Gazette Reference: No.MTP/I12002/UX-7, dated 14th March, 2003
Type: Fee/Duty Revision — Excise Duty on Medicinal and Toilet Preparations
Authority: Bombay Prohibition Act, 1949 (implementing Government of India, Ministry of Finance notification No.1/2003-M&TP dated 1.3.2003, as per Finance Bill 2000)
Summary: This circular revises the rates of excise duty leviable on medicinal and toilet preparations containing alcohol or narcotic drugs, effective from 1st March 2003. Crucially, it shifts the duty calculation basis for Ayurvedic/Homeopathic preparations from per-litre of pure alcohol content to ad valorem (percentage of value), introduces a self-assessment mechanism for manufacturers, and mandates maintenance of current accounts with minimum credit balances for duty payment.
KEY CHANGES:
1. REVISED EXCISE DUTY RATES (Effective 1.3.2003):
| Sr. No. |
Description of Dutiable Goods |
Rate of Duty |
| 1 |
Allopathic Medicinal Preparations |
|
| 1(a) |
Medicinal preparations containing alcohol which are not capable of being consumed as ordinary alcoholic beverages |
|
|
(i) Patent or proprietary medicines |
16% ad valorem |
|
(ii) Others |
16% ad valorem |
| 1(b) |
Medicinal preparations capable of being consumed as ordinary alcoholic beverages |
|
|
(i) Medicines not containing known active ingredients in therapeutic quantities |
50% ad valorem |
|
(ii) Others |
16% ad valorem |
| 1(c) |
Medicinal preparations not containing alcohol but containing narcotic drugs |
16% ad valorem |
| 2 |
Unani or Ayurvedic Medicines containing alcohol or narcotic drugs |
16% ad valorem |
| 3 |
Toilet Preparations containing alcohol or narcotic drugs |
16% ad valorem (on 60% of retail sale price minus 40% abatement) |
| 5 |
Medicinal preparations containing self-generated alcohol not capable of being consumed as alcoholic beverages |
Nil |
| 6 |
All medicines containing alcohol prepared by distillation or to which alcohol has been added |
16% ad valorem |
| 7 |
Homeopathic preparations containing alcohol |
4% ad valorem |
2. MAJOR STRUCTURAL CHANGES:
Duty Calculation Basis Shift:
- Previous System: Ayurvedic/Homeopathic preparations taxed per litre of pure alcohol content
- New System: All preparations brought under ad valorem basis (percentage of assessable value)
- For toilet preparations: Duty calculated on retail sale price mentioned on label minus 40% abatement (i.e., 60% of retail price is assessable value)
3. SELF-ASSESSMENT SYSTEM (Immediate Effect):
Current Account Mechanism:
- Every manufacturer must open a current account in the name of the Excise Department
- Minimum credit balance = Average excise duty paid in last six months OR ₹1,00,000 (whichever is lower)
- Goods can be removed only after depositing duty from credit balance above the minimum maintained
Manufacturer Obligations:
- Get assessable price and excise duty payable pre-approved by excise authority before commencing self-assessment
- Nominate an authorized officer (name notified to Excise Department) responsible for duty compliance
- Factory manager remains ultimately liable for any duty shortfalls detected in audit
Record-Keeping Requirements:
- Authorized officer must maintain daily records (electronic or manual format)
- If electronic, print copies must be pasted in approved registers
- Records must reflect: finished goods stock, production, goods removed, excise duty paid
- All registers must be signed by authorized officer daily
Returns and Compliance:
- Submit daily/monthly returns as per Medicinal & Toilet Preparation Rules and as prescribed by Superintendent State Excise
- Frequency: As directed, but minimum twice every month
4. INSPECTION AND OVERSIGHT:
Excise Inspector Duties:
- Each inspection recorded in visiting book maintained by licensee
- Inspection must verify: raw materials, stock, consumption, production, duty paid
- Inspector must note satisfaction that duty correctly calculated and paid
Superintendent State Excise Duties:
- Visit every unit at least once per year
- Verify appropriate records maintenance and timely duty payment
- Issue copies of circular to all licensees in district
- Ensure acknowledgment of circular receipt from all Superintendents
5. TRANSITIONAL PROVISIONS:
Differential Duty Recovery:
- Where old rates applied during 1-14 March 2003, differential duty may be recovered from the manufacturer's current account
Immediate Applicability:
- Circular effective immediately
- All concerned licensees must be notified by Superintendents
- All Superintendents must acknowledge receipt of circular
EFFECTIVE DATE:
- New excise duty rates: 1st March 2003
- Self-assessment and current account mechanism: Immediate effect from 14th March 2003
Authority Reference: Commissioner of State Excise, Maharashtra State, Mumbai (circular No.MTP/I12002/UX-7)