Session 2
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 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
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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
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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 bonded lab is proposed to be situated
– The amount of the capital proposed to be invested in the
venture
– Approximate date from which the applicant desires to
commence the manufacture, stating the % of alcohol in each
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Licensing
– 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
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Licensing
-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.
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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 narcotwicww.dDurlouMigx.com 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
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-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
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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 www.DuloMix.com 12
Conditions of License
-The license should be displayed in a prominent place within the
premises
-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
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Design and construction of a bonded laboratory
A bonded lab should consist of the compartments as per the
following diagram
MANUFACTURING ROOM FINISHED GOODS STORE
RAW SPIRIT STORE EXCISE OFFICER
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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
preparations
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
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– 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
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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
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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
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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.
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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
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Manufacture of preparations in 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)
– 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
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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
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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
purpose
– The spirit will then be stored in the spirit store
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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
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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
purpose
– It should also be entered in a register and given a batch
number
– 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
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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
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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
preparation
– Every container should be labeled with the name of the
preparation, batch number, strength, date of storage and
actual content
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Manufacture of preparations in bonded laboratory
4. Storage of finished preparations
– Preparations may be issued in containers not less than 50 ml
capacity
– The stored preparations should be entered in a stock ledger
which should be updated with manufacture of each batch
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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
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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