Introduction of mandatory labeling of goods in Russia in 2019

Currently, the mandatory labeling system covers a limited number of products. It is mandatory for medicines, alcohol and fur coats. This year, the list of goods subject to mandatory labeling will be expanded.  What products are planned to be labeled and to what consequences will these changes lead for business?

What is mandatory labeling and what is it for?

Labeling of products involves applying a unique code on the product presented on sale, which identifies it and allows buyers, as well as representatives of controlling organizations, to keep up to date information about it. Officially, the codes are called CIM, which is an abbreviation of control identification marks.

All such codes are unique, there are no identical ones. The code is used only once. Once the products are out of circulation, the code will be destroyed. It is strictly forbidden to use it again.

Each CIM consists of a pair of codes — identification, as well as verification. The first reflects the commodity position of the goods in the catalog, as well as the unique code of a particular item. Innovative cryptographic technologies are used in the development of the verification code, thus eliminating the possibility of duplication or forgery.

The CIM contains the following information:

  • item name;
  • brand;
  • name and location of the manufacturer;
  • seller data.

Mandatory labeling was introduced to exclude counterfeit products as well as counterfeiting. It enables representatives of regulatory bodies to have the opportunity to track the route of the goods from the place of manufacture to the counter of the store.

If desired, each buyer has the opportunity to check the legality of the goods he is interested in personally. To do this, he needs only a smartphone or a tablet, as well as the appropriate mobile application. The verification is performed by means of a special application “Checking goods” or a scanner of QR codes. The use of the free application “Checking goods” is recommended to the consumers by the Federal Tax Service of Russia. This program is compatible with devices running Android and iOS systems.

Principle of operation of the mandatory labeling system

To mark their products (supplied or manufactured), the companies and individual entrepreneurs should join the unified monitoring system in Russia. Today there are several monitoring systems. They are used for different goods. The USAIS system is used for control of alcohol circulation, information resource of labeling — for fur products. There is also an in-house monitoring system to control the production and sale of various medicines.

Those goods to be labeled starting with the current year will be controlled by the CPTD system. Today it is used for labeling tobacco products, which is carried out on a voluntary basis.

There is no need to pay for registration in any of the above services. But for their use it is necessary to have an enhanced electronic signature.

It is necessary for product manufacturers as well as suppliers to register in the monitoring systems mentioned above. This ensures the introduction of up-to-date information about the product at all stages of its movement from the manufacturer to the buyer. After registering the product in the system, the manufacturer makes its description and sends a request to the monitoring system about the required quantity of CIM.

After receiving the necessary data, the system generates the codes and then sends them to the manufacturer. The generation of codes during the voluntary labeling period is free of charge. With the introduction of mandatory labeling, the manufacturer will have to pay a certain fee for the codes. All costs will be included in the cost of their products.

After receiving the codes, manufacturers apply them to their goods or packages. The monitoring system receives information that the products are manufactured and will soon be available. If the product to be marked is not marked with a code, it is not allowed for sale. Violation of this rule leads to administrative and criminal penalties.

After wholesale suppliers purchase the goods, information about the change of ownership is entered into the monitoring system. It is the responsibility of suppliers to verify the codes affixed to the products and to reconcile them with the codes specified in the primary documentation.

Retail outlets check the code matches too. Once the goods are sold to the end buyer, the information about this is also sent to the monitoring system through the FDO and online cashier. After that, the unique product code is eliminated and destroyed.

What steps does the process of introduction of mandatory labeling of products include?

Officially, the law laying the foundations for the use of mass labeling of products has been in force since the first of January this year. But some products have been obligatorily labeled in our country before. Excise stamps are an example. Goods that had to receive mandatory certification were also labeled.

However, the means of identification used in the past proved to be untenable and were often forged.  Excise stamps were forged and used several times. It was often impossible to determine the legality of goods in a long chain consisting of many suppliers and buyers.

After analyzing the current situation, the state decided to take cardinal measures and introduce item labeling of products produced and offered to buyers. Now the labeling code will necessarily be assigned not to a batch of goods, but to each of its units (packaging of medicines, pack of cigarettes, bottle, etc.).

Since August 12, 2016 the mandatory labeling of fur products has been carried out as an experiment. All participants of this project were obliged to mark the products with CIM and then transfer data about it to the appropriate Information labeling resource, the operator of which being the Federal Tax Service of Russia.

After the adoption of the decree number sixty-two dated January 24, 2017, medicines became subject to mandatory labeling. CIM in a form of a bar two-dimensional code was applied on them. Federal Service for the Supervision of Public Health and Social Development claims that by the end of last year one hundred percent of registered medicines sold in our country were subject to individual labeling.

On the 1st of February last year the country began the introduction of the system USAIS 3.0, which provides for the branding of alcoholic beverages. The implementation of this project is monitored by the Federal Service for Alcohol Market Regulation. Since the beginning of July last year, the use of this system has become mandatory for alcoholic beverages. All manufacturers, importers, suppliers, and sellers (catering establishments and outlets) were obliged to keep an item to item record of produced and sold bottles. This system prohibits duplicating brands or selling alcohol indicating incomplete information.

Since the beginning of June last year, there has been an experiment providing for voluntary labeling of footwear. In a year after the beginning of this experiment it will be obligatory. In addition, this year mandatory labeling of a number of other products will be introduced.

Which products are subject to mandatory labeling in 2019?

The list of such goods includes ten commodity items. It specifies the exact dates for the mandatory labeling of each of them.

From the beginning of March 2019 mandatory labeling of all tobacco products without exception will be introduced. On July 1, they will be joined by footwear products. On the 1st of December this year, the following groups of goods will also be subject to mandatory labeling:

  • cologne water and perfume;
  • tyres;
  • various items of clothing, including work clothes made of composite or natural leather;
  • kitchen, toilet, dining room, bed linen;
  • women's and girls' knitted blouses, hand or machine knitted;
  • men's and boys' windbreaker jackets, windcoats, coats, trenchcoats, capes, short coats and greatcoats;
  • photoflashes, flash lamps, cameras (excluding cinema cameras).

Not all manufacturers of the above products are waiting for 2019 Some of them decided to start labeling their products in advance and did so voluntarily. For example, tobacco companies did so.

Introduction of mandatory labeling of all tobacco products and cigarettes

Although the date of introduction of mandatory labeling of tobacco products is set on 1st of March this year, manufacturers, suppliers, and sellers of tobacco products have already started this experiment today. It began in January of last year.

All participants should register on the CPTD Operator Information Portal in accordance with the official procedure. After registration in the system, the manufacturer can proceed to transfer information about its products and receive the required number of codes from the operator. Information about the issued cigarettes is recorded in the register of the operator. After that, they ask for the codes. When the codes are produced and handed over to the manufacturer, they are applied to the package. Information about this is also received by the operator. The codes used are entered in a different registry.

The DataMatrix 2D barcodes are currently indicated on boxes, blocks, and cigarette packs. At each sale of tobacco products, they are checked against the data specified in the primary documents. Final control is carried out at the moment of sale of cigarettes to the buyer.

After reading the barcode by the seller, the information about the code that went out of circulation is transferred to the fiscal cash storage device. The barcode information is then transferred to the FDO  and then received by the monitoring system operator. It clears the code used and deletes the data about it from the registry.

What are the consequences of violations of product labeling requirements?

Manufacturers, suppliers and sellers may be held administratively as well as criminally liable for any violation of the rules of mandatory labeling.

The administrative penalty provides for mandatory imposition of a fine of 5-10 thousand rubles on entrepreneurs and 50,000 - 100,000 on legal entities. All unmarked products are confiscated in the event of a fine.

Sale of goods without labeling is punishable today by a fine of 2,000 — 4,000 rubles for individuals, 5,000 — 10,000 for individual entrepreneurs, 50,000 — 300,000 for legal entities with confiscation of products. Such sanctions may also be imposed on the storage, transport or purchase of unlabeled products for the purpose of marketing.

Manufacture of unmarked cigarettes and alcohol is punishable by a fine for sole traders in the amount of 10,000 — 15,000 rubles with confiscation of products, and for legal entities — in the amount of 100,000 — 150,000 rubles.

Sale of tobacco and alcohol without labeling entails maximum penalties. Individuals in this case are punished with a fine of 4,000 — 5,000 rubles, individual entrepreneurs — 10,000 — 15,000 rubles, companies — 200,000 — 300,000 rubles. Unlabeled tobacco and alcohol must be confiscated.

In the manufacture, purchase, storage, transportation, and sale of unlabeled products in especially large volumes (in the amount of more than one and a half million rubles), one may be criminally liable. In the case of tobacco products and alcohol, the amount of this sum is reduced to one hundred thousand rubles. Violators face imprisonment for a period of up to three years in combination with a fine of up to one hundred and twenty thousand rubles or a very large fine of up to half a million rubles.