Circular No. 196/30/96-CX dated 3/4/96
Subject: Exemption from Excise Duty on Medicaments used in Ayurvedic
system under Notification No. 75/94-CE.
Ayurvedic system of rne4icines in accordance with the formulae given in the
authoritative books specified in the first Schedule to the Drugs and Cosmetic Act and
sold under a generic name are fully exempt from excise duty under notification No.
75/94-CE, dated the 29th March, 1994. The scope of the exemption on Ayurvedic, Unani,
Siddha, Homeopathic and Bio-chemics systems was clarified by the Board through a
Circular, F.No. B30/1/94-TRU, dated the 29th March, 1994. It was made clear that the
benefit of exemption is applicable so long as the medicaments are prepared according
to the formulae described in the relevant authoritative books or pharmacopoeia s the
case may be, and the medicine is s I by name described in such books or pharmacopoeia.
It is immaterial whether the manufacturer puts his mark, logo, monogram, symbol etc.
in marketing such medicines.
2. It has now been brought to the notice of the Board that ayurvedic medicine
manufactures are facing certain difficulties in availing of exemption from excise duty
in cases where some other ingredients are also added so as to increase the shelf life
or to make it in a convenient form or to be palatable. Such ingredients are reported
to be not having any therapeutic value. However, the benefit of exemption from excise
duty is being denied on the ground that such medicaments are not strictly being
manufactured as per the standard textbooks which is a condition prescribed under the
said notification.
3. The matter has been examined. There is no dispute that the medicaments remain
ayurvedic medicine and are sold as Ayurvedic medicines under generic name as stated in
the standard textbooks even if preservatives or binding agents etc are added but the
question is whether in view of the existing condition specified under the
notification the concessional rate of duty will be available or not. A view has been
expressed that as long as the ingredients are added in the ayurvedic medicaments which
do into have any therapeutic value and the formulation is otherwise prepared as per the
prescribed textbooks, it may not be proper to deny the benefit of full exemption to
such of those ayurvedit medicaments from excise duty under notification No. 75/94-CE.
In this context, the Ayurvedic Siddha and Unani Drugs Technical Advisory Board under
the Ministry of Health and Family Welfare were consulted, who has opined that changes
have taken place in the process of making of ayurvedic medicines and preservatives,
inner excipients like starch, lactose and willing agents like sodium laurel sulphate
are now a days widely used. They are in favour of allowing use of preservatives by the
manufacturers of ayurvedic medicines.
4. Having regard to the above, the Board is of the view the benefit of exemption under
S.No. 3 of notification No. 75/94-CE should not be denied to ayurvedic medicines if
they are manufactured in accordance with the formulae prescribed in the authoritative
textbooks and sold under the generic name mentioned in the said authoritative
textbooks but contain preservatives, inner the assessing officers may obtain a certificate
to be produced by the manufacturers from the appropriate Drug Authorities that the
drug satisfies the following conditions: -
(a) The medicament has been prepared in accordance with the formulae
prescribed in the authoritative textbooks; and
(b) The ingredients added, other than those prescribed in the authoritative
textbooks, should not have any therapeutic value.
Needless to say that for availing the benefit of exemption, the ayurvedic medicament
should be sold under the generic name as specified in the authoritative textbooks.
5. Pending cases on this issue, if any, may be disposed off accordingly.
Sd/-
(R.Sekar)
Deputy Secretary Central Board of Excise and Customs
F.N0.345/19/95-TRU
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