Ethyl alcohol in manufactured products and the Dabur India principle support exclusion from Chapter 30 duty treatment.

Presence of ethyl alcohol in the manufactured products was confirmed by private laboratory reports and later by the Central Revenue Control Laboratory when the correct testing method was applied. An earlier negative report was treated as unreliable because it used an incorrect testing method. The note also reflects the principle from Dabur India that physical presence of alcohol in the final marketed product is not essential where alcohol is used in manufacture and is otherwise established by evidence. On that basis, the contrary finding of the adjudicating authority was unsustainable for the relevant period.

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Issues: Whether the products manufactured by the assessee contained alcohol so as to attract the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 and take them of liability under Chapter 30 of the Central Excise Tariff Act, 1985.

Analysis: The products were supported by private laboratory reports and later by the Central Revenue Control Laboratory, which confirmed the presence of ethyl alcohol when the correct testing method was applied. The absence of alcohol in an earlier test report was held to be attributable to an incorrect method of testing. The Court also noted that the legal position under the Supreme Court decision in Dabur India was that physical presence of alcohol in the final marketed product is not necessary if alcohol is used in manufacture and is otherwise established by the evidence. On the record, the ingredients used during the relevant period remained the same, and the adjudicating authority's contrary finding was not sustainable.

Conclusion: The products were held to contain alcohol for the relevant period and were not liable to central excise duty under Chapter 30 on the basis adopted in the impugned order.

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