Hi, Stating in brief the facts and query as under-
Company XYZ has two premises in Gurgaon, one is a warehouse (on lease basis) and another is an office space.
The company has outsourced manufacture of its products (essentially drugs and cosmetics ) to a third party. However, the packing, branding and labeling of the manufactured products in Company’s name is done at the warehouse.
For another business, products of various cosmetic brands are assorted into various packages/ hamper of sorts. For this purpose, Company procures finished, ready to sell products from various brands. At the office premises, these products are then packed into various boxes, without modifying the individual products. These boxes are in company’s name and are further sold to customers.
Queries-
1) Will mere assortment/ packing or repacking of goods amount to 'manufacturing process' under the 'Factories Act'?
2) Will the warehouse and office premises fall within the definition of ‘factory’ under ‘Factories Act’?
3) Will Industrial Standing Orders Act be applicable to the warehouse and the office premises?
4) What are the labour law related registrations that the Warehouse and office premises have to take?
From India, New Delhi
Company XYZ has two premises in Gurgaon, one is a warehouse (on lease basis) and another is an office space.
The company has outsourced manufacture of its products (essentially drugs and cosmetics ) to a third party. However, the packing, branding and labeling of the manufactured products in Company’s name is done at the warehouse.
For another business, products of various cosmetic brands are assorted into various packages/ hamper of sorts. For this purpose, Company procures finished, ready to sell products from various brands. At the office premises, these products are then packed into various boxes, without modifying the individual products. These boxes are in company’s name and are further sold to customers.
Queries-
1) Will mere assortment/ packing or repacking of goods amount to 'manufacturing process' under the 'Factories Act'?
2) Will the warehouse and office premises fall within the definition of ‘factory’ under ‘Factories Act’?
3) Will Industrial Standing Orders Act be applicable to the warehouse and the office premises?
4) What are the labour law related registrations that the Warehouse and office premises have to take?
From India, New Delhi
The position is as follows:
1) The definition of 'manufacturing process' includes packing ..... or adapting any article or substance with a view to its use, sale, transport, delivery or disposal. So the operation is covered, the only question that remains is whether you have employed 10 or more person and uses power (even for lighting purpose) or otherwise it is twenty or more workmen in such a premise.
2) The definition of factory is any premises where a manufacturing process is carried on and deploys the preceribed strength of workmen (as above). So such premises are factory though outwartdly it may not have any signs of being a factory (like a chimney or slanting roof)
3) Standing Orders Act is applicable if it meets the prescribed manpower strength as per the State Act.
4) To answer the query, more information is needed.
From India, Mumbai
15341) The definition of 'manufacturing process' includes packing ..... or adapting any article or substance with a view to its use, sale, transport, delivery or disposal. So the operation is covered, the only question that remains is whether you have employed 10 or more person and uses power (even for lighting purpose) or otherwise it is twenty or more workmen in such a premise.
2) The definition of factory is any premises where a manufacturing process is carried on and deploys the preceribed strength of workmen (as above). So such premises are factory though outwartdly it may not have any signs of being a factory (like a chimney or slanting roof)
3) Standing Orders Act is applicable if it meets the prescribed manpower strength as per the State Act.
4) To answer the query, more information is needed.
From India, Mumbai
Thank you for your insightful response.
Could you please shed light on whether simply assorting and repacking of finished products would amount to manufacturing. (Like an amazon only packs products but doesn't manufacture them. Will Amazon also fall within the definition of a Factory)
Thank you.
From India, New Delhi
Could you please shed light on whether simply assorting and repacking of finished products would amount to manufacturing. (Like an amazon only packs products but doesn't manufacture them. Will Amazon also fall within the definition of a Factory)
Thank you.
From India, New Delhi
Since 'packing' comes within the definition of ' manufacturing activity' it could be Factory as per the Factories Act 1948. But in a significant matter the Court held that though the laundry would render the Hotel to be a factory under the Act, yet since that is not its primary or substantial activity, the Hotel would not be a Factory. (Probably in Ritz Hotel matter in 2006/07). Going by that logic, Amazon or other such online distributors, packing or repacking is only an incidental activity and is not central to their business so the aforesaid reasoning could apply.
But, in your case as the packing, branding and labeling of the manufactured products in Company’s name is done at your warehouse, the interpretation that the place would come within the scope of manufacturing process holds weight and accordingly the consequence would follow.
From India, Mumbai
But, in your case as the packing, branding and labeling of the manufactured products in Company’s name is done at your warehouse, the interpretation that the place would come within the scope of manufacturing process holds weight and accordingly the consequence would follow.
From India, Mumbai
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