Only preparations containing self-generated alcohol attracts excise duty.

(Prayer : Petition filed under Article 226 of the Constitution of India to call for the records of the 2nd respondent herein relating to his order dated 9.9.1998 passed in Proceedings D.Dis.C/3134/97 confirming the order of the 3rd respondent dated 30.11.1996 in No.M4/Ni-NE/P1/83/ 1974-75 to 1980-81 and quash the said order by the issue of a writ of certiorarified mandamus directing the 3rd respondent to refund to the petitioner the sum of Rs.45,795/04 paid pursuant to the said order and forbearing respondents from levying or demanding or collecting any excise duty including the duty of Rs.6,278/- levied by the 4th respondent on 30.11.1998 on the petitioner's unrestricted preparations prepared as per Sahasvayogam, a recognised Pharmacopeia under Rule 65 of the Medicinal and Toilet Preparations (Excise Duty) Rules, 1956.)

The petitioner manufactures ayurvedic preparations and claims to be a hereditary Vaidyar. He had earier prepared Dasamoolarishtam, Abhayarishtam, Amritharishtam and Kalyanakudam. Now, he is preparing Kanakasavam and Jeerakarishtam. He claims that they are all 'unrestricted preparations' and are not found in the list of 'restricted preparations' given in the Schedule to the Medicinal and Toilet Preparations Rules (Rules in short). In Kanyakumari District, from which the petitioner hails, the ayurvedic preparations are mainly unrestricted preparations since manufacture of restricted preparations involves expenditure. Restricted preparations are mainly manufactured by big pharmaceutical companies and the process involves distillation or addition of alcohol. The unrestricted preparations of the petitioner are manufactured using medicinal plant parts such as leaves, stems, seeds, fruits, roots, nuts, etc. and by adding water and by keeping the mixture under fermentation for a period of 45 days, periodically adding medicines to them. The preparations that are brought about by a process of fermentation without boiling are called Asavas and the preparations that are brought about by boiling and keeping under fermentation are called Arishtas. No alcohol is added nor are they brought about by the process of distillation. The manufacture of each of the preparations is as per the formulae and directions given in the Pharmacopoeia Sagasrayogam, a Malayalam Ayurvedha Pharmacopoeia which has been in vogue from time immemorial in the State of Kerala and Kanyakumari District and it is a recognised pharmacopoeia within the meaning of Rule 65 of the Rules. The unrestricted preparations of the petitioner and others contain only self-generated alcohol. The respondents found that these preparations contained self-generated alcohol in excess of 2% and consequently, excise duty was demanded under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (hereinafter referred to as the Act). The petitioner preferred an appeal. The appeal was dismissed. The dismissal of the appeal was challenged before the Board of Revenue. There also, he was not successful. The further appeals to the Government were also dismissed by orders dated 13.8.1982. The Government held that the Ayurvedic preparations manufactured by the petitioner contain pure spirit in excess of 2% and these are capable of being consumed as ordinary alcohol beverages and therefore, attract liability to pay duty irrespective of the fact whether these specific ayurvedic preparations have been included in the Schedule as restricted preparations or not. Against that, writ petitions were filed. These writ petitions were finally disposed of on 30.3.1990 and the matter was remitted to the Government for disposal afresh, after affording a reasonable opportunity to the petitioner. The appeal was rejected. As against that, the present writ petition has been filed.

2. The following provisions of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 are relevant and they are extracted hereunder :

"2. Definitions. - (c) 'Dutiable goods' means the medicinal and to