1970 (10) TMI 28 - SC - Central Excise

Medicinal and Toilet Preparations (Excise Duties) Act, 1955 - Levy - Interpretation of taxing statute

Summary

Issues:
Interpretation of Item 1 in the Schedule to the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 in relation to the presence of alcohol in medicinal preparations.

Analysis:
The case involved a manufacturer of medicines resisting a demand for excise duty on the grounds that the medicines contained alcohol indirectly through substances like tincture and spirit. The central issue was whether the presence of alcohol in the medicinal preparations, even if not directly added, made them subject to excise duty under the Act. The relevant provisions of the Act, including Section 3(1) and the definition of "medicinal preparation," were crucial in determining the scope of dutiable goods. The contention was that unless alcohol was added in its free condition, the medicinal preparation should not be considered dutiable.

The Supreme Court analyzed the definitions and provisions of the Act, particularly focusing on Item 1 of the Schedule, which specified dutiable goods as medicinal preparations containing alcohol not meant for consumption as alcoholic beverages. The Court emphasized that the presence of alcohol, whether directly added or through components like tincture, was sufficient to attract excise duty. The Court rejected the argument that indirect introduction of alcohol would lead to multi-point taxation, stating that the plain language of the provision mandated duty on preparations containing alcohol, regardless of the method of inclusion.

Furthermore, the Court referred to Section 4 of the Act, which provided for a rebate on alcohol supplied to manufacturers of dutiable goods, indicating that multi-point taxation on medicinal preparations with alcohol was within the legislative intent. The Court highlighted that the rebate provision supported the imposition of duty on all medicinal preparations containing alcohol, emphasizing the unambiguous language of the levy provision. The decision of the Madras High Court in a similar case was cited to support the conclusion reached by the Supreme Court.

Ultimately, the appeal was dismissed, affirming that medicinal preparations containing alcohol, whether directly added or indirectly present, were subject to excise duty under the Act. The Court's interpretation focused on the explicit language of the provisions and legislative intent, emphasizing the inclusion of alcohol as a key factor in determining dutiability, irrespective of the method of introduction.