Session 3
Medicinal and Toilet
preparations (Excise duties)
act, 1955 and Rules
Contents
• The Medicinal and Toilet Preparations (Excise Duties) Act
• Objectives, legal definitions, licensing, bonded and non-
bonded laboratory, warehousing
• Manufacture of ayurvedic, homeopathic, patent and
proprietary preparations
• Offences and penalties
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Intended Learning Outcomes
• At the end of this lecture, student will be able to
– Write the introduction and reasons for
implementation of The medicinal and Toilet
Preparation Act, 1955
– Describe the objective of Excise Duties Act, 1955
– Define the related terms included in the Excise Duties
Act, 1955
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Manufacture outside Bond
• Preparations are deemed to be manufactured in bond
when they are manufactured in a premise, licensed or
approved for this purpose and on which the excise duty has
been paid at the time of spirit purchase
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Manufacture outside Bond
• A license is required for undertaking the manufacture of
medicinal and toilet preparations without a bond
• The application for the licence should be submitted in
the prescribed form accompanied with the prescribed
fee at least 2 months before the date of
commencement of the manufacture
• The conditions are similar to that of manufacture in
bond
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Conditions of License
-The form of application and other conditions for license is the
same as that of manufacture in bond
-Non- bonded laboratory should be separate from the rest of the
business premises and should be used exclusively
for the manufacture of spirituous
medicinal and toilet preparations
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Design and construction of a non-bonded
laboratory
A non- bonded lab should consist of the compartments as per
the following diagram
FINISHED GOODS STORE
MANUFACTURING ROOM
RAW SPIRIT STORE
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Design and construction of a non-bonded
laboratory
1. A Spirit Store
2. A room for the manufacture of medicinal preparations
3. One or more rooms for the storage of finished medicinal
preparations
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Design and construction of a non-bonded
laboratory
– The manufacture and sale in a non- bonded lab should be
conducted between sunrise and sunset only and on days as
fixed by the excise commissioner for the purpose.
– There should be only one entrance to the lab and only one
door for each of its compartments
– Every window in the bonded premises should be provided
with maleable iron rods, not less than 1.9 cm in thickness
and set not more than 10 cm apart
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Design and construction of a non-bonded laboratory
– The rods should be embodied in brick work to a depth of atleast
5 cm and covered on the inside with strong netting or expanded
metal of a mesh not more than 2.5 cm in diameter in length
– Each room in the lab should bear a board indicating its serial
number and purpose
– The pipes from sinks inside the laboratory should be connected
to the general drainage of the premises
– The gas and electric connections in the lab should be arranged in
such a way that their supply can be cut off at the end of a days
work
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Design and construction of a non-bonded
laboratory
– Permanent vessels should be provided for the storage of
alcohol and other narcotic substances received under bond
– All vessels should bear a distinctive serial number and a
statement of their full capacity
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Manufacture in a non-bonded laboratory
– The essential steps are :
1. Obtaining raw spirit from distillery after duty payment
2. Manufacture
3. Storage of finished preparations
4. Returns
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Manufacture in a non-bonded laboratory
1. Obtaining raw spirit from distillery
– Raw spirit is obtained from a distillery approved by the Excise
commissioner
– An indent is sent in the prescribed form, countersigned by
the officer in charge of the lab ( in Duplicate)
– One copy to the distiller or warehouse keeper and the other
to the excise officer in charge of the distillery or warehouse
– Before sending a copy to the officer in charge of the distillery,
the manufacturer should pay the excise duty on the alcohol
to be purchased
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Manufacture in a non-bonded laboratory
1. Obtaining raw spirit from distillery
– The treasury challan of the payment should be enclosed with
the indent
– The treasury officer shall also send an advice to the Excise
officer in charge of the distillery
– After verification of the payment details, the excise officer
shall issue the spirit along with a permit covering the issue
– The spirit will then be transferred to the spirit store and
entered in the register
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Manufacture of preparations in non- bonded
laboratory
2. Manufacture of alcoholic preparations
– The manufacture of preparations from duty paid spirit should
be carried out only at the licensed premises
– Each preparation, soon after its manufacture, should be
registered and given a distinctive batch number
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Manufacture of preparations in non- bonded
laboratory
3. Storage of finished preparations
– All finished preparations should be transferred from the lab
to the finished goods store and so arranged that they can be
easily checked from the stock register
– Preparations stored in bulk should be measured in the
storage vessel nearest to 28.350 ml
– The quantities taken out from time to time should be
entered in the stock maintained for the purpose
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Manufacture of preparations in non- bonded
laboratory
4. Sampling
– The excise officer of the concerned jurisdiction, without any
previous notice to the manufacturer, shall take samples of
not less than 10% and more than 15% of the total batches
manufactured during the month
– All such samples should be taken personally by the officer in
the presence of the manufacturer
– Every sample shall be taken in duplicate and the labels of the
bottles should be signed by the officer taking the samples
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Manufacture of preparations in non- bonded
laboratory
4. Sampling
– The cork of every bottle should be fixed with the seal of the
officer
– The manufacturer can also add his seal to the sample bottles
– If the alcoholic content differs by more than 30 proof on
either side from the strength declared by the manufacturer,
he shall pay a penalty at the rate of 10 times the duty
payable
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Manufacture of preparations in non-bonded
laboratory
5. Returns
– The manufacturer should maintain up to date and proper
accounts of all transactions and deliver them to the
concerned officers on the 5th of each month
– Any change in staff should be intimated to the excise
commissioner
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Manufacture of preparations in non-bonded
laboratory
6. Inspection
– The non bonded lab shall be open to inspection by officers of
the excise department
– It shall be inspected at least once every month
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Fees
• The fees to be paid for obtaining a license are:
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Fees
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Offences and Penalties
OFFENCES PENALTIES
I. BY LICENSEES
a) Failure to follow licence Imprisonment up to 6 months or fine up
conditions/pay duty to Rs. 2000
b) Disorderly keeping of stocks or Fine up to Rs. 2000
accounts
c) Illegal sale of dutiable goods Fine up to Rs. 1000
d) Failure to furnish export proof Fine up to Rs. 2000
e) Obstruction to officers/ false Fine up to Rs. 5000
information
f) Failure to provide/ maintain weighing Fine up to Rs. 1000
or measuring devices
g) Failure to provide / maintain facilities Fine up to Rs. 200
for locking
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Offences and Penalties
OFFENCES PENALTIES
II. BY EXCISE OFFICERS
a) Failure to do duty Imprisonment up to 3 months or
fine or both
b) Vexatious searches / seizures Fine up to Rs. 2000
c) Disclosure of information Fine up to Rs. 1000
OFFENCES PENALTIES
III. BY PUBLIC
a) Malicious information Imprisonment up to 2 years or fine upto
Rs. 2000or both
b) Connivance of owners/ occupiers of Imprisonment up to 6 months or fine
land upto Rs. 500 or both
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Latest amendments
• Amendment of Article 268 (1) (Duties levied by the union
but collected by the States): –
-Article 268 (1) provides the provision of levy of stamp duty
and excise duty on medicinal and toilet preparation by union
government and collection by state (In case of State) or by
union (In case of union territory).
– Now, the duties of excise on medicinal and toilet preparation
has been omitted and same is been amalgamated in GST.
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Summary
• An excise or excise tax is an inland tax
• The objective of the Act is to provide for the collection of levy
and duties of excise on medicinal and toilet preparations
containing alcohol, narcotic drugs or narcotics
• Alcohol means ethyl alcohol of any strength and purity having
the chemical composition C2 H5 OH
• Medicinal Preparation includes all drugs which are a remedy
or prescription prepared for internal or external use of human
being or animals and all substances intended to be used for or
in the treatment, mitigation or prevention of disease in
human beings or animals