Medicinal and Toilet preparations (Excise duties) act, 1955 and Rules

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Session 2

Medicinal and Toilet preparations
(Excise duties) act, 1955 and Rules



• 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 2


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 3


Manufacture in 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 duty has not been paid until

the finished products are removed from the

licensed premises 4


Manufacture in Bond

• Every person interested in manufacturing preparations

containing alcohol or other narcotic substances should

obtain a license for the Excise Commissioner of the

concerned state

• The application for the license should be submitted in

the prescribed form accompanied with the prescribed

fee at least 2 months before the date of

commencement of the manufacture 5


• 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 bonded lab is proposed to be situated

– The amount of the capital proposed to be invested in the


– Approximate date from which the applicant desires to

commence the manufacture, stating the % of alcohol in each 6



– The number and full description of vats,

still and other permanent apparatus and

the machinery which the applicant

wishes to get together with the

maximum quantity of alcohol to be used 7



-The site and the elevation plans of the manufactory/building,

showing the different rooms, doors and windows, along with

similar plans for the quarters of the Excise Officer together with

relevant records

– The kind and number of each licence under the Drugs and

Cosmetics Act held by the applicant

– In case of a firm, copy of the partnership deed and in the case

of companies, the list of directors and managers. 8



– 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 9


Processing of application

-On receipt of application, the licensing authority will enquire

into the

1) The qualifications and experience of the technical personnel

involved in the manufacture

2) The equipment of the bonded laboratory

3) Suitability of the proposed building for the establishment of

bonded laboratory

4) Applicants financial position 10


-If the Excise commissioner is satisfied with the enquiries made,

he may issue directions for license to be issued and approve the

plans of the building and equipments

-On completion of the construction, the licensing authority will

ascertain whether the construction has been done in accordance

with the approved plan

-Separate licenses should be obtained for separate premises of

business 11


Conditions of License

-If the licensee desires to transfer his business to another person,

the transferee should obtain a fresh license which shall be

granted free of fee for the residue of the period covered by the

original license

-Any transfer in premises should be notified to the licensing

authority 10 days in advance and obtain an amended license

-The license is valid for a period of 1 year and should be

renewed thereafter

-The application for renewal should be submitted one month

before the due date 12


Conditions of License

-The license should be displayed in a prominent place within the


-The licensee should allow his premises and goods to be inspected

by the licensing authority

-A visit book should be maintained to enter the remarks of the

visiting officers

-All invoices and documents related to the business should be

maintained 13


Design and construction of a bonded laboratory

A bonded lab should consist of the compartments as per the

following diagram




Design and construction of a 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


4. If the manufacture of toilet preparations is also carried on, a

separate manufacturing room for these together with a

separate room for the storage of finished toilet goods

5. Accommodation , with necessary furniture for the excise

officer in charge of the bonded lab, near its entrance 15


– There should be only one entrance to the lab and only one

door for each of its compartments

– The lab can be opened only in the 16


Design and construction of a bonded laboratory

– 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

– The rods should be embodied in brick work to a depth of

at least 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 aboard indicating its

serial number and purpose 17


Design and construction of a bonded laboratory

– 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

– 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 18


Design and construction of a bonded laboratory

– All vessels , containing

preparations on which

duty has not been paid

should be secured with

excise ticket locks. 19


Manufacture of preparations in bonded laboratory

– The essential steps are :

1. Obtaining raw spirit from distillery without duty

2. Verification of raw spirit by excise officer

3. Storage of raw spirit in raw spirit store

4. Manufacture

5. Storage of finished preparations

6. Issue of preparations from bonded lab 20


Manufacture of preparations in bonded laboratory

1. Obtaining raw spirit from distillery

– Raw spirit is obtained from a distillery approved by the Excise


– An indent is sent in the prescribed form, countersigned by

the officer in charge of the lab ( in Duplicate)

– The distiller will receive the duplicate copy of the indent and

issue the spirit in duly sealed containers along with the

advice of consignment to the excise officer in charge of the

bonded lab 21


Manufacture of preparations in bonded laboratory

1. Obtaining raw spirit from distillery

– There should be no wastage of spirit during transportation

from the distillery to the lab

– In case there is a loss of contents due to negligence by the

manufacturer, the manufacturer will be asked to pay duty on

the total loss in the amount of spirit

– However if the Excise commissioner is satisfied that the loss

has occurred in spite of all care taken by the manufacturer,

he may waive off the duty on the lost spirit 22


Manufacture of preparations in bonded laboratory

2. Verification and storage of raw spirit

– The consignment of the spirit has to be verified in volume and

strength by the Excise officer on its arrival in the bonded lab

and the amount entered in the register maintained for the


– The spirit will then be stored in the spirit store 23


Manufacture of preparations in bonded laboratory

3. Manufacture of alcoholic preparations

– Whenever the manufacturer wants to manufacture any

preparation, he must calculate the requirements of the spirit

and hand it over to the officer in charge

– The officer will then issue the spirit

– Before requesting for the spirit, all the other ingredients of

the preparation should be kept ready

– The spirit is then mixed with the ingredients in the presence

of the officer in charge 24


Manufacture of preparations in bonded laboratory

3. Manufacture of alcoholic preparations

– The finished product is then moved to the finished goods

store, measured and stored in the vessels provided for the


– It should also be entered in a register and given a batch


– The officer in charge may permit the manufacturer to take a

sample upto a max of 250 ml from each batch of the finished

preparation, free of duty for determination of its alcoholic

strength 25


Manufacture of preparations in bonded laboratory

3. Manufacture of alcoholic preparations

– A separate account should be entered for samples used for

analysis and any amount left over after analysis should be

mixed with the main batch 26


Manufacture of preparations in bonded laboratory

4. Storage of finished preparations

– All finished preparations should be stored in bulk in jars and

bottles, each containing not less than 2.25 litres of the


– Every container should be labeled with the name of the

preparation, batch number, strength, date of storage and

actual content 27


Manufacture of preparations in bonded laboratory

4. Storage of finished preparations

– Preparations may be issued in containers not less than 50 ml


– The stored preparations should be entered in a stock ledger

which should be updated with manufacture of each batch 28


Manufacture of preparations in bonded laboratory

5. Issue of finished preparations

– Whenever the manufacture wishes to take out any

preparation from the bonded lab, he must present an

application to the excise officer and pay duty for it

– The officer will check the entries, realize the duty and allow

the preparations to be removed from the bonded lab

– Before issue of preparations, an issue pass has to be written

out by the Excise officer 29



• 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