TRINITY PHARMACEUTICALS INDIA PVT Vs. SECRETARY BOARD OF REVENUE EXCISE TRIVANDRUM
LAWS(KER)-1968-1-17
HIGH COURT OF KERALA
Decided on January 09,1968

TRINITY PHARMACEUTICALS (INDIA) PVT. LTD., TRICHUR Appellant
VERSUS
SECRETARY, BOARD OF REVENUE (EXCISE), TRIVANDRUM Respondents

JUDGEMENT

- (1.) THIS case arises under the Medicinal and Toilet Preparations (Excise Duties) Act 1955, (hereinafter referred to as the Act ). The Act provides for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol, opium, Indian hemp or other narcotic drug or narcotic. Section 3 of the act contains the charging provision. It reads: "3. Duties of Excise to be levied and collected on certain goods.-- (1)There shall be levied duties of excise, at the rates specified in the schedule, on all dutiable goods manufactured in India. (2) The duties aforesaid shall be leviable- (a) Where the dutiable goods are manufactured in bond, in the state in which such goods are released from a bonded-warehouse for home consumption, whether such State is the state of manufacture or not; (b) Whether the dutiable goods are not manufactured in bond, in the State in which such goods are manufactured, (3) Subject to the other provisions contained in this Act, the duties aforesaid shall be collected in such manner as may be prescribed. Explanation.-- Dutiable goods are said to be manufactured in bond within the meaning of this section if they are allowed to be manufactured without payment of any duty of excise leviable under any law for the time being in force in respect of alcohol, opium, Indian hemp or other narcotic drug or narcotic which is to be used as an ingredient in the manufacture of such goods. " The Schedule in the Act has been amended from time to time; and what applies to this case is Item No. 2 in the Schedule substituted by the Finance Act, 5 of 1964. This item reads as follows: (For Item see next page)
(2.) THE petitioner is a manufacturer of an Ayurvedic Preparation called "protovine". Admittedly it contains self-generated alcohol; and alcohol is also added to it as preservative. Protovine is manufactured out of bonds. Where a medicinal preparation is manufactured out of bonds, the rectified spirit required for its manufacture is obtained by the manufacturer in accordance with the Medicinal and toilet Preparations (Excise Duties) Rules 1956 (hereinafter referred to as the rules) from the distillery on payment of its price and the duty payable thereon. Thus the duty payable on protovine in respect of the alcohol added to it has been levied and recovered by the State Government in accordance with the Act and the rules. Subsequently a controversy arose whether the petitioner is liable to pay duty on the said preparation in respect of the self-generated alcohol also. The Board of Revenue took the view that "protovine" falls under Item No. 2 (iii) in the schedule to the Act, and that the duty payable thereon is on the quantity of alcohol found in the preparation, and not added to the preparation. Accordingly, the Excise Department made an analysis of the preparation, determined the quantity of self-generated alcohol therein, by deducting the added alcohol from the total alcoholic content as found on analysis, and demanded the petitioner to pay duty on the said preparation also in respect of the self-generated alcohol. Ext. P-7 dated 28-1-1966 is a memorandum issued by the Secretary of the Board of revenue, communicating the above decision of the Board to the petitioner, thereupon the petitioner filed this Original Petition to quash Ext. P-7; and it has prayed for the issue of a writ of mandamus or prohibition to the respondents forbearing or restraining them from imposing or collecting any duty on "protovine", not only in respect of the quantity of self-generated alcohol therein, but also from collecting any duty thereon. Item No. Description of dutiable goods. Rate of duty. 2. Medicinal Preparations Medicinal preparations in Ayur-vedic, Unani or other indigenous systems of medicine (i) Medicinal preparations containing self-generated alcohol which are not capable of being consumed as ordinary alcoholic beverages. Nil (ii) Medicinal preparations containing self-generated alcohol which are capable of being consumed as ordinary alcoholic beverages. Thirty-eight naye paise per litre of the strength of London proof spirit. (iii) All others containing alcohol which are prepared by distillation or to which alcohol has been added. Rupees fifteen and fifty naye paise per litre of the strength of London proof spirit. (iv) Medicinal preparations not containing Ten per cent ad alcohol but containing opium, Indian hemp, or valorem. other narcotic drug or narcotic. . . . . . . . . . . . . . . . . . .
(3.) THE question raised in this case is one of first impression. Protovine is admittedly "not capable of being consumed as ordinary alcoholic beverage"; and it contains "self-generated alcohol". The petitioner's learned Counsel, therefore, contended that it falls under Clause (i) of Item 2 of the Schedule in the Act, and that the duty is nil. On the other hand, the learned Government Pleader, appearing for the respondents, contended that medicinal preparations falling under item 2 are divided into two categories, namely (i) those containing self-generated alcohol and (ii) those which are prepared by distillation and containing alcohol or to which alcohol is added. Medicinal preparations mentioned in Clauses (i) and (ii) of Item 2 fall under the first category; and all others fall under the second category. According to him, the first category relates to medicinal preparations containing self-generated alcohol only; and a medicinal preparation to which alcohol is added falls under the second category. The learned Government Pleader submitted that protovine, being a preparation "to which alcohol has been added", falls under Clause {iii) of Item 2, and duty is payable thereon at Rs. 15. 50 per litre of the strength of London proof spirit.;


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