Affixation of MRP labels on imported goods under Legal Metrology law and Exemption to AEO registrants – A Missing Link
The legal sanctity of relaxation given to Authorized Economic Operator (‘AEO’) registrants with respect to affixing of MRP labels on imported goods at their premises.
Condition No. 5 of General Notes (‘Condition No. 5’) of the Import Export Policy, 2017 (‘IEP 2017’) subjects all packaged imported goods to the provisions of Legal Metrology (Packaged Commodities) Rules, 2011 (‘LMPC Rules’) when imported in India.
Section 18 of the Legal Metrology Act, 2009 (‘LMA’) provides that no person is allowed to manufacture, pack, sell, import, deliver, distribute, offer, expose or possess for sale any prepackaged commodity unless such package contains declarations in the prescribed format.
Chapter II of the LMPC Rules applies to packages meant for retail sale. Rule 2(k) of the LMPC Rules defines ‘retail package’ and includes imported packages within its scope.
Consequently, to comply with Condition No. 5 of the IEP 2017 and LMPC Rules, an importer either undertakes labelling in bonded warehouse or directs the foreign supplier to affix labels at its end. Both the options create operational difficulties for adherence.
CBEC (now CBIC) has issued AEO program guidelines vide Circular No. 33/2016-Customs dated July 22, 2016 (‘Circular No. 33’). Para 1.5.2 of Section 1 of Circular No. 33 prescribes certain relaxations for importers of AEO-T2 and above category including affixation of MRP label at their premises.
The LMPC Rules mandates declaration to be made on every package of imported goods. Notably, it does not prescribe the point of time when such label needs to be affixed. This timeline is provided by Condition No. 5 of the IEP 2017.
It is pertinent to note that CBIC and DGFT are independent authorities. Vide Condition No. 5 of the IEP 2017, DGFT has mandated importer to comply with the LMPC Rules before clearance of imported goods. Once DGFT has imposed this condition, CBIC cannot relax the requirement of affixing MRP label to a particular class of importers (AEO-T2 and above) without amending IEP 2017.
To avoid any litigations in future, the DGFT should correct this missing link by issuing suitable Policy Circular expressly providing this relaxation.