Formulations with Less than 135 Mg of Dextropropoxyphene are not Liable for State Excise Duty: Bombay HC [Read Judgment]

A division bench of the Bombay High Court, in a writ petition filed by Macleods Pharamaceuticals, held that formulations containing less than 135 mg of dextropropoxyphene cannot be classified as a ‘narcotic’ or a ‘narcotic drug’ within the meaning of Section 2(h) of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 [M & TP Act] and hence are not liable for state excise duty.

Petitioner- Company was engaged in manufacturing pharmaceutical formulations under Chapter 30 of the schedule to the Central Excise Tariff Act, 1985.

The Central Government, by a notification dated June 12, 1986, had declared dextropropoxyphene to be a ‘narcotic drug’ for the purpose of the M&TP Act.

Consequently, the State Government claimed that the petitioners committed a criminal offence since they were manufacturing formulations that were narcotic substances without permission.

On December 12, 1998, the department was informed by the petitioners that their formulations contained only 65 mg of dextropropoxyphene, which was less than 135 mg as contemplated in the notification for a formulation to be classified as a narcotic drug under the M&TP Act.

However, on December 29, 1998, an inspector of the state Excise Department visited the petitioner’s factory and seized the stock of the said formulations for evasion of excise duty.

The bench comprising of Justice AS Oka and Justice Riyaz Chagla observed that the Petition is squarely covered by the judgment of this Court in USV Ltd.

“The term “Narcotic Drug” or “Narcotic” with which we are concerned with in the present case has been defined under Section 2(h) of the M & T P Act to mean a substance which is coca leaf, or coca derivative, or opium, or derivative of opium, or Indian hemp and shall include any other substance, capable of causing or producing in human beings dependence, tolerance and withdrawal syndromes and which the Central Government may, by notification in the Official Gazette, declare to be a Narcotic Drug or Narcotic. Under the notification dated 12th June 1986, issued by the Central Government in terms of the said provisions of the M & T P Act, substances have been declared as Narcotic Drug or Narcotic. The plain reading of item No. 86 in the notification extracted above which is the relevant item in the present case a Narcotic Drug or Narcotic would include only formulations containing more than 135 mgs of Dextropropoxyphene per dosage unit. In the present case admittedly the subject formulations contain less than 135 mgs i.e. 65 mgs of Dextropropoxyphene and hence cannot be classified as a Narcotic drug or Narcotic in view of the said Notification.”

Read the full text of the Judgment below.

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