Medicinal and Toilet Preparations (Excise Duties Act, 1955)
Medicinal and Toilet
Preparations (Excise Duties Act, 1955)
INTRODUCTION TO MEDICINAL AND TOILET PREPARATIONS
·
Alcohol has always been a
fascinating friend of the mankind.
·
However the consumption of
alcohol purely for drinking purpose to derive pleasure is the abuse of this
liquid.
·
Use of alcohol for
preparation of medicines is necessity.
·
Alcohol used either for
drinking or manufacture of perfumes is subjected to higher duties than that of
used in medicine preparation.
·
Affordability of alcohol
is to be controlled.
·
This is the reason to take
this Act in existence.
·
The Excise Duties Act came
in force in 1955.
o
For excise duty to be an
effective alcohol control measure, duty increases need to increase annually in
relation to inflation and income.
o
It has found that
increasing the level of a minimum price per unit leads to steep reductions in
alcohol consumption and related harms.
·
An excise or excise tax is
an inland tax. It is different from Customs duties.
o
In other words, an excise
is considered an indirect tax.
·
In common terminology (but
not necessarily in law),
·
an excise is distinguished
from a sales tax or VAT in three ways:
o
(i) an excise typically
applies to a narrower range of products;
o
(ii) an excise is
typically heavier, accounting for a higher fraction of the retail price of the
targeted products; and
o
(iii) an excise is
typically a per unit tax, costing a specific amount for a volume or unit of the
item purchased, whereas a sales tax or VAT is an ad valorem tax and proportional
to the price of the good.
·
In India, an excise is
described as an indirect tax levied and collected on the goods manufactured in
India.
·
The Act is extended
throughout India.
·
The Excise Duties Act is
sometimes referred as “Sin tax” Types of Excise duty Basic Additional Special
Excisable Goods
·
The term 'excisable goods'
means the goods which are specified in the first schedule and the second
schedule to the Central Excise Tariff Act, 1985, as being subject to a duty of
excise.
DEFINITIONS
·
“Medicinal Preparation”
o
includes all drugs which
are a remedy or prescription, prepared for internal or external use of human
beings or animals and all substances intended to be used for or in the
treatment, mitigation or prevention of disease inhuman beings or animals.
·
“Toilet preparation” means
o
any preparations, which is
intended for use in the toilet of the human body or in perfuming apparel of any
description or any substances intended to cleanse, improve or alter the
complexion, skin, hair or teeth and includes deodorants and perfumes.
·
“Absolute alcohol” means
o
alcohol confirming to the
British Pharmacopoeial specification for dehydrated alcohol
·
“Bonded manufactory” means
o
the premises or any part
of the premises approved and licensed for the manufacture and storage of
medicinal and toilet preparations containing alcohol, opium, Indian hemp and
other narcotic drugs or narcotics on which duty has not been paid
·
“Non-bonded manufactory”
means
o
the premises or any part
of the premises approved and licensed for the manufacture and storage of
medicinal and toilet preparations containing alcohol, opium Indian hemp and
other narcotic drugs or narcotics on which duty has been paid
·
“Chemical Examiner” means
o
the Chemical Examiner to
the State Government and includes such other officer whom the State Government
or the Central Government may at any time appoint as Chemical Examiner;
·
“Denatured spirit” or
“denatured alcohol” means
o
alcohol of any strength
which has been rendered unfit for human consumption by the addition of
substances approved by the Central Government or by the State Government with
the approval of the Central Government
·
“Duty” means
o
the duty of excise payable
under Sec. 3 of the Act
·
“Excise Commissioner”
means
o
the Head of the Excise
administration of a State and includes a Prohibition Commissioner and also an
officer designated in any State as Prohibition or Excise Director
·
“Finished store” means
o
that portion of a non
bonded or bonded manufactory which is set apart for the storage of its finished
preparations
·
“From” means
o
a Form appended to the
rules
·
“Gauge” means
o
to determine the quantity
of alcohol or dutiable goods contained in or taken from any cask or receptacle
or to determine the capacity of any cask or receptacle
·
“Laboratory” means
o
that part of a non-bonded
or bonded manufactory in 2 which the actual manufacture of dutiable goods takes
place;
·
“Manufacturer” means
o
a person to whom a licence
has been granted for the manufacture of dutiable goods.
·
“Officer –in-charge “
means
o
an officer of the Excise
Department of any State appointed by the collecting Government to supervise
work in a bonded manufactory or a bonded warehouse and includes officers of any
other Department similarly appointed;
·
“Proper officer” means
o
an Excise Officer in whose
jurisdiction the premises of the manufacturer of any dutiable goods, or of any
person engaged in the process of manufacture of, or trade in such goods or
containers thereof, whether as manufacturer, wholesale dealer, or intended
manufacturer or wholesale dealer, are situated;
·
“Prove” means
o
to test the strength of
alcohol by hydrometer or other suitable instrument;
·
“Quarter” means
o
a period of three months
beginning with 1st January, 1st April , 1st July or 1st
October;
·
“Rectified spirit” means
o
plain un-denatured alcohol
of a strength not less than 50.0 over proof and includes absolute alcohol;
·
“Rectified preparation”
means
o
every medicinal
preparation specified in the schedule and includes every preparation declared
by the Central Government as restricted preparation under these rules;
·
“Unrestricted preparation”
means
o
any medicinal preparation containing
alcohol but other than a restricted preparation a spurious preparation;
·
“Schedule” means
o
the schedule annexed to
these rules;
·
“Spirit store” means
o
that portion of the bonded
or non-bonded manufactory which is set apart for the storages of alcohol opium,
Indian hemp and other narcotic drugs or narcotic purchased free of duty or at
prescribed rates of duty specified in the schedule to the Act;
·
“Standard preparation:
means
o
a preparation other than a
“sub-standards preparation”.
·
A “sub-standard
preparation “ is –
o
(a) a pharmacopoeial
preparation in which the amount of any of the various ingredients is below the
minimum that the pharmacopoeial composition would require , or
o
(b) a proprietary medicine
which does not conform to the formula or the list of ingredients disclosed on
the label on the container or on the container;
·
“Warehouse” means
o
any place or premises
licensed licensed under rule 70.
OBJECTIVE OF MEDICINAL AND TOILET PREPARATIONS (EXCISE DUTIES)
ACT, 1955
1.
This is a central Act and
thus extends to the whole of India.
2.
It came into force with
effect from 1st of April, 1957.
3.
This Act provides for the
levy and collection of duties of excise on the medicinal and toilet
preparations containing alcohol, Indian hemp., narcotic drugs and narcotics
which are termed as dutiable goods.
4.
With the above object, the
Act also regulates the manufacture of dutiable goods.
5.
The Excise duty is
collected on the manufacture of such preparations as per the schedule
prescribed in the Act.
6.
By virtue of section 19,
the Central Govt. has framed the Medicinal and Toilet Preparations (Excise
Duties) Rules, 1956 to carry out the purposes of the Act.
SCENARIO BEFORE THE ENACTMENT OF MEDICINAL AND TOILET PREPARATIONS
·
Before the enactment of the
Medicinal and Toilet Preparation (Excise Duties ) Act,1955,
·
levy of excise duties on
the medicinal and toilet preparations containing alcohol, Indian hemp, narcotic
drugs and narcotics was a subject on which the provincial legislature could
legislate.
·
Various Provincial
Government had their own legislature for levy and collection of excise duties
on the medicinal and toilet preparations containing alcohol, Indian hemp,
narcotic drugs and narcotics.
CATEGORY OF LICENSES UNDER THE MEDICINAL AND TOILET PREPARATIONS
1.
L-I:
·
License to manufacture
medicinal and toilet Preparations containing alcohol, opium, Indian hemp and
other narcotic drugs and narcotics under bond for payment of duty
2.
L-2:
·
License to manufacture
medicinal and toilet Preparations containing alcohol, opium, Indian hemp and
other narcotic drugs and narcotics outside bond
3.
L-3
·
License for Ayurvedic or
Unani Practitioner to manufacture Ayurvedic or Unani preparations containing
self-generated alcohol for dispensing and not for trade purposes
4.
L-4:
·
License for a bonded
warehouse
APPLICATION FORMS FOR PROCURING LICENCES
1.
AL-1
·
(Application form for
licences in forms L-1 & L-2 to manufacture goods liable to duty of excise
under the Medicinal and Toilet Preparations (Excise Duties ) Act, 1955
2.
AL-2:
·
Application form for
licence in form L-3 to manufacture Ayurvedic or Unani preparations by any
Ayurvedic Practitioner
3.
AL-3:
·
Application form for
licence in form L-4 for a bonded warehouse for the storage of excisable goods
liable to duty under the Medicinal and Toilet Preparations (Excise Duties )
Act, 1955
MANUFACTURE OF ALCOHOLIC PREPARATIONS
Manufacture in-bond:
·
The licence is issued from
office of the Excise Commissioner of the State for alcohol.
·
Application should be made
two months in advance prior to date of manufacturing along with requisite fee
as indicated.
·
The application should
include:
1.
Name, addresses, and site
of bonded laboratory if it is a firm name and address of every partner of the
firm; if it is a company, its registered name, address of the Managing Director
and Directors.
2.
Capital to be invested for
bonded preparation.
3.
Number and description of
apparatus, machinery, still and maximum amount of alcohol to remain at one
time.
4.
Approximate date of
starting manufacturing; requirement of excise officer, either whole time or
part-time.
5.
List of preparations
containing alcohol; licence number issued by Licensing Authority under DCA.
6.
Elevation plan, plan of
different rooms, details of doors and windows, and quarters for excise staff
are to be provided.
7.
In case of firm,
partnership deal and in case of companies, list of association and latest
balanced sheet of the company.
·
The Licensing Authority
shall enquire into
o
the purpose of
manufacturing of such formulations containing alcohol and narcotic drugs;
o
qualifications of the
staff employed, previous experience of technical personnel;
o
suitability of the
proposal;
o
financial position of the
applicant.
·
The Licensing Authority
shall also look into
o
the equipment, requirement
of alcohol and fix an amount of security.
·
After satisfying all conditions,
o
the Licensing Authority
issues license for one year relating to the premises approved after inspection
and for manufacturing of product containing alcohol or narcotic drug.
·
Separate licence is issued
for each premises and the license is not transferable.
·
The licence issued should
be displayed properly in the premises.
·
Licensing Authority may
amend or alter the conditions of licence.
·
Renewal of licence
o
should be done before one
month of expiry or else 25% extra fee is charged.
·
Conviction of violation of
provision of the Act is possible under sections 109 or 116 of Indian Penal
Code.
·
Before cancelling or
suspending the licence, sufficient opportunity is given to the licensee to
explain his/her position.
Ayurvedic Preparations and Homoepathic Preparations
Ayurvedic preparations are of two types:
1)
Self-generated alcohol
containing preparations like Asavas and Aristas
2)
Prepared by distillation
or addition of alcohol.
·
Self-generating preparation:
·
Containing alcohol was
earlier exempted from excise duty.
·
However, now all such
preparations are chargeable with 4% ad valorem excise duty.
·
Those preparations with
more than 2% self-generated alcohol and being capable of consumed as a beverage
are charged duty of 4% ad valorem.
·
Ayurvedic practitioners are
exempted for license from excise authorities if the samples are being used for
their own patients.
o
However, the excise
officer should be allowed to take the sample, if required.
·
For Homoepathic preparations capable of consumption as
ordinary alcoholic beverages, the excise duty of 4% ad valorem is required to
be paid.
Manufacture outside bond:
·
The manufacturing and sale
operations are restricted only between sunrise and sunset and days and hours as
fixed by the Excise Commissioner.
·
Essential requirements of
Manufactory are:
1.
Separate laboratory spirit
store and finished store.
2.
Only one entrance to
non-bonded manufactory and one door each to laboratory, spirit store and
finished store.
3.
The iron bars in windows
should be not less than 19 mm in thickness, set not more than 102 mm apart and
fixed in brick construction to the depth of not less than 51 mm. The aperture
of wire netting to the window should not exceed 25 mm in diameter.
4.
A separate spirit store
for rectified spirit purchased at the specified duty.
5.
All pipes from wash basins
and sinks are connected to closed drainage fonning part of general drainage
system.
6.
All electric and gas
connections should be well secured with one cut off switch.
·
The State Government may
relax conditions of requirements of infrastructure if alcohol consumption is
less.
·
Alcohol is procured by the
manufacturer after payment of excise duty.
·
The form for payment of
duty is filled up in triplicate,
o
one copy is to be given to
spirit warehouse keeper,
o
second to officer in
charge and
o
third to be retained by
the licensee.
·
The duty for alcohol
purchased is to be paid to Government treasury and challan enclosed.
·
Thereafter, the treasury
officer sends an advice to officer incharge.
·
Sealed containers are
required to be used for procurement and storage of alcohol.
·
The alcohol purchased
cannot be resold.
·
Manufacturing, storage and
sale of preparations should be carried out only in licensed premises.
·
Batch number should be
given and separate finished store is provided for alcoholic products.
·
All necessary entries of
operations carried out are maintained in stock register and the same should be
made available for inspection by the excise officer and drug control authority.
·
Excise officer may take
upto 10% of the preparation for analysis and the same is sent to the chemical
examiner.
·
If the chemical examiner
of government gives the report that alcohol content is more than what is
claimed, the penalty charged is 10 times or maximum of Rs. 2000/- per batch.
·
If this is frequently done
by manufacturer, licence may be withdrawn.
Design and construction of
non-bonded lab manufacture in non-bonded lab:
·
The following categories
of preparations are exempt from excise duty
o
Hospitals and dispensaries
working under the supervision of Central Govt. or a State Govt.
o
Hospitals and dispensaries
subsidized by the Central Govt. or State Govt.
o
Charitable hospitals and
dispensaries under the Administrative control and management of local body.
o
Medical Store depot,
Central Govt. or State Govt.
o
Every other institution
certified by the principal Medical Officer of the district in which such
institution is situated, which distributes drugs to poor for free.
Following particulars and documents shall have to be furnished to
obtain a license to establish a bonded and non-bonded manufactory:
1.
Requisite license under
the Drugs and Cosmetics Act, 1940 for manufacturing the medicinal products.
2.
The approved list of the
medicinal preparations and their compositions, by the Drug department.
3.
Declaration regarding the
maximum quantity of alcohol, Indian hemp, narcotic drugs and narcotics in
finished and non-finished preparation that are likely to remain in the
manufactory at one time.
4.
Declaration regarding the
number and full description of vats, stills and other apparatus and machinery
required for the purpose.
5.
The proposed amount of
capital to be invested.
6.
The detail of the site.
7.
The nature of service
required (whole-time /part time) of the Excise Officer.
8.
Three copies of the
B.P.Plan.
9.
In case of firm following
particulars are to be submitted :
a.
Registration copy of the
firm, if registered.
b.
The partnership deed.
10.
In case of company, the
following particulars are to be submitted :
a.
A list of directors and
managers, as certified by the Registrar of Joint stock companies.
b.
Memorandum of articles of
association.
c.
The latest balance sheet.
11.
The qualification and
previous experience of the technical, personnel engaged in the manufacturing
operation.
12.
Financial solvency.
13.
Trade License.
14.
Fire license.
15.
I-Tax / P-tax / S-tax
clearance certificate.
16. Certificate of physical and mental soundness.
·
Before granting of license
of bonded manufactory / warehouse, the licensing authority shall fix the amount
of security / surety, which is required to be furnished under these rules.
·
The security may be
furnished in interest bearing securities viz. Government promissory notes,
national savings certificate.
The effective rates of duty on different categories of medical
preparations and toilet preparations are as follow:
|
Description
|
Rate of duty
|
|
a. Allopathic medicinal preparations containing
alcohol, Narcotic drug or narcotics.
|
16% ad-valorem
|
|
b.
Ayurvedic/ Unani/
Indigenous system medicinal preparation not containing alcohol but containing
narcotic drugs or narcotics.
|
16% ad-valorem on the retail sale price after abatement
of 40% of the retail sale price
|
|
c. Toilet preparations containing alcohol, narcotic
drugs or narcotics.
|
|
|
Ayurvedic / Unani / Indigenous system medicinal preparations
containing alcohol which are prepared by distillation and to which alcohol is
added.
|
6%
|
|
Ayurvedic / Unani / Indigenous system medicinal
preparations containing self-generated alcohol
capable of being consumed as ordinary alcoholic beverages.
|
4%
|
|
Homoeopathic preparations containing alcohol.
|
Rs 20/- per PAC
|
|
Ayurvedic / Unani / Indigenous system medicinal
preparations containing self-generated alcohol not capable
of being consumed as ordinary alcoholic beverages.
|
NIL
|
WAREHOUSING OF ALCOHOLIC PREPARATIONS
·
The manufacturers and
dealers in alcoholic preparations are allowed to establish warehouses anywhere
in India for the purpose of depositing spirituous goods on which duty has not
been paid.
·
Those wishing to establish
such a warehouse should obtain a licence for the purpose from the Excise
Commissioner of the State, by making application to him with a fee of Rs.25.
Movement of goods from one warehouse to other returns
·
The licensee must, within 7 days of the expiry of each month,
submit details of the transactions made in the warehoused goods and such other
details as may be prescribed by the State Govt. in this behalf.
Inter-state transport of alcoholic goods export of alcoholic
preparations
·
Under bond (directly from
a bonded laboratory without payment of duty) under claim for rebate of duty
DUTIES OF EXCISE TO BE LEVIED AND COLLECTED ON CERTAIN GOODS
1.
There shall be levied
duties of excise, at the rates specified in the Schedule, on all dutiable goods
manufactured in India.
2.
The duties aforesaid shall
be leviable:
·
where the dutiable goods
are manufactured in bond, in the State in which such goods are released from a
bonded-warehouse for home consumption, whether such State is the State of
manufacture or not;
·
where the dutiable goods
are not manufactured in bond, in the State in which such goods are
manufactured.
Explanation:
·
Dutiable goods are said to
be manufactured in bond within the meaning of this section if they are allowed
to be manufactured without payment of any duty of excise leviable under any law
for the time being in force in respect of alcohol, [narcotic drug or narcotic]
which is to be used as an ingredient in the manufacture of such goods. Subs. by
Act 66 of 1976, s. 39
REBATE OF DUTY ON ALCOHOL PREPARATIONS
·
Where alcohol opium,
Indian hemp or other narcotic drug or norcotic had been supplied to a
manufacturer or any dutiable goods for use as an ingredient of such goods by,
or under the authority of, the collecting Government and a duty or excise on
the goods so supplied had already been recovered by such Government under any law
for the time being in force, the collecting Government shall, on an application
being made to it in this behalf, grant in respect of the duty of excise
leviable under this Act, a rebate to such manufacturer of the excess, if any,
of the duty so recovered over the duty leviable under this Act.
CERTAIN OPERATIONS TO BE SUBJECT TO LICENSES
1.
The Central Government
may, by notification in the official Gazette, provide that from such date as
may be specified in the notification,
·
no person shall engage in
the production or
·
manufacture of any
dutiable goods or of any specified component parts or
·
ingredients of such goods
or
·
of specified container of
such goods or
·
of labels of such
containers
·
except under the authority
and in accordance with the terms and conditions of license granted under this
Act.
2.
Every license under
sub-section (1) shall be granted for such area, if any, for such period,
subject to such restrictions and conditions, and in such form and containing
such particulars as may be prescribed.
OFFENCES AND PENALTIES
If any person
1.
contravenes any of the provisions
of a notification issued under Sec. 6; or
2.
evades the payment of any
duty of excise payable under this Act; or
3.
fails to supply any
information which he is required by rules made under this Act to supply or
(unless with a reasonable belief, the burden of proving which shall be upon
him, that the information supplied by him is true) supplies false information;
or
4.
Attempts to commit or
abets the commission of any offence mentioned in Cl. (a) or Cl.(b).
5.
He shall for every such
offence be punishable with imprisonment for a term which may extend to six
months, or with fine which may extend to two thousand rupees, or with both.
Officers required assisting Excise Officers
·
All officers of Customs
and Central Excise, and such other officers of the Central Government as may be
specified in this behalf, and all police officers and all officers engaged in
the collection of land revenue are hereby empowered and required to assist
excise officers in the execution of this Act.
Owners or occupiers of land to report manufacture of contraband
dutiable goods
·
Every owner or occupier of
land and the agent of any such owner or occupier incharge of the management of
that land,
o
if dutiable goods are
manufactured thereon in contravention of the provisions of this Act or the
rules made thereunder, shall, in the absence of reasonable excuse, be bound to
give notice of such manufacture to a Magistrate or to an officer of the Excise,
Customs, Police or Land Revenue Department immediately the fact comes to his
notice.
Failure of excise officers on duty
·
Any excise officer who
o
ceases or refuses to
perform, or
o
withdraws himself from,
the duties of his office,
o
unless he had obtained the
express written permission of his superior officer or
o
has given such superior
officer two months' notice in writing of his intention or
o
has other lawful excuse,
·
shall be punishable with
imprisonment for a term which may extend to three months, or with fine which
may extend to three months' pay, or with both.
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