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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Objectives
• To provide for the collection of levy and duties
of excise on medicinal and toilet preparations
containing alcohol, narcotic drugs or narcotics
• To provide for uniformity in the rules and rates
of Excise duties leviable on such preparations
throughout the country
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Definitions
• Alcohol means ethyl alcohol of any strength and purity having
the chemical composition C2 H5 OH
• Absolute alcohol means ethyl alcohol containing less than 1%
by weight of water
• Dutiable Goods means the medicinal and toilet preparations
specified in the Schedule as being subject to the duties of
excise levied under the Act
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Definitions
• 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
• Toilet Preparation means any preparation which is intended
to cleanse, improve or alter the complexion, hair, skin, or
teeth, and includes deodorants and perfumes
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Definitions
• Bonded Manufactory means the premises approved and
licensed for the manufacture and storage of medicinal and
toilet preparations containing alcohol, opium, Indian hemp or
any other narcotic drug or narcotics on which duty has not
been paid
• Non- bonded Manufactory means the premises approved and
licensed for the manufacture and storage of medicinal and
toilet preparations containing alcohol, opium, Indian hemp or
any other narcotic drug or narcotics on which duty has been
paid www.DuloMix.com 7
Definitions
• Denatured Alcohol or denatured spirit means 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
approval of the Central Government
• Rectified Spirit means plain denatured alcohol of a strength
not less than 50.00 over proof and includes absolute alcohol.
It is highly concentrated ethanol which has been
purified by means of repeated distillation, a process that is
called rectification.
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Definitions
• Restricted Preparation means every medicinal and toilet
preparation specified in the Schedule and includes every
preparation declared by the Central Government as restricted
preparation
• Unrestricted Preparation means any medicinal or toilet
preparation containing alcohol but other than restricted
preparation or a spurious preparation
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What is an Excise?
• Is an inland tax on the sale, or production for sale, of
specific goods or a tax on a good produced for sale, or sold, within a
country or licenses for specific activities.
• It is different from Customs duties ( border taxes)
• An excise tax is distinguished from a sales tax or VAT in three ways:
• (i) an excise typically applies to a narrower range of products;
• (ii) an excise is typically heavier, accounting for a higher fraction of
the retail price of the targeted products; and
• (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 proportional to the price of the good
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What is an Excise?
• An excise is considered an indirect
tax, meaning that the producer or
seller who pays the tax to the
government is expected to try to
recover or shift the tax by raising
the price paid by the buyer
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Central Board of Excise and Customs
• Central Board of Excise and Customs (CBEC) is a part of the Department
of Revenue under the Ministry of Finance, Government of India
• It deals with the tasks of formulation of policy concerning levy and
collection of Customs & Central Excise duties and Service Tax, prevention of
smuggling and administration of matters relating to Customs, Central
Excise, Service Tax and Narcotics to the extent under CBEC’s purview
• The Board is the administrative authority for its subordinate
organizations, including Custom Houses, Central Excise and Service Tax
Commissionerates and the Central Revenues Control Laboratory.
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Licensing
• Manufacturing of alcoholic and narcotic preparations can only
be undertaken under the authority of a licence granted for
this purpose
• A license will be granted only if the applicant holds the
requisite license for the manufacture of drugs under the
Drugs and Cosmetics act.
• The act also specifies procedures to be followed for the
manufacture of Homeopathic and Ayurvedic preparations,
removal of goods from bonded labs, interstate movement of
preparations etc.
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Licensing
• Application for the licence or for its renewal is to be made to
Licensing authority who is the EXCISE COMMISSIONER
• A separate application is to be made if more than one kind of
licence is desired
• The application for the licence should be submitted in the
prescribed form accompanied with the prescribed fee
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Licensing
• The particulars required to fill in the application for obtaining
the licence are:
– Name and address of the applicant and place and site on
which the manufacturing unit is situated
– The amount of the capital proposed to be invested in the
venture
– Approximate date from which the applicant desires to
commence the manufactory
– The number and full description of vats, still and other
permanent apparatus and the machinery which the applicant
wishes to get together wwwitwh.DtuhloeMmix.acoxmimum quantity1o5f alcohol
Licensing
-The site and the elevation plans of the manufactory/building
and also similar plans for the quarters of the Excise Officer
together with relevant records
– The amount on cash or Government Promissory Notes which
the applicant is prepared to furnish for the due performance of
the conditions on which the licence may be granted
– The kind and number of each licence under the Drugs and
Cosmetics Act held by the applicant
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Licensing
– A list of all preparations which the applicant proposes to
manufacture and /or those manufactured during the preceding
year showing the percentage or proportion of
alcohol in preparations or opium, indian hemp
or other narcotic drug
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Summary
• 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.
• The Excise Duties Act came in force in 1955.
• For excise duty to be an effective alcohol control measure,
duty increases need to increase annually in relation to
inflation and income.
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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 C2H5OH
• 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