Government of India
Department of Revenue
(Tax Research Unit), New Delhi
Subject : Exemption from Excise Duty on Medicaments used in Ayurvedic system under Notification No. 75/94-CE.
Ayurvedic system of medicines 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, 1944. 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 medicine is sold 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 manufacturers 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 text-books which is a condition prescribed under the said notification.
3. The matter has been examined. There is no dispute that the medicaments remain ayurvedic medicines 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 nto have any therapeutic value and the formulation is otherwise prepared as per the prescribed textbooks, it nay 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 significant 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 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 textbook; 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 he generic name as specified in the authoritative textbooks.
5. Pending cases on this issue, if any, may be disposed off accordingly.