GLOBAL EXCESS Vs. UNION OF INDIA
LAWS(GJH)-2014-1-16
HIGH COURT OF GUJARAT
Decided on January 17,2014

Global Excess Appellant
VERSUS
UNION OF INDIA Respondents

JUDGEMENT

J.B.PARDIWALA, J. - (1.) BY this writ application under Article 226 of the Constitution of India, the petitioner engaged in the business of computers, printers, laptop, note -book, tablets etc. seeks to challenge the Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order 2012 dated 7th September 2012 and the notifications issued pursuant thereto by the Central Government in exercise of powers conferred under Section 10 (1) (p) of the Bureau of Indian Standards Act, 1986 read with Rule 13, Clause (fa) of the Bureau of Indian Standards Rules, 1987 as being ultra vires, unconstitutional and violative of Article 19 (1) (g) of the Constitution of India.
(2.) THE case made out by the petitioner in this petition may be summarized as under: 2.1 The petitioner is engaged in the business of importing computers, printers and other accessories including laptop, notebook, tablets, printers, plotters, scanner, wireless key boards etc. from different countries for their sale in India. For the purpose of import of the aforesaid goods, the petitioner is holding a requisite license and permission from the concerned governmental agencies as required under the law. The petitioner is also a registered dealer according to the provisions of the Central Sales Tax Act. The petitioner is paying the requisite import, custom and other allied duties. The petitioner claims to be a legitimate and bona fide trader carrying on his business in conformity with the relevant laws, rules and regulations framed from time to time. 2.2 According to the petitioner, there are numerous other persons in the country carrying on similar business activities and engaged in the import and sale of the imported electronics and information technology goods in India. 2.3 The petitioner and such other importers were carrying on their lawful business activities of selling the aforesaid branded products in Indian market at a competitive price by purchasing the same in bulk from other countries where they are available at a very cheap price. 2.4 According to the petitioner, even the consumers are being benefited as they get the products at a lesser price than that offered by the manufacturers. The petitioner is aggrieved by issue of the Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012 and the notifications issued by the respondent authorities in purported exercise of powers conferred under Section 10 (1) (p) of the Bureau of Indian Standards Act, 1986 (for short, "the Act 1986") read with Rule 13 (fa) of the Bureau of Indian Standards Rules, 1987 (for short, "the Rules 1987") which has an effect of destroying the parallel imports and hampering the business of such importers including the petitioner as the same mandates compulsory registration of the aforesaid products by getting them tested in BIS ( Bureau of Indian Standard) recognized laboratory through a manufacturer or by a person duly authorized by such manufacturer by providing such technical specifications which only the manufacturer possesses. 2.5 According to the petitioner, a situation has been created whereby the manufacturers, who are multi national companies (MNCs), will have a monopoly in the field of import and sale of electronic and information technology products. 2.6 According to the petitioner, the Order 2012 and the notifications have resulted into a total indirect ban on the importation of the parallel import of the electronic and information technology goods from 3rd July 2013, which is otherwise permissible under Section 107A (b) of the Patents Act, 1970 as amended by the Patent (Amendment) Act, 2005. 2.7 It is the case of the petitioner that the parallel import is a mechanism which is helpful for providing commodities to the consumers at an international competitive price. The net result of the impugned order is that the parallel imports into India of the electronics and information technology goods will be totally closed and the business activities of the petitioner and other similarly placed persons will be ruined. 2.8 In such circumstances, referred to above, the petitioner has prayed that the order dated 7th September 2012 and the notifications issued pursuant thereto be quashed and set aside as being ultra vires Article 19 (1) (g) of the Constitution of India or in the alternative the respondents be directed to modify the impugned order to the extent that the importer of electronics and information technology goods be permitted to apply and get the registration from BIS without the requirement of authorization of the manufacturer and without the requirement of supply of such technical specifications which are available only with the manufacturer. Stance OF THE RESPONDENT NO.1 -UNION OF INDIA: - 3.1 On behalf of the Union of India, an affidavit -in -reply has been filed duly sworn by the Director, Department of Information Technology, Ministry of Communications and Information Technology, New Delhi, inter alia, stating as under: "As a part of National Policy on Electronics (NPE), the activity of developing and mandating standards has been adopted by the Government of India with a view to Provide Indian consumers with the right to enjoy world ­ class goods Upgrade the quality of domestic products for bringing ­ Global competitiveness Develop strategy to stop dumping of non -compliant ­ goods For projecting a positive image internationally as a ­ country with quality production of the Electronic and IT goods. Department of Electronics and Information Technology (DeitY) has on 03 Oct. 2012 notified "Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012" mandating fifteen categories of electronics items under the Compulsory Registration Scheme of Department of Consumer Affairs based on their compliance to Indian safety standards. 3.4 The order under consideration, "Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012", was not sudden and due notice was given to all concerned. The order was notified on 07 Sept. 2012, published in Gazette of India on 03 -10 -2012 and came into effect on 03 July 2013. The order neither has any effect of prohibiting parallel imports nor does it encourage the monopoly of MNCs. The order is equally applicable to imported as well as domestically manufactured electronic goods. The petitioner has alleged that the said Order has an effect of destroying the parallel imports and shutting down of the business of such importers. The petitioner's allegation is baseless as the notified order's aim is to bring safe electronics products into country for domestic consumers and increase the competitiveness of Indian manufacturers. This order is neither to stop parallel imports nor to increase monopoly of MNCs in the Indian market and thus does not effect the importation of parallel imports. Goods once registered can be imported by anyone in the country. Reference may be made to the attached letter to JS (Customs). 3.5 It is again submitted that monopoly of MNCs is not being encouraged by this Gazette notification and nor the parallel imports are restricted. Example of Dell India is quoted by the petitioner which seems irrelevant as Dell India in its representation dated 12 Aug., 2013 has requested to allow third party imports of such products as listed in the said order and is trying to encourage parallel imports on the other hand. .... 3.6 While it is correct that this notification restricts the sale from 3rd July 2013 onwards to the products which are not registered with BIS and that the authorization is required from the overseas manufacturers in the name of Indian representative to get the initial registration from BIS. It is brought out that for the goods supplied by foreign manufacturers if anything goes wrong with the product, holding them accountable under Indian laws would be cumbersome and sometimes impossible, hence the need for local representative in India. The local representative is responsible on behalf of overseas manufacturers towards Indian laws and liability issues arising out of goods placed in Indian markets. But, once registration is done, and goods are certified to be safe and conforming to notified standards any person / entity can import provided the product bears the self ­ declaration mark with IS No., as required by the order. This notification applies to manufacturers only and does not affect the right of petitioner for parallel imports. 3.8 ........ Addressing regulations on Safety/Health/Environmental issues are one of the responsibilities of the Govt. to ensure safety of its citizens and are in place in most of the countries of the world. Department of Electronics and Information Technology (DeitY) had initiated the process for creating a suitable framework in the country for ensuring compliance of Electronics and IT goods to Standards of Safety and this initiative has been put in place after due consultations with stakeholders which include industry associations, Department of Consumer Affairs (DoCA), Ministry of Commerce, Bureau of Indian Standards (BIS), Representatives of Conformity Assessment Bodies, Consumer Organizations etc. Rather, this order has come into effect as a strategic initiative of National Policy on Electronics (NPE), 2012 of the Govt. of India which has led to this order that has been approved by the Union Cabinet. A.The order is neither ultra vires, nor unjust, nor unreasonable, nor in violation of provisions of law, nor arbitrary, nor discriminatory, nor contrary to settled legal position, nor in breach of principles of natural justice and nor in gross violation of Art. 14 and 19 (1) (g) of the Constitution of India since it has been issued after due consultations with the stakeholders in the electronics sector including industry associations, Department of Consumer Affairs (DoCA), Ministry of Commerce, Bureau of Indian Standards (BIS), Representatives of Conformity Assessment Bodies, Consumer Organizations etc. B. ............ C. The BIS Act has been in place since 1986. Many Govt. Ministries/Departments have been using BIS Licensing scheme of BIS to control quality of goods. The present order, in fact, is only a simplified version of licensing scheme which has been notified keeping dynamics of electronic industry in mind. Further, as stated above, the order does not violate any of the fundamental rights of the petitioner or any other citizen of the country. As of today, majority of the electronic goods submitted for registration with BIS and/or DeitY are imported. BIS Act requires the nomination of authorized representative. Producing safe product is the responsibility of the manufacturer and it is the manufacturer who has the effective control over the production to ensure consistency of product as per approved design and specifications. While importer cannot ensure the continued safety compliance of the product, it is only the manufacturer who could thus be eligible to apply, provide details, be in agreement, and keep design and production control for consistent compliance to the order."
(3.) STANCE OF THE RESPONDENT NO.2 -BUREAU OF INDIAN STANDARDS: - 4.1 On behalf of the respondent no.2, an affidavit -in -reply has been filed duly sworn by the Assistant Director (SC -B), inter alia, stating as under: "4. It is submitted that the petitioner has challenged by way of the present petition, the Electronics and Information Technology Goods (requirement for compulsory registration) Order, 2012 dated 07.09.2012 (hereinafter to be referred to as "Order" for convenience) and Notifications issued pursuant thereto by the respondent no.1, the Central Government of India. The said Order dated 07.09.2012 was issued and published in the Official Gazette by respondent no.1 by exercising its powers under Section 10(1)(p) of the Bureau of Indian Standards Act, 1986 read with Rule 13 (FA) of the Bureau of Indian Standards Rules, 1987 (hereinafter to be referred to as "Act" and "Rules" respectively for convenience). 5. ....... (a) .......... (b) ........... (c) With regard to para no.3.4 of the petition, the contents thereof are denied, since the same are contrary to the intention of the respondents behind the Order so passed on 07.09.2012. It is further submitted that the said Order has been introduced to safeguard the interest of the consumer. In addition to providing safeguard to the interest of consumer, the same also provides the mechanism through which safe electronics and Information Technology (IT) goods are made available to the consumers. It is pertinent to note that the said Order is not only applicable to indigenous manufacturers but also to the foreign manufacturers of the covered electronics and IT goods. It is categorically denied that the impugned Order will be having an overriding effect over the Section 107A(b) of the Patent Act, 1970 because the impugned Order does not deal with the import of the electronics and IT goods, however, the same has been issued to provide safeguard to the consumer against the sub -standard or defective goods which do not conform to the specified standards. (d) With regard to para no.3.5 of the petition, I state that the contents thereof are distinct and irrelevant so far as the facts and circumstances of the current proceedings are concerned. Even for the sake of repetition, I reiterate that the impugned Order and the adopted mechanism pursuant thereto do not interfere with the export and import of electronics and IT goods but the same provides certain mechanism to maintain certain quality standards in the interest of consumer at large. (e) With regard to para no.3.6 of the petition, I state that the alleged discrimination is false, frivolous and baseless and hence, denied. I further submit that the Rules for registration with respondent no.2 apply to both indigenous and foreign manufacturers irrespective of nationality of the manufacturer. Therefore, it is not proper for the petitioner to state that the Rules for registration with respondent no.2 are discriminatory in nature. (f) With regard to para nos.3.7 to 3.10 of the petition, contents thereof are misleading, false and frivolous and hence, denied. I submit that the impugned Order and the mechanism for the registration established pursuant thereto do not interfere with import of the electronics and IT goods more specifically, the same provides equal requirement for registration with the respondent no.2 so that the Indian consumers are provided safeguard against substandard electronic and IT goods. I further submit that the petitioner's import cannot be said to be hampered since, the petitioner can very well carry on the business activity by importing the IT goods from the registered manufacturers under the impugned Order. It is pertinent to note that under the Act, "Manufacturer" means the Manufacturer of any article or process. Therefore, the Rules, Orders issued thereunder are only applicable to the Manufacturer of Article and Process and importers are not at all affected by the same. Hence, it is not proper for the petitioner to allege that the execution of the impugned Order would result into loss of livelihood to the petitioner. 6. I further submit that the impugned Order is applicable only to the manufacturers of electronics and IT goods irrespective of their nationality. The Manufacturer, who is desirous to market and sell its products in India, the same has to get the electronic and IT goods registered with the respondent no.2, which would after conducting a test in the laboratory recognized by the respondent no.2 issue the appropriate direction. Therefore, the grievance raised by the petitioner cannot be sustained since, the petitioner is not a manufacturer but merely an importer of electronic and IT goods." ;


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