a result, the laws governing e-commerce and consumer protection, as well as the interpretation of those laws, have attracted a lot of attention from the general public. A rise in Online shopping gives a sudden rise in fraudulent activities by Sellers by selling substandard products, products displayed on online portals differ in many aspects than in actuality. A complete description of the product, details of manufacturing and details of Country of Origin found to be missing on an online portal. It resulted in the rise in Consumer grievances.

Because e-commerce platforms have made buying and selling items so much easier, it’s become even more vital to focus on legislation that ensures the consumer’s rights are protected while purchasing goods and services from such online websites/portals.

When it comes to the same product or service, the number of companies in the internet market has expanded, offering the consumer more options to pick from. However, such alternatives are useless without transparency, and no one can guarantee that competitors are not engaging in unfair trade practices under the guise of doing business.

On 23rdJune 2017, the central government in exercise of its powers provided under the Legal Metrology Act, 2009 (Act) and the Legal Metrology (Packaged Commodities) Rules, 2011 introduced important amendments to Legal Metrology (Packaged Commodities) Rules, especially about e-commerce entities and The Legal Metrology (Packaged Commodities) Amendment Rules, 2017 issued on 23rdJune 2017 came into force on 1stJanuary 2018.

This amendment in Legal Metrology Act is not a sudden trigger to the pandemicsituation but it is already backed by the various early moments like this appeal was made by the Hon’ble Prime Minister of India in his maiden Independence Day address on 15th August,2014 stating that “Come, make in India. Come, manufacture in India. Sell in any country of the world but manufacture here. We have got skill, talent, discipline, and determination to do something.”

Fast forward to 2020-21, and the ball is already rolling, with the Government of India on implementing several Atmanirbhar Bharat (Make-in-India) initiatives in full force (GOI). One such initiative was the requirement that all imported products bear the name of the country of origin (“COI”). Although the requirement was made mandatory in 2018 by changing the Legal Metrology (Packaged Commodities) Rules, 2011, enforcement is now catching up.

The recent COVID Pandemic which was given birthby Wuhan generated Carona Virus gave a very different impact on trade and commerce, Indians who were looking for cheap and bulk available Chinese products suddenly banning products manufactured in China, suddenly started reading Place of Manufacture, the word “County of Origin” became important while selecting the products.

Important amendments in Legal Metrology Act 2009 about e-commerce entities

The following definitions have been introduced:

E-commerce means buying and selling goods and services including digital products over a digital and electronic network.

E-commerce entity means a company incorporated under the Companies Act, 1956 of the companies Act, 2013 or a foreign company covered under clause (42) of Section 2 of the Companies Act, 2013, or an office, branch, or agency in India covered under sub-clause (ii) of clause (v) of Section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999) owned or controlled by a person resident outside India and conducting e-commerce business.

According to Legal amendments to the Legal Metrology Rule 2011, E-commerce industries will come under these rules. All E-Commerce Website shall mandatorily declare sales price, net quantity, name, and address of the manufacturer, details of Importer, place of manufacturer.

Rule 10 of the Amended Rules, aboute-commerce companies:
E-commerce enterprises are required to include specific declarations (similar to packaged commodities) on the digital or electronic platform primarily utilized for e-commerce platforms, according to Rule 10 of the Amended Rules. Similarly, products sold through e-commerce businesses would be classified as pre-packaged commodities and would be subject to the Act and Rules.

Rule 10 of the Amended Legal Metrology Rules require e-commerce entities to mandatorily makedeclarations, similar to the ones made on the label of the goods, specifically for prepackaged commodities. Lists of the declarations that are to be made are as under:

• 1. Name and address of the manufacturer
• 2. Country of origin of the product
• 3. Common/generic name of the product
• 4. Net quantity
• 5. Best before/use date (wherever applicable)
• 6. Maximum Retail Price (which should also mention the words “Inclusive of all taxes”)
• 7. Dimensions of the product/commodity

Correctness of the Declarations:
In an e-commerce marketplace like setup, the onus of declaring the correct information tothe consumer lies with the manufacturer/seller/dealer/importer, as applicable, and not thee-commerce entity, provided:

• a. The e-commerce entity’s function is limited to providing access to a communication system over which information made available by the manufacturer or seller or dealer or importer is transmitted or temporarily stored or hosted;
• b. The e-commerce entity does not initiate the transmission, select the receiver of the transmission and select or modify the information contained in the transmission; and
• c. The e-commerce entity observes due diligence while discharging its duty as an intermediary under the Information Technology Act, 2000 and observes guidelines issued by the central government.

The following products are exempt from the provisions of the amendment rules:

• a. Packages containing food articles, which are governed by similar provisions that are present in the Food Safety and Standards Act, 2006 and the Rules made thereunder
• b. Packages of commodities containing a quantity of more than 25 kilograms or 25 liter
• c. Cement, fertilizer, and agricultural farm produce sold in bags above 50 kilograms
• d. Packaged commodities meant for industrial consumers or institutional consumers.

Effectiveness of Rule 10

As per Rule 10, recently the declarations required under the web portal, the correctness of the declaration, applicability of intermediary regulations under the IT Act, by the e-commerce entities, and nonadherence to Rule 10 resulted in penal actions against them. The Union Minister of State for Consumer Affairs, Food and Public Distribution, Shri Ashwini Kumar Choubey stated that “The Legal Metrology Office of the Department of Consumer Affairs has issued 183 notices in the last 12 months to e-commerce entities for violation of provisions aboutthe country of origin,”

As per the Legal Metrology (Packaged Commodities) Rules, 2011 under the Legal Metrology Act 2009, in case of imported goods, it is mandatory to provide a declaration of country of origin.

The Path Forward

As a result of numerous consumer complaints about insufficiency in quality, quantity, and lack of information provided by E-commerce Industries on package/e-commerce platforms, these amendments have been triggered.
As a result of this amendment, the producer, retailer, dealer, or importer will have an additional burden to guarantee that all such declarations are printed on the packaging of the commodity being sold on the e-commerce website. This, on the other hand, will undoubtedly promote transparency in the way e-commerce platforms work, with consumers benefiting as a result.

Conclusion

While we believe that these amendments will necessitate e-commerce entities making extensive changes to their portals to ensure that relevant declarations as required by the Act and the Rules are duly declared, we believe that this is necessary because consumers purchasing products from e-commerce portals do not have access to the details and declarations made on the label of pre-packaged commodities at the time of purchase.
The manufacturer or seller or dealer or importer is responsible for ensuring correct declarations on the marketplace model e-commerce portals and not the e-commerce entities.

Regards,
Legal Team

Proind Business Solutions Private Limited
306, Tower B, I-thum, Plot No A-40, Sector 62, Noida, UP, India- 201301
No.: +91 120 4224203
Email: info@proind.in, website: www.proind.in