DPCO, 1995 & The Central Excise Tariff Act, 1985 And Their Related Cases

        DRUGS (PRICE CONTROL) ORDER, 1995 

•  Definitions

•  Sales prices of Bulk Drugs

•  Bulk Drug Manufacturers 

•  Calculation of Retail Price

•  Power to fix Formulation Prices

•  Power to Fix Ceiling Price

•  Power to recover Dues

•  Power to recover Overcharged Amt.

•  Issue of Price List

•  Power to Review

•The First Schedule

The Gazette of India - Extraordinary

PART II - Section 3 - Sub-Section (ii)

Ministry of Chemicals and Fertilizers

Department of Chemicals and Petrochemicals New Delhi, dated the 6th January, 1995  

ORDER 

S.O. 18 (E). : In exercise of the powers conferred by section 3 of the Essential Commodities Act, 1955 (10 of 1955), the Central Government hereby makes the following Order, namely:- 

1. Short title and commencement : 

(1)  This Order may be called the Drugs (Prices Control) Order, 1995. 

(2)  It shall come into force on the date of its publication in the Official Gazette. 

2. Definitions : In this Order, unless the context otherwise requires, - (a) "bulk drug" means any pharmaceutical, chemical, biological or plant product including its salts, esters, stereo-isomers and derivatives, conforming to pharmacopoeial or other standards specified in the Second Schedule to the Drugs and Cosmetics Act, 1940 (23 of 1940), and which is used as such or as an ingredient in any formulation;

(b)           "capital employed" means net fixed assets plus working capital of a manufacturer in relation to manufacture of bulk drugs;

(c)            "ceiling price" means a price fixed by the Government for Scheduled formulations in accordance with the provisions of paragraph 9; (d)  "dealer" means a person on the business of purchase or sale of drugs, whether as a wholesaler or retailer and whether or not in conjunction with any other business and includes his agent;

(e)     "distributor" means a distributor of drugs or his agent or a stockist appointed by a manufacturer or an importer for stocking his drugs for sale to a dealer;

(f)     "drug" Includes - 

(i)       all medicines for internal or external use of human beings or animals and all substances intended to be used for, or in the diagnosis treatment, mitigation, or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes; 

(ii)     such substances, intended to affect the structure or any function of the human or animal body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Government by notification in the official Gazette; and 

(iii)   bulk drugs and formulations; 

(g)    "Form" means a form specified in the Second Schedule;

(h)    "formulation" means a medicine processed out of, or containing without the use of any one or more bulk drug or drugs with or pharmaceutical aids, for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or and, but shall not include - 

(i)      any medicine included in any bona fide Ayurvedic (including Sidha) or Unani (Tibb) systems of medicines. 

(ii)  any medicine included in the Homeopathic system of medicine; and 

(iii)any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply; 

(i)    "free reserve" means a reserve created by appropriation of profits, but does not include reserves provided for contingent disputed claims, goodwill, revaluation and other similar reserves;

(j)    "Government" means the Central Government;

(k)  "import" with its grammatical variations and cognate expressions means bringing into India from a place outside India, and "importer", in relation to any goods at any time between their importation and consumption, includes any owner or any person holding himself out to be the importer;

(kk) “local taxes” means any tax or levy (except excise duty included in retail price) paid and/or payable to the Central Government or State Government or any local authority under any law bt the manufacturer or his agent or dealer;

(l)      "manufacture" in relation to any drug, includes any process or part of a process for making, altering, finishing, packing, labelling, breaking or otherwise treating or adapting any drug with a view to its sale and distribution, but does not include the compounding or dispensing of any drug or the packing of any drug in the ordinary course of retail business, and "to manufacture" shall be construed accordingly.

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Balkrishna Pillai, Chief Inspector of Drug, Intelligence squad Trivendrapuram Vs Matha Medical 1991.

Balakrishna Pillai, Chief ... vs Matha Mediclas And Others on 15 January, 1991 Equivalent citations: 1991 SCR (1) 65, 1991 SCC (2) 203 Author: J S Verma Bench: Verma, Jagdish Saran (J) PETITIONER: BALAKRISHNA PILLAI, CHIEF INSPECTOR OF DRUGS INTELLIGENCE   S

 Vs.

RESPONDENT: MATHA MEDICLAS AND OTHERS

DATE OF JUDGMENT15/01/1991

BENCH: VERMA, JAGDISH SARAN (J) BENCH: VERMA, JAGDISH SARAN (J) RAY , B.C. (J)

CITATION:  1991 SCR  (1) 65   1991 SCC  (2) 203  JT 1991 (1)   123   1991 SCALE  (1)35

ACT   Drugs (Price Control) Order, 1979--Paras 10-14, 18  and 21--  Collection of excess price when drug's maximum  retail price  fixed--Maintainability of prosecution--'Bulk  drug'-- Formulation--Interpretation of.

HEADNOTE:

     Respondent  No.  1 is a firm dealing in  medicines  and respondents 2 and 3 are its managing partner and pharmacist. In contravention of the provisions of Drugs (Price  Control) Order  1979, para 21 read with para 18 they charged  from  a Nursing Assistant of the Medical College Hospital,  Kottayam, Rs.  90 in excess of the maximum retail price fixed for  the sale  of 15 tablets of Largactil of 100 mg each and  60p  in excess for 100 tablets of Hipnotex of 5mg each.   According to   the  prosecution  this  act  of  their  's   being   in contravention of the provisions of the Order, was punishable under  Section 7 of the Essential Commodities Act, 1955  and accordingly   prosecution   was   initiated   against  the respondents.   The trial court found the respondents  guilty and convicted them and sentenced respondent No. 1 firm to  a fine  of Rs. 2.000 and respondents 2 and 3 to  three  months simple imprisonment.  On appeal, the High Court  of  Kerala acquitted  them taking the view that none of  the  aforesaid two   medicines,   namely  Largactil   and   Hipnotex were 'formulations' as  defined  in Section 2(f)  of  the  Drugs (Price Control)  Order 1979 and as such the sale  of  these drugs at higher rates than the prescribed was not punishable under paras 21 read with para 18 of the order.

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The Central Excise Tariff Act, 1985

[ACT NO. 5 OF 1986]

                                                                                                                         

[19th January, 1986]

An Act to provide for tariff for Central Duties of Excise BE it enacted by Parliament in the Thirty-sixth Year of the Republic of India as follows:-

1. Short title, extent and commencement  :-

(1) This Act may be called the Central Excise Tariff Act, 1985.

(2) It extends to the whole of India. 1 (3) It shall come into force on such date as the Central Government may, 2 by notification in the Official Gazette, appoint.

2. Duties specified in 3 [the First Schedule and the Second Schedule] to be        levied. –

The rates at which duties of excise shall be levied under the 4 [Central Excise and Salt Act, 1944] (1 of 1944) are specified in3 [the first Schedule and the Second Schedule].

3. Emergency power of the Central Government to increase duty of excise.

 (1) Where, in respect of any goods, the Central Government is satisfied that the duty leviable  there on under Section 3 of the 5 [Central Excise Act, 1944] (1 of 1944) should be increased and that circumstances exist which render it necessary to take immediate action, the Central Government may, by notification in the Official Gazette, direct an amendment of 3 [the First Schedule and the Second Schedule] to be made so as to substitute for the rate of duty specified in 3 [the First Schedule and the Second Schedule] in respect of such goods, -

(a)  in a case where the rate of duty as specified in 3 [the First Schedule and the Second Schedule} as in force immediately before the issue of such notification is nil, a rate of duty not exceeding fifty per cent ad valorem expressed in any  form or method;

(b) *in any other case, a rate of duty as it thinks necessary. Provided that the Central Government shall not issue any notification under this sub-section for substituting the rate of duty in respect of any goods as specified by an earlier notification issued under this sub-section by that Government before such earlier notification has been approved with or without modifications under sub-section (2).

Explanation:, “Form or method”, in relation to a rate of duty of excise means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty may be levied.

(2) Every notification under sub-section (1) shall be laid before each House of Parliament, if it is sitting, as soon as may be after the issue of the notification, and if it is not sitting, within seven days of its re-assembly, and the Central Government shall seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification is so laid before the House of the People and if Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the validity of anything previously done there under.

(3) For the removal of doubts, it is hereby declared that any notification issued under subsection

(1), including any such notification approved or modified under sub-section (2), may be rescinded by the Central Government at any time by notification in the Official Gazette.

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 Mentha and Allied medicals Product Ltd Vs Collector of Central excise, Meerut 2004,

 

Mentha And Allied Products Limited Versus Commissioner Of Central Excise, Meerut, Uttar Pradesh

Civil Appeal No. 922 of 1998 ; *J.Date :- MAY 5, 2004

CENTRAL EXCISE RULES, 1944 Rule - 8(1) CENTRAL EXCISE ACT, 1944 Section - 11A CENTRAL EXCISE TARIFF ACT, 1985

The appellant is not in the use of any formulation which is a medicine processed out of or containing CENTRAL EXCISE RULES, 1944 - R. 8(1) - Central Excise Act, 1944 - S. 11A - Central Excise Tariff Act, 1985 - appellant-Company engaged in the manufacture of Menthol IP, Menthol BP, Menthol U.S.P. and Mentha Oil IP under a licence granted by the drug control authorities under the Drug and Cosmetics Act, 1940 - appellant claimed Menthol as falling under the expression "bulk drugs" as set out in the notification dated 1.3.1988 and accordingly filed the classification list and availed the benefit of exemption - Department demanded excise duty without availing of the benefit of exemption and imposed penalty - CEGAT held that Menthol cleared by appellant is not used as such, or as an ingredient in any formulation as provided under the Act of 1940 and appellant is not entitled to said exemption - appeal - held, the expression "formulation" is used only with reference to a medicine processed out of bulk drug - Menthol IP used by one or more bulk drugs - therefore, the view taken by the CEGAT cannot be assailed - further without absolute clarity of law and where divergent views have been expressed by the Tribunal, High Court and the also by this Court in one of the decisions invoking of S. 11A and levy of penalty is not appropriate - order of the Tribunal modified to the - appeal partly allowed.

Equivalent Citation(s):  2 004 (5) SCC 193 : 2004 (5) Scale 776

JUDGMENT :- Imp.Para:

Cases Referred To :

Calibre Chemicals V/s. Commissioner Of central Excise, Surat, 1998 98 ELT 755 Citric India Ltd. V/s. Union Of India, 1993 66 ELT 566 Union Of India V/s. Citric India Ltd., 2002 146 ELT 259 : 2003 (9) SCC 18 : 2003 (85) ECC 303 : 2002 S.Rajendra Babu, J.

1 The appellant before us is a company engaged in the manufacture of Menthol IP, Menthol BP, Menthol U.S. P. and Mentha Oil IP. The appellant was carrying on its activities under a licence granted by the drug control authorities constituted under the Drugs and Cosmetic Act, 1940. The licence enabled the appellant to manufacture Menthol IP, Menthol BP, Menthol U.S.P. and Mentha Oil IP.

2 On 1.3.1988 a notification No. 31/88-CE was issued by the Department which reads as under: In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944 , the Central Government hereby exempts goods of the description specified in column (2) of the Table thereto annexed and falling under Chapter 28, 29 or 30 as the case may be, of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1985), from so much of the duty of excise livable thereon under the said Schedule as is in excess of the amount calculated at the rate specified in the corresponding entry in column (3) of the said Table.

Explanation In this notification, the expression "bulk drugs" shall have the same meaning assigned to it in the Drugs (Prices Control) Order, 1987. The Notification provides that the expression

"Bulk drugs" shall have the same meaning assigned to it in the Drugs (Prices Control) Order, 1987. The Drugs (Prices Control) Order, 1987 defines 'bulk drug' as under: "Bulk Drug" means any substance including pharmaceutical, chemical, biological or plant product or medicinal gas conforming to pharma-copoeial or other standards accepted under the Drugs and Cosmetics Act, 1940 (23 of 1940), which is used as such, or as an ingredient in any formulation."

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