All posts by Subaya & Janini

Dual/ Differential Maximum Retail Sale Price

Consumers, in India, have in the recent past had a concern in relation to FMCG and, in particular, food products being made available by manufacturers, at different prices in different places. The complaints have been with regard to products being sold at cinema halls, malls, airports etc., at higher prices as compared to the same products at regular retail shops. The Department of Legal Metrology has, in the recent past, pulled up such sellers but was unable to bring these matters to logical closure as the Legal Metrology Act, 2009 and the Legal Metrology (Packaged Commodities) Rules, 2011 (PC Rules) did not provide for the regulation of dual/ differential pricing.

The Ministry of Consumer Affairs, through a recent amendment to the PC Rules, introduced a provision regulating the dual/ differential pricing of products. This provision prohibits manufacturers, packers or importers from declaring different prices on identical commodities. The prohibition is, however, subject to the pricing being arrived at by adopting restrictive or unfair trade practices as have been set out in the Consumer Protection Act, 1986.

The above would mean that a manufacturer, packer or importer is prohibited from using a dual/ differential maximum retail sale price in relation to an identical commodity, by using restrictive or unfair trade practices as per the Consumer Protection Act. As a consequence, it would appear that a manufacturer, packer or importer may continue to have differential prices in relation to an identical commodity as long as there is an adequate justification for the same, which results in an increased cost from the factory to the shelf, provided the same is not coloured by unfair or restrictive trade practices.

The amendment is being brought into force from January 1, 2018 and manufacturers would, from such then on, have to ensure that all their products are in compliance with this provision.

Smart Consumer App – FSSAI

The Food Safety and Standards Authority of India (FSSAI) is attempting to ensure that consumers receive the maximum information in relation to the products that they intend to purchase. In this regard, the FSSAI is establishing a network integration with the ‘Smart Consumer App’, which would provide consumers with the desired information.

The ‘Smart Consumer App’ has been developed by the Ministry of Consumer Affairs in the year 2016 along with GS1 India (a body that has been set up to issue barcodes), and the function of the app involves a consumer scanning the bar code set out on any package or entering the Global Trade Index Number (GTIN), and receiving information in relation to the product. The information could relate to the statutory declarations required to be set out on a package or information in relation to a package of food being recalled by the manufacturers etc. The detailed intention of the FSSAI has been set out in a press release issued by the FSSAI on September 12, 2017.

The FSSAI is encouraging manufacturers, suppliers and such persons to start providing the required information to GS1 India so as to integrate the barcode and the GTIN with the information, for the consumer information and use.

Conflict – Minimum Height of Letters and Numerals

A packaged product is required to convey certain consumer relevant information through its label. The lettering used to set out such information has been subject to regulation by the Department of Legal Metrology, and in case of food products, the FSSAI as well. These regulations presently prescribe a minimum size of the letters and numerals based on either the net quantity of the product, or the area of the principal display panel.

The Legal Metrology (Packaged Commodities) Rules, 2011 (PC Rules), as mentioned in an earlier post, has now been amended in relation to the minimum height of such letters and numerals. The recent amendments to the PC Rules, which come into effect from January 1, 2018, require that the minimum height of the letters and numerals are to be determined solely on the area of the principal display panel. The manner in which the area of the principal display panel is required to be calculated is also set out in the PC Rules.

The above amendment poses a challenge, specifically in relation to food products, where the minimum height of the letters, under the FSSA, in relation to all the declarations are required to be maintained at 1 millimetre, regardless of the size of the package of the product, whereas the minimum height of the letters in relation to the declarations under the PC Rules would change depending on the area of the principal display panel. This would mean that the declarations being set out on a package would be of different sizes thereby compromising on the aesthetics of the same.

In addition to the above, the PC Rules previously had provided an exemption whereby in the event that any other law governed the minimum of height of the letters and numerals of a declaration, the said law would be applicable as against the PC Rules. This exemption has been retained, however, with a qualification, whereby certain declarations have to mandatorily comply with the PC Rules, notwithstanding the fact that the minimum height of the letters and numerals of the same are also governed by another law.

An example of the above would be the ‘net quantity’ declaration which is a mandatory declaration, both under the FSSA and the PC Rules, and the minimum height of the letters and numerals of the same are governed by both the laws. The question that would therefore arise is in relation to which law is required to be complied with, i.e., whether the requirements under the FSSA or under the PC Rules. Whilst the key to this may be looked for in the principles of statutory interpretation, it appears that this conflict has been overlooked while amending the exemption provision set out in the PC Rules.

In conclusion, it appears that the only possible way in which both the FSSA and the PC Rules can be complied with is if the law requiring greater compliance is followed. However, it may also be argued that as there is a specific law governing food products, and that PC Rules recognises the same, and permits certain other declarations, such as the name of the product, to only be governed by the FSSA, the PC Rules must ideally continue to recognise the same in relation to all the declarations and permit conflicting provisions in relation to food products to be governed only by the FSSA.

Legal Metrology (Packaged Commodities) Amendment Rules, 2017

The Ministry of Consumer Affairs, Food and Public Distribution (Department of Consumer Affairs), has, as on June 23, 2017, issued the Legal Metrology (Packaged Commodities) Amendment Rules, 2017. The amendments being made to the Legal Metrology (Packaged Commodities) Rules, 2011 would come into force and effect from January 1, 2018.

The Packaged Commodities Rules, in view of the amendments made, will now take into its fold various new concepts such as the concept of dual retail sale price, the buying and selling of products through e-commerce websites etc.

Licenses for Proprietary Food

The Food Safety and Standards Authority of India (FSSAI) has now set out the meaning and standards for proprietary food products very clearly in the regulations. The FSSAI has, however, not set out the resultant implications in relation to the issue of licenses required for the manufacture of such products.

Proprietary food products, as a concept, have been in existence even prior to the Food Safety and Standards Act, 2006 (FSSA) being brought into force and effect.

An obvious implication of the new meaning and standards for proprietary food products, that were set out by the FSSAI, was the requirement for food business operators to re-evaluate each of their products and ascertain as to whether they continue to remain proprietary. The FSSAI, however, did not require, by way of any law or order, for these food business operators to reapply or make any changes in relation to the license for the manufacture of the products, if they continued to be proprietary food products.

The FSSAI, has now, recently updated the online licensing system and has set out a separate category for proprietary food products, novel foods, etc. This is an excellent move by the FSSAI as now there is a clear and express route that can be used for applying for a license in relation to the different kinds of food products. The FSSAI, however, did not make any provision for those food products that were granted licenses prior to the online licensing system being updated, nor did the FSSAI provide any clarity for those food business operators who had licenses issued for products, prior to the new meaning and standards being introduced, and which products continued to be proprietary under the new law.

The FSSAI, however, now requires that these issued license holders approach the FSSAI and apply for a modification of their licenses for the reason that the proprietary food products being manufactured are not under the category as required by the updated licensing system and the FSSAI as on today. Whilst there is no order or communication in this regard, food business operators find this being required of them on approaching the FSSAI for modification of their license to include additional products or additional food business activities or while applying for a renewal of their licenses.

The above seems rather unfair to food business operators who are required to make an application for the modification of their licenses and also pay an additional fee in view of a delay on the part of the FSSAI in updating the online licensing system or in providing clarity on the matter. While the intention of the FSSAI cannot be questioned, it should take this particular matter into consideration and and consider it fair to provide a solution to these food business operators or a more efficient manner in which their licenses could be updated.

Hygiene levels of Ice

The Food Safety and Standards Authority of India (FSSAI) has now realised how unhygienic the ice being used for the transportation, preservation and storage of food products is. Ice, many a times, is made from doubtful sources of water and is transported in blocks at the back of cars, lorries, etc., with an unhygienic cloth covering it or sometimes with no covering at all. These are further delivered to their respective destinations by merely leaving the same on the ground, which in most cases could be the side of a public road, which requires no imagination to visualise unhygienic conditions that such blocks of ice go through. To make matters worse, these are also rampantly used and served by not just wayside eateries to unsuspecting consumers.

The FSSAI has understood that the ice blocks being used for the purposes of preservation, storage or transportation of food products, that are perishable, is made from water that is non-potable. Unfortunately, while the FSSAI had prescribed standards for edible ice, there were no standards for ice used in this manner.

The FSSAI, now, in view of the above, has stated, in terms of an order dated April 25, 2017, that any ice or ice blocks used in relation to the preservation, storage or transportation of food or that which comes into contact with the food must comply with the microbiological requirements that have been prescribed and set out for edible ice in the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011.

In a time where water borne diseases are rife, this is a positive move by the FSSAI to ensure the safety of ice. The FSSAI should however have also provided for the storage and transportation of such ice or ice blocks as the aforesaid could greatly affect the safety of such ice till such time it is put to its intended use.

Novel Food – A Dilemma

The Food Safety and Standards Authority of India (FSSAI) first introduced the concept of novel food through the Food Safety and Standards Act, 2006 (FSS Act) and defined it along with the term proprietary food. Food business operators and consumers therefore, till recently, used the terms proprietary food and novel food interchangeably as these kinds of food products were in effect the same.

The FSSAI has however subsequently split the concepts of proprietary food and novel food. In terms of the revised regulations today, these kinds of food products are to exist independently.

The FSSAI has, during the last few months, crystallised the concept of proprietary food products and the regulations in relation to the same and as a consequence these products are now are clearly classifiable.

Novel foods are now being regulated in terms of the Food Safety and Standards (Health Supplements, Nutraceuticals, Food for Special Dietary Use, Food for Special Medical Purpose, Functional Food and Novel Food) Regulations, 2016. In terms of the aforesaid regulations, the meaning of a novel food is as set out in the FSS Act. The FSSAI, unfortunately, has not amended the FSS Act and novel foods are still defined along with proprietary food retaining the confusion between the two food products. The FSSAI appears to have introduced another level of interpretation difficulties by additionally defining novel foods in the body of the Regulations. Accordingly, one has to now mine through the definitions and meaning of the term in the FSS Act and the Regulations to understand as to whether a product being manufactured would indeed be a novel food.

In addition to the above, the FSSAI has reintroduced requirement of an approval (similar to the earlier approval as was required for proprietary food) in relation to novel food and has stated that no such product can be manufactured or imported into India (for commercial purposes) without the approval of the FSSAI. The application required to be made for this approval and the documents and other details required to be submitted would be specified by the FSSAI from time to time. The FSSAI has however, as on date, not introduced any details in relation to this application.

The FSSAI has unfortunately left a gap in the regulatory framework in relation to innovative foods. Given the lack of clarity, and the reluctance with which the representatives of the FSSAI offer clarifications, a food business operator in relation to such novel foods, is today confronted with a dilemma of either running afoul of the law or simply staying away from such food products. Based on the above, we feel that the FSSAI must understand the difficulties being faced by such food business operators in view of the ambiguous regulations in relation to such food products. It would really help the food industry if the FSSAI could simplify the procedure and process involved in the manufacture of novel foods, as it recently did in relation to proprietary food products.

The Form and Format of the FSSAI License Number

The Food Safety and Standards Authority of India (FSSAI) amended the provisions of the Food Safety and Standards (Packaging and Labelling) Regulations, 2011 (Labelling Regulations) in June, 2013, to specifically include provisions in relation to setting out the FSSA license number on packages of food. The provision, in addition to requiring the license numbers to be set out, sets out a specific form and format for the same.

The FSSAI , to provide more clarity on the manner in which the license numbers  must be set out on labels, issued a clarification and advisory in October, 2013. This clarification and advisory was later replaced by another clarification and advisory issued in June, 2014. It must be noted here that the clarification issued by the FSSAI requires certain additional compliances/ declarations to be set out on labels, which are not, today, present in the Labelling Regulations.

To sum it up, the manner in which the FSSA license numbers are presently required to be set out is governed by the Labelling Regulations and the clarification of June, 2014. On a combined reading of the provisions in the Labelling Regulations and the clarification, one particular issue that one would notice is that the form and format of setting out the primary FSSA license number is set out in a different manner in the clarification, as compared to the Labelling Regulations.

The question that would naturally follow from the above would be as to which format is required to be adopted by food business operators, which would ensure that they have complied with the Labelling Regulations. While it could be stated that any format could be complied with, as both the formats have been issued by the FSSAI, we hold the view, that the correct format which must be followed is the one set out in the Labelling Regulations and not in the clarification. This is for the reason that, based on the principles of law, the clarification is supposed to merely ‘clarify’ the provision in relation to which it is issued and should not, ideally, set out any new provisions of the law.

The above would then, however, lead to a bigger question as to whether all the other provisions as set out in the clarification and do not find any mention in the Labelling Regulations must be complied with by food business operators. These provisions would include the manner of setting out the FSSA license numbers when multiple units are involved with a product, the minimum height of the letters and numerals, etc.

In view of the above, we strongly believe that the FSSAI, keeping in mind its history with issuing regulations and making law through guidelines and orders, should adopt the proper procedure and take appropriate steps to include the various new provisions, as contained in the clarification, in the Labelling Regulations. This would ensure that the provisions intended by it to be complied with, are indeed adequately complied with.

Import Regulations

The Food Safety and Standards Authority of India (FSSAI) has now notified the Food Safety and Standards (Import) Regulations, 2017 and has made the same effective from March 10, 2017. This effectively concludes the process initiated by the FSSAI in the year 2016 during which it had issued various notices in relation to the operationalisation of the Import Regulations and also a set of draft regulations calling for comments and suggestions.

In terms of a press release, the FSSAI has stated that the Import Regulations have been notified for the purpose of streamlining the process of clearance of imported food in an efficient and transparent manner. It would be important to note that whilst the Import Regulations have just been notified, the FSSAI has been regulating the import of food products at various ports through its ‘Food Import Clearance System’. Importers of food products have faced various difficulties, in the past, due to a lack of clarity in relation to certain aspects of imports. The Import Regulations, it is hoped, would remove these difficulties and make the process of import efficient.

The Import Regulations would be applicable to all food products being imported into India and among other things sets out the licenses required and the procedures to be followed for the import of food products, shelf  life of imported food products, the labelling declarations required to be set out on packages being imported, etc.

The FSSAI has however not provided any specific time period for compliance with the Import Regulations which would imply that the Regulations must be complied with immediately.

Guidelines – Operations of E-commerce food business operators

The Food Safety and Standards Act, 2006 (FSSA) was drafted and brought into force and effect based on the erstwhile Prevention of Food Adulteration Act, 1954. As a result, many of the provisions, as were contained in the erstwhile law were retained and the FSSA, accordingly, was founded on the traditional ‘brick and motar’ format of business, as food products were then dealt with. The FSSA therefore, as argued by many, did not expressly relate to the ‘modern’ (if it may be called) way of doing business.

The ‘modern’ way of doing business today involves consumers transacting online through laptops, smart phones and other internet enabled devices. It is not surprising that the rapid development of transacting business online, led to food business operators finding their way onto the online marketplace or ‘e-commerce platforms’, as commonly known and, today, different kinds of food products can be bought online and through e-commerce platforms, by the mere click of a button.

The question that has always perplexed many a people operating these e-commerce businesses is as to whether the FSSA does indeed apply to food business being undertaken through online stores/ e-commerce platforms. To this, we would say that going by the intent of the law makers, the FSSA would ideally apply. In view of the manner in which the term ‘food business’ has been set out in the FSSA, almost any and every kind of food business carried on, in India, will fall under and within the ambit of the FSSA.

In order to get past the uncertainty in relation to the applicability of the FSSA to e-commerce food business operators, the FSSAI has, during February 2017, attempted to provide clarity on this by issuing a set of guidelines for the operations of e-commerce food business operators. These guidelines cast obligations on e-commerce food business operators such as registration and licensing, supply chain compliance, food product listing and information, etc.

The FSSAI has however stated that the guidelines are to be read only as an explanatory memorandum and not in supersession or replacement of any of the provisions of the FSSA, the rules and the regulations. The aforesaid, unfortunately, whilst clearly establishing the intention of the FSSAI to clarify the applicability of the FSSA to the operations of e-commerce food business operators, leaves one wondering as to whether the same would have the true force of law.

On a perusal of the guidelines, it would appear that the FSSAI is, with the best of intentions, trying to make the law, in relation to e-commerce food business operators, through these guidelines. The question, therefore, would be as to whether these guidelines, which appear to be setting out the law, are required to be complied with by all e-commerce food business operators, as if complying with the law. It may be recalled that, in the past, the Supreme Court has held that the FSSAI does not have the power to issue such guidelines that have the effect of creating regulations without following the procedure mentioned in the FSSA, i.e., by placing such regulations before the Parliament, as required in terms of the FSSA.

In the interests of providing true clarity to e-commerce food business operators, it would therefore be imperative for the FSSAI to crystallise the guidelines, into a set of duly made regulations, applicable to e-commerce food business operations. The same would not only ensure due compliance but would also be the basis of creating a structured legal framework in relation to the sale of food products online.