The Hindu Business Line : Is refrigerator a `packaged commodity'?

Whirlpool, a manufacturer of refrigerators, was recently caught in a whirlpool of interpretations when fighting against the Excise Department. Getting thawed in the process, at the apex court, was the definition of `packaged commodity' under the SWM (Standards of Weights and Measures) Act, 1976.

The company was not so much against the valuation as per Section 4A of the Central Excise Act, 1944 as it was aggrieved by the demand that MRP (maximum retail price) be printed on the package of the refrigerator manufactured by it, according to Notification No. 9 of 2000.

PRINTING MRP

Excise officials were of the view that the refrigerator was in fact sold `in a package of polythene cover, thermocol, hardboard cartons etc.' and that it fell in the category of `pre-packed commodity'. On that basis, they contended that since every packaged commodity was included in the SWM Act and the Rules made thereunder, there could be no escape from printing the MRP on the package.

Countering these views, Whirlpool argued that a refrigerator, as a matter of fact, was not sold in a packaged form. "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 at least 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."

The submission is quite incorrect, observed the apex court. It studied the definition of `commodity in packaged form' - that it means "commodity packaged, whether in any bottle, tin, wrapper or otherwise, in units suitable for sale, whether wholesale or retail."

Another definition that came under focus was that of `pre-packed commodity', under the SWM Rules: "`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."

DEFINITION EXPLANATION

Explanation to the definition states that 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 the 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.

According to the `explanation', refrigerator is covered under the term `pre-packed commodity', said the court in its verdict dated November 2. "Even if the package of the refrigerator is required to be opened for testing, the refrigerator would continue to be a `prepacked commodity'."

D. MURALI

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