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Almost every year, post-Budget, there are disputes between consumers and manufacturers over the pricing of goods. Not without reason. When the Finance Minister brings down indirect taxes, manufacturers are most reluctant to give the full benefit of reduced duties to the consumers. On the other hand, when duties are hiked, dealers promptly hike prices, and these even on goods that are already in the retail outlets and therefore do not attract the new duty structure. Recently, the apex consumer court heard one such complaint where the consumer had been asked to pay the revised excise duty on a car that had already left the manufacturer’s factory by the time the duty revisions were announced. Said the national commission in its order: Collection of excise duty from the consumer without paying such a duty to the government is not only unjust and illegal, but also an unfair trade practice. In fact there can be no two opinions in this case. Yet, neither the dealer nor the manufacturer was willing to refund the money to the consumer, forcing him to wage a long legal battle spanning over 10 years! (Tata Engineering Locomotive Company and Sakti Automobiles Vs John Jacob, RP no. 1079 of 1998, decided on April 4, 2006). The case dates back to 1996. In February that year, John Jacob booked a Tata Sumo Car through Sakti Automobiles, Kochi, by making an advance payment of Rs 25,000. The agreed price of the vehicle at the time of booking was Rs 3,30,061 and subsequently, Jacob paid the entire amount. However, at the time of taking delivery of the vehicle in September, he was asked to pay an additional amount of Rs 38,344 on the ground that there was a hike in excise duty. Mr Jacob paid the additional amount under protest and took delivery of the vehicle. Thereafter, he filed a complaint before the district forum, Kottayam, which however dismissed it. The state commission, Kerala, before which he filed an appeal, directed the dealer and the manufacturer to furnish the relevant information as to when the vehicle was released from the factory. Despite two adjournments, the required information was not produced. So the state commission directed them to refund the amount of Rs 38,344 with interest at the rate of 12 per cent per annum, calculated from September 1996. Against this order of the state commission, the dealer and the manufacturer filed a revision petition. Here again, at the time of admission of the petition, the national commission asked them to provide the date on which the car had been released from the factory and gave repeated adjournments to help them produce this information. Eventually at the time of hearing, the commission was told that the car had left the factory before the increase in excise duty. Observed the commission: "`85 Yet, the revision petitioners argued that the complainant was required to pay the increase in excise duty to the dealer who had delivered the vehicle after increase of such excise duty`85 In our view, such a demand is, on the face of it, an ‘unfair trade practice’ by the petitioners, namely TELCO and its dealer. Reason being, once the excise duty is not paid by the manufacturer or the dealer, there is no reasonable or valid purpose in recovering the same from the consumer." Said the commission further: "In our view, apparently, this is a fit case for issuing a direction to TELCO which is a big company and its dealer to discontinue such an unfair trade practice and not to repeat the same in future, and also to direct its dealers not to adopt it in future." The commission next considered whether the new provision in the Consumer Protection Act that empowers consumer courts to award punitive damages should be invoked in this case. Considering the circumstances of the case, I would think that this was an appropriate case for such a levy and it would have also sent a warning to all manufacturers not to indulge in such unfair trade practice. However, the national commission thought otherwise. It observed: "As nothing has been brought on record that the petitioners have adopted such practice in a number of cases, we do not impose punitive damages." However, on the ground that the petitioners had not only imposed, unjustifiably, the excise duty on the consumer, but had also carried on with the litigation for years, the commission felt that this was a fit case for awarding costs to the consumer. It therefore directed the petitioners to comply with the order of the state commission and also pay Rs 25,000 as costs to the consumer. |
