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Govt rejects Amazon’s appeal against notice requiring it to show country of origin of products

The Legal Metrology Department has rejected Amazon’s appeal against a notice asking it why it wasn’t displaying the country of origin of a product listing on its platform. The department, which falls under the Consumer Affairs Ministry, found that Amazon didn’t do its due diligence as a marketplace e-commerce platform in complying with the mandatory declarations required under the Legal Metrology (Packaged Commodities) Rules, 2011. It said that the complete address of the manufacturer was not displayed alongside the product listing on Amazon’s website.

MediaNama obtained a copy of the order, and has independently verified its authenticity from the Legal Metrology Department. The order was issued on February 2, and signed by B.N. Dixit, the Director of the Legal Metrology Department. By way of the order, the department can now proceed against Amazon. As per the Legal Metrology (Packaged Commodities) Rules, 2011, first offences result in a fine of upto Rs 25,000, and subsequent violations will result in a penalty of Rs 50,000 and/or jail.

The department, in October 2020, had sent notices to Amazon and Flipkart asking them to explain — within fifteen days — why action shouldn’t be taken against them for not displaying the country of origin in some product listings. In the notice, the department had highlighted certain products that were violating these rules. In Amazon’s case, it flagged one link — a sweatshirt made by US Polo.

Amazon did not respond to our queries until the time of publishing. We reached out to the Metrology Department to ask about the status of the notice it sent to Flipkart.

In July, the Consumer Affairs Ministry notified the Consumer Protection (E-Commerce) Rules, 2020 which directed e-commerce companies to display the country of origin alongside product listings. On top of that, the companies will also have to reveal the parameters that go behind determining product listings on their platforms. While the requirement to display country of origin was already a necessity under the Legal Metrology (Packaged Commodities) Rules, 2011, the enforcement of these rules coincided with the ban of several Chinese-owned apps.

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Amazon says it is a marketplace and disclosures are manufacturer’s responsibility

In its response to the notice, Amazon informed the department that the sweatshirt was sold by third-party sellers on its platform, and that its role as an intermediary was limited to merely “providing access to a communication system.” Amazon said that since it is a marketplace, and under the Metrology rules, the responsibility of the correctness of declarations rests with the manufacturer or the seller.

“The Company provides an information technology platform, also Known as marketplace platform on digital and electronic network, to act as a facilitator between sell[e]rs and buyers. It was also informed that their Company is an intermediary as defined under Section 2(w) of the Information Technology Act, 2000. Therefore the discrepancy, is on the part of the third party merchant who displayed and sold the product to customer and not on part of them and requested to quash the notices,” Amazon said.

It also told the Department that it took down the flagged product listing from it platform in less than 36 hours of receiving the notice.

‘Amazon didn’t show due diligence in its role as an intermediary’: Metrology Department

The department argued that while the rules place the onus of declarations on the manufacturer or seller of a product on e-commerce sites, Amazon “has not shown due diligence in discharging it’s duty as an intermediary as the product was uploaded on their website without giving all declarations required under the rules”. It said that “by default the company is responsible for the violation under reference”.

Traders’ body welcomes move, but also calls for a week-long ban on Amazon

The Confederation of All India Traders, an association of offline retailers, and one of the the most vocal critics of Amazon and Flipkart, welcomed the order. “All sales at Amazon platform are controlled by them since there is no mention of details of the sellers and all the sales first directly go to Amazon and they decide to whom the order is to be forwarded,” B.C.Bhartia, national president and Praveen Khandelwal, general secretary of CAIT said in a joint statement.

However, the organisation argued that the monetary penalty prescribed in the rules is not enough. “CAIT believes that the paltry monetary penalty has no significance at all and therefore , we strongly demand that a 7 days ban on Amazon and other big e-commerce companies who are continuously offending the law and policies, should be imposed on them,” they said. “Let there be an exemplary punishment,” they added.

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