The Medicinal and Toilet Preparations Excise Duties Act

The Medicinal and Toilet Preparations (Excise Duties) Act & Rules

DEFINITIONS “alcohol” means ethyl alcohol of any strength and purity having chemical composition C 2 H 5 OH. “medicinal preparation” includes all drugs which are a remedy or “prescription” prepared for internal or external use of human beings or animals & all subs intended to be used for or in t/t, mitigation or prevention of disease in human beings or animals. “narcotic drug” or “narcotic” means a subs which is coca leaf, or coca derivative, or opium or derivative of opium, or Indian hemp & shall include any other subs, capable of causing or producing in human beings dependence, tolerance & withdrawal syndromes & which CG may, by notification in Official Gazette, declare to be a narcotic drug or narcotic.

DEFINITIONS “toilet preparation” means any prep which is intended for use in toilet of human body or in perfuming apparel of any description, or any subs intended to cleanse, improve or alter complexion, skin, hair or teeth & includes deodorants & perfumes. “bonded manufactory” means premises approved & licensed for mfr & storage of medicinal & toilet prep containing alcohol, opium, Indian hemp or other narcotic drug on which duty has not been paid. “non-bonded manufactory” means premises approved & licensed for mfr & storage of medicinal & toilet prep containing alcohol, opium, Indian hemp or other narcotic drug on which duty has been paid.

LICENSING � Alcoholic prep & narcotics or narcotic drugs can be mfr’d only under the authority of licence. � Such licence is issued only if the requisite licence for mfr of drugs under D&C Act has been obtained. � Application for license or for its renewal is to be made to Licensing Authority (LA) who is (a) Excise commissioner in case of a bonded manufactory or warehouse (b) in other cases, an officer authorised by SG. � Separate application to be made if more than one kind of license is desired. � Where applicant has > 1 place of business, he should obtain a separate licence in respect of each such place of business. � Application for license should be submitted in prescribed form accompanied with prescribed fees, atleast 2 months before the proposed date of commencement of mfr.

Particulars to be submitted in application for obtaining licence to mfr dutiable goods in or outside bond: 1. Name & address of applicant & place & site on which the manufactory is situated or to be constructed. (a) If applicant is a firm; name & address of every partner of firm; (b) If it be a company, its regstd name & address, & names & add of its directors, managers & managing agents to be specified. 2. Amt of capital proposed to be invested in the venture. 3. Approximate date from which applicant desires to commence manufactory & statement whether bonded lab will require services of a whole time or part-time excise officer and whether the quarters for excise staff will be provided within the manufactory or its vicinity. 4. No. & full description of vats, stills & other permanent apparatus & machinery which applicant wishes to set up together with max qty of alcohol & alcohol content in finished prep & max qty by wt of opium, Indian Hemp or other narcotic drugs or narcotics & their contents in finished & unfinished prep.

5. Site & elevation plans of manufactory or building & also similar plans for quarters of excise officer with relevant records. 6. Amt in cash or Govt Promissory Notes which applicant is prepared to furnish for the due performance of conditions on which the license may be granted. 7. Kind & number of each license under D&C Act held by applicant. 8. List of all prep which the applicant proposes to mfr &/or those mfd during preceding year showing percentage or proportion of alcohol in alcoholic prep or opium, Indian Hemp or other narcotic drugs in terms of weight in proportions containing those subs, quoting pharmacopoeia under which such prep are/were proposed to be mfd.

� On receipt of application, LA may enquire into the following: 1. Qualification & previous experience of technical personnel engaged in mfr’ing operations. 2. Equipment of bonded & non-bonded laboratory. 3. Soundness of applicant’s financial position. 4. Suitability of proposed building for establishment of mfr’ing unit. • Licence cannot be sold or transferred. • It should be exhibited in a conspicuous part of licensed premises. • Where a licensee sells or transfers his business to another person, purchaser or transferee has to obtain a fresh license but for residue of period covered by the license it is issued free of cost. • Licensee can enter into partnership after obtaining prior sanction of LA & then his license is suitably amended.

• If a partnership is dissolved, every partner is reqd to send a report of dissolution to LA within 10 days. • If a licensee desires to transfer his business to new premises he can do so be informing LA atleast 15 days in advance, specifying add of premises & getting his license suitably amended. • LA may amend or alter any license or issue a fresh license in accordance with any further conditions which may be prescribed. • Any correction in license is valid only if ordered & attested by LA. • License can be revoked or suspended by LA if the licensee or any other person in his employment is found to have committed a breach of prescribed condition or any provisions of the Act or of Indian Penal Code; after giving him reasonable opportunity of showing cause against action proposed to be taken.

• License remains valid for a period of 1 year & should be renewed thereafter. • Application for renewal should be submitted atleast one month before commencement of the year to which it relates. • Licensee is also reqd to provide a visit book paged & stamped by any officer empowered by Excise Commissioner in this behalf, in which visiting officers may record any remarks when inspecting licensed premises. • On termination of period of license, licensee has to deliver visit book, account & license to such officer as directed by LA. • All invoices, cash memoranda, permits & other documents relating to consignments received & dealt with by licensee are to be preserved for a year after the year to which they relate.

MANUFACTURE Supply of rectified spirit: For mfr of medicinal & toilet prep, rectified spirit can be obtained from a distillery or a spirit warehouse of the state or outside state. In any case, if the Excise Commissioner is satisfied that the loss of rectified spirit in transit is bonafide & not due to negligence or connivance on the part of mfr’er, duty payable in respect of such loss may be waived in full or in part according to merits of the case. Concession in this rule is not applicable to issue of rectified spirit to non-bonded manufactories, except with prior sanction of SG

Mode of manufacture: Mfr of medicinal & toilet prep containing alcohol is permitted in bond as well as outside bond. In case of mfr in bond (on which duty has not been paid), is to be used under excise supervision. In case of manufacture outside bond, only alcohol on which duty has been paid, has to be used.

MANUFACTURE IN BOND Rectified spirit without previous payment of duty is issued if mfr’er enters into a bond with sufficient security towards due payment of duty & observance of rules. There should be only one entrance to bonded manufactory & one door to each of its compartments. All these doors should be secured with excise ticket locks during the absence of officer-in-charge.

� Bonded lab should make the foll provisions: 1. One plain spirit store unless the manufactory is attached to a distillery or spirit warehouse. 2. At least one large room for mfr’ing medicinal prep & separate arrangement for mfr of toilet prep. 3. Room(s) for storing finished medicinal prep & toilet prep. 4. Accommodation with necessary furniture for officer-in-charge in bonded premises. 5. Malleable rods NLT ¾” in thickness, set NMT 4” apart, embodied in brick work upon a depth of at least 2 inches & covered on inside with strong wire netting or expanded metal of a mesh NMT 1 inch in diameter or length in every window of bonded premises. 6. A board on which the name of the room & a serial no. , if any, are legibly painted in oil colour, on the outside of every such room in manufactory.

7. All pipes from sinks or wash basins inside manufactory premises discharging into drains forming part of general drainage system of premises. 8. All gas & electrical connections within the licensed premises so fixed as to admit of the supply of gas or electricity being cut off & all regulators or switches being securely locked at the end of the day’s work. Addition or alteration in respect of permanent fixture in bonded premises can be made only with previous permission of Excise Commissioner. Permanent vessels for storage of alcohol, narcotic drugs & narcotics received under bond & all finished prep on which duty has not been paid should be secured with excise ticket locks. All vessels intended to hold alcohol & liq prep are gauged by officer-in-charge. They should bear a distinctive serial no. & their full capacity distinctly & indelibly marked on them. Tables should be computed to show contents of each vessel at an inch & one tenths of an inch of depth of each vessel.

� Mfr of alcoholic prep: 1. Procurement of rectified spirit 2. Verification of rectified spirit received 3. Issue of spirit from spirit store 4. Storage of finished products 5. Issue of alcoholic prep from bonded lab 6. Deficiencies in finished store 7. Disposal of sub-standard prep 8. Disposal of recovered alcohol 9. Wastage in mfr 10. Remission of duty in case of loss due to accident

1. Procurement of rectified spirit - Rectified spirit can be obtained on an indent countersigned by officer-incharge from any distillery or spirit ware-house. - Officer of distillery or spirit ware-house, on receiving duplicate copy of indent, shall issue spirit in duty sealed containers & send an advice of consignment to officer-in-charge. 2. Verification of rectified spirit received - Verify in volume & strength - Amt to be entered in a register maintained - Store in spirit store

3. Issue of spirit from spirit store - Calculated qty of alcohol can be obtained on requisition by licensee to officerin-charge. - Mfr’er should keep all other ingredients of prep ready & mix alc immediately in presence of officer-in-charge. - Every time the percolator or other vessel intended for alc is charged, a label should be attached showing the foll particulars: 1. Name & batch no. of prep 2. Description & qty of alc placed in it 3. Date of removal of prep & qty of such prep removed � As prep is mfd, it should be removed to finished goods store, & after measuring, it should be stored in vessels provided for purpose & accounted for in register.

� On completion of mfr, licensee must be permitted to take free samples, or qty that officer-in-charge considers necessary for analysis & declaration of strength of alc & medicaments. � Any qty left over after analysis should be returned to bonded manufactory & mixed with main bulk of batch before it is measured & stored. � Qty used by licensee should be accounted separately. � All entries of stock register relating to batches of finished prep should be initialled by officer-in-charge. � He can also take 2 samples from each batch, each NMT 150 ml of which one must be sent to chemical examiner. � Duplicate sample kept in excise ticket lock. � After receipt of report from chemical examiner, duplicate sample should be returned to finished goods store.

Duplicate sample should not be returned to finished goods store if chemical examiner declares à strength of prep to be more than 3° proof over the strength declared by mfr’er, unless EC permits std’ization of such sub-std prep. à Spurious prep All smaples reqd for analysis are to be supplied free of cost by licensee & all expenses in connection with packing & despatch samples should be borne by him. Samples may also be taken at any time & sent to chemical examiner for analysis & check.

4. Storage of finished products - Store in jars or bottles each containing NLT 80 fuid ounce volume. - Such ready for use prep may be filled in bottles or containers of NLT 2 fluid ounce vol - But EC may permit filling in bottles or containers of small capacity - Every container of finished prep should bear a label showing its name, batch no. , alc strength & name of mfr’er. - Label of each bulk container of prep stored in bulk should indicate actual contents in bulk gallons, alc strength & date of storage. - Containers should be arranged in suitable racks as to allow ready identification of each batch. - Record of all deficiencies in bulk content of finished prep should be kept by officer-incharge & reported to EC quarterly. - If EC is satisfied that deficiency reported was due to natural or unavoidable reasons & it has not gone into consumption, he may remit duty payable. - Otherwise, such loss is subject to levy of duty at penal rate which should NMT double the prescribed rate.

5. Issue of alcoholic prep from bonded lab - Alc prep from bonded lab can be taken out by a mfr’er by making an application to Excise officer in prescribed form after paying duty on it. - Excise officer after checking entries & realisng duty payable, allows reqd qty’s to be removed after issuing a permit. - Prep issued to bonded warehouse or for export or to institutions entitled to receive duty free prep, may be issued without payment of duty. - Instead of paying duty on every consignment, an advance sum may be deposited to credit of collecting govt. - Licensee is reqd to maintain accounts in proper forms & registers. - He should also deliver to officer-in-charge, by 5 th of each months, a return of transaction of business in respect of preceding month. - Supervisory staff for bonded lab is decided by EC in consultation with licensee. - Excise officer especially empowered in this behalf, shall inspect manufactory & submit the report.

- Dutiable goods cannot be delivered from bonded manufactory or bonded warehouse before 6 am & after 6 pm nor at any hour on Sunday or other holidays. - Licensee of a bonded manufactory or warehouse shall be held responsible for removal of dutiable goods by any person & shall be liable to be dealth with as if he had removed the goods himself. 6. Deficiencies in finished store - A record of deficiencies in bulk content of any finished M&TP in store shall be maintained by officer-in-charge. - A report of all such deficiencies is submitted to EC every quarterly. - In absence of satisfactory expln, all loss is subjected to levy of duty at penal rates which NMT double prescribed rates.

7. Disposal of sub-standard prep - A finished M&TP that is or is suspected to have deteriorated in quality may be destroyed by mfr’er with permission of EC. - EC may allow a mfr’er to reprocess a sub-std prep. - EC shall waive duty on alc content of prep so destroyed if he is satisfied that the deterioration of his prep or its improper mfr was due to reasons beyaond the control of licensee. 8. Disposal of recovered alcohol - Alc recovered in course of prod of M&TP or distillery separately from the mark of such prep may be used for subsequent prod of same prep provided such alc is collected & accounted separately. - When alc recovered from a prep liable to duty at lower rate is sought to be used in mfr of a prep subject to higher rate of duty, the duty on prep so mfd shall be collected or made leviable on determination of spirit strength of prep.

- An account of recovered alc in a recovered alc vat shall be maintained by officer-in -charge in prescribed form. - Recovered alc declared by licensee to be unfit for consumption shall be destroyed by him in presence of officer-in-charge, on submission of written application. - No rebate of duty shall be allowed on recovered alc so destroyed. 9. Wastage in mfr: - % of wastage in prod of a particular M&TP is fixed by SG from time to time. - Any wastage exceeding permissible limit & not properly accounted for shall be charged with duty together with such penalty not exceeding duty leviable thereon as EX may deem fit. - If alc strength of a prep is found to exceed highest allowable limit by more than 3 degree proof or to be below permissible limit, its issue from bonded manufactory shall be withheld.

10. Remission of duty in case of loss due to accident: - In case of any accidental loss of alc in a bonded manufactory, due to reasons beyond the control of licensee, duty on alc so lost shall be remitted with approval of EC.

MANUFACTURE OUTSIDE BOND 1. Obtaining duty paid spirit 2. Manufacture, storage & sale 3. Sampling 4. Employees 5. Inspection

� Mfr & sale of non-bonded manufactory has to be conducted b/w sunrise & sunset & on days fixed by Excise commissioner. � There should be a spirit store, a laboratory, finished store, each having one door & one entrance to non-bonded lab. � Construction of windows & other provisions – same as bonded manufactory � Spirit store & finished store should be separate for rectified spirit purchased at diff rates & prep made from such spirits. � Any alteration in arrangement of building & plant can be made only with previous sanction of EC. � SG may relax all or any provisions in case of small mfr’er whose annual consumption of alc does not exceed 100 gallons & also in case of those who prepare medicinal prep for dispensing to their patients only & not for sale. � Suitable receptacles should be provided for storage of alc & finished prep.

� Obtaining duty paid spirit: Rectified spirit can be obtained from any distillery or spirit warehouse on an indent prepared in triplicate. Original copy is sent to distiller or spirit warehouse keeper. Duplicate copy to officer-in-charge of distillery or spirit ware-house. Triplicate copy is retained by licensee. Duty should be paid to Govt treasury & a challan in token of such payment should be enclosed along with duplicate copy of indent being sent to officer-in-charge of distillery. Treasury officer sends an advice to officer-in-charge of distillery who shall issue spirit together with a permit covering issue. Spirit so brought into non-bonded manufactory has to be immediately transferred to spirit store & necessary accounts written up in prescribed register. Mfr’er cannot sell or transfer rectified spirit obtained by him. In any case qty of rectified spirit with him shall not exceed limit fixed by LA.

Manufacture, storage & sale: Mfr, storage & sale should be carried out in licensed premises only. Each prep should be regstd & bear a batch no. All finished prep should be transferred from lab to finished store & be so arranged that the checking of stock of every batch of prep from register is facilitated. Prep stored in bulk should be measured into storage vessel to nearest fluid ounce & sealed. Qty’s taken out from time-to-time, should be entered in stock card maintained for the purpose.

� Sampling: Without previous notice to mfr’er, excise officer shall take samples NLT 10% & NMT 15% of total no. of prep from finished stocks at least once every month. These samples are forwarded to chemical examiner for verification of alc contents thereof. If report of chemical examiner differs by more than 3 degree proof strength as declared by Mfr’er, mfr’er is liable to a penalty at rate of 10 times diff in duty on qty so mfd but not exceeding Rs. 2000. Freq occurrence of such offence shall be ground for cancellation of license held by mfr’er. All samples are to be taken by excise officer personally & in presence of mfr’er or his authorised agent. Every sample (8 fluid ounce or as fixed by EC) should be taken in duplicate & cork of each bottle should be fixed with officer’s personal seal. Label of bottle should be signed by officer taking the sample. Mfrer shall also affix his seal & sign the labels.

Duplicate samples are to be preserved carefully under lock & key & returned promptly to mfr’er when needed no more. Mfr’er is not entitled to any compensation for samples taken for analysis. Mfre’er should maintain up-to-date & proper accounts of his transaction of his business in his manufactory & declare them to proper officer by 5 th of each month. Employees: Mfr’er should inform EC the names of all employees whose duties require them to enter non-bonded manufactory. Any change in such persons should be conveyed promptly to EC. No other person can enter manufactory without special permission to proper officer.

Inspection: EC & other officer having jurisdiction over the area in which manufactory is situated; Any officer of prohibition, land revenue, medical & public health dept authorised by SG; Can inspect non-bonded manufactory at all reasonable times. Officer should inspect non-bonded manufactory at least once every month.

MANUFACTURE OF AYURVEDIC, HOMEOPATHIC & PATENT & PROPRIETARY PREPARATIONS � Ayurvedic prep: ‘Asavas’ & ‘Aristas’ are principal types of ayurvedic prep which contain self generated alcohol. P’copoeias that are used in various states are presently recognised as std ayurvedic P’copoeias. Ayurvedic prep containing self-generated alc in which alc content does not exceed 2% proof spirit are deemed to be non-alc & hence are exempted from payment of excise duty. Prep containing more than 2% alc, but not capable of consumption as ordinary alc beverage are also exempted from excise duty. Prep which can be consumed as alc beverages are liable to duty of Re 1 per L. P. lt.

Regstd ayurvedic practitioners of good standing may be allowed to mfr & dispense such prep free of duty provided they take license & use such prep only for their patients. Practitioner should allow excise officer to take samples to ensure that prep contain only self-generated alc & also maintain daily account of all prep mfd & dispensed giving particulars of names & addresses of patients. Ayurvedic prep made by distillation or to which alc is added at any stage of mfr are treated as prep capable of being used as ordinary alc beverages & hence are liable to a duty of Rs 30 per L. P. lt. Homeopathic prep: For time being American, British & General P’copoeias in vogue are recognised as std p’copoeias for homeopathic prep. All homeopathic prep containing alc are classified as being consumed as ordinary alc beverages & attract duties prescribed for such class of prep falling under category of restricted prep.

� Patent & Proprietary prep: Allopathic prep are medicinal prep made according to mdern system of medicine. They are classified as: 1. Official prep made strictly according to formula given in current editions of BP, BPC, IP, USP, NF, any other p’copoeia recognised under D&C Act & Veterinary Codex. 2. Non-official allopathic prep referred to as proprietary prep which are prepared according to allopathic medicine & conform strictly to formula displayed on label.

M&TP capable of being consumed as ordinary alcoholic beverages are referred as ‘Restricted Prep’. All other std prep & proprietary prep not being capable of being consumed as alc beverages are referred as ‘Unrestricted Prep’. Any unrestricted prep, if misused widely, may be declared to be restricted prep by CG either on request of SG or on its own. Any new proprietary prep is presumed to be a restricted prep unless declared to contrary by CG on advice of standing committee. Any mfr’er wanting to mfr a propreitary prep should submit 2 samples of prep together with its formula to SG. SG shall then forward samples to CG which after seeking advice of standing committee, will declare whether sample is to be categorised as a restricted or an unrestricted prep.

Standing committee consist of: 1. Drugs Controller of India 2. Chief Chemist, Central Revenues Lab 3. One Pharmacologist nominated by CG. 4. Advisor on Indigenous system of medicine, Ministry of Health, Family planning & Urban Development. Committee shall advice CG on all matters connected with technical aspects of admn of Act &Rules & in particular whether (i) A particular prep is to be treated as a genuine M&TP for purposes of the Act. & if so (ii) whether it should be treated or continue to be treated as a restricted or unrestricted prep.