The Department of Company Affairs (DCA), we learn has quietly granted an exemption to certain dairy products like chocolates, icecreams and such others from submitting the cost of production, selling price, etc. These details are required to be submitted under the Cost Accounting Records(Milk Foods) Amendment Rules, 2001 and Regulations under the Companies Act.
The DCA’s generosity can only have been the result of lobbying and according to sources, it maybe a ploy to allow this high margin earning industry to hide its true profits.
The Ahmedabad based Consumer Education and Research Society (CERS), has opposed the exemption granted by the Department of Company Affairs(DCA). In a representation to the DCA, CERS has described the exemption as"unjustified, illegal and uncalled for” and demanded its withdrawal.
CERS submitted to the Secretary, DCA, photographs ofthe packaging material used for chocolates to make the point that themanufacturers themselves prominently projected milk among the ingredients and the product is promoted and marketed as a milk product and described as "Milk Chocolate".
If the companies are marketing this product with a focus that it is a Milk Chocolate, the question arises, how the DCA concluded that milk is a negligible ingredient and, therefore, it is not a milk product.
Under the Indian law, the statutory requirement, almost a definitionfor ice cream, is that it must have minimum 10 per cent of milk fat.There is no other ingredient for ice cream, which is so compulsory as 10 per cent of milk fat, and ice cream is "nothing else but a milk product".
The exemption was granted on the grounds that products such as chocolates, icecreams, etc. are not essentiallymilk products and that no minimum percentage of milk input in such products has been defined to make them milk products for the purpose of Cost Accounting Record Rules. Therefore, the Department announced that these Rules would be applicable to the companies engaged in the production, processing or manufacture of (i) infant milk foods and (ii) milk food.
"Such simplistic alternative," CERS added, "is more liable to be misused or abused in the absence of a kind of supervision and superintendence as called for in the matter of issueof notification or formulation of or amendments to the Rules."
CERS has also described as "another important and serious lapse" the DCA's announcement of the exemption, which was not in the form of a notification, much less formulation or amendments to the Rules under the Act.A notification or formulation or amendment to the Rules requires the seal of approval from the higher authorities.In fact, the Rules do not come into force unless they are notified as draft, and suggestions and objections are invited before they are finalised.