Codeine-based cough syrups within notified limits fall outside excise levy, but duty already paid may still be denied as refund.

Cough syrups containing Codeine Phosphate are treated as outside the definition of narcotic drug or narcotic for excise purposes when compounded with other ingredients and kept within the notified dosage and concentration limits, because the governing statutory scheme and notification exclude such preparations. On that basis, excise duty cannot be levied prospectively on preparations within those limits. However, duty already paid under protest was not ordered to be refunded, as refund was denied to avoid unjust enrichment on the footing that the burden may have been passed on to consumers.

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Issues: (i) Whether cough syrups containing Codeine Phosphate, when compounded with other ingredients and kept within the prescribed dosage and concentration limits, fall within the definition of narcotic drug or narcotic for the purpose of excise duty under the Act; (ii) Whether excise duty already paid under protest was refundable.

Issue (i): Whether cough syrups containing Codeine Phosphate, when compounded with other ingredients and kept within the prescribed dosage and concentration limits, fall within the definition of narcotic drug or narcotic for the purpose of excise duty under the Act.

Analysis: The statutory scheme treats only those medicinal preparations as dutiable which contain a narcotic drug or narcotic. The definition of narcotic drug or narcotic is controlled by the Act and the Central Government notification, which excludes preparations compounded with other ingredients where the drug content does not exceed the notified limits. The factual position that the petitioner's preparations contained Codeine Phosphate below the prescribed dosage and concentration limits was not disputed. On that basis, the preparations could not be classified as narcotic drugs or narcotics for the purpose of the Act.

Conclusion: The issue is answered in favour of the petitioner. The cough syrups were not liable to be treated as narcotic preparations for excise purposes so long as they remained within the notified limits.

Issue (ii): Whether excise duty already paid under protest was refundable.

Analysis: Although the levy was held inapplicable prospectively to preparations falling within the notified limits, the Court declined to order refund of duty already paid. The reason recorded was that refund would result in unjust enrichment, since the additional burden was presumed to have been passed on to consumers.

Conclusion: The issue is answered against the petitioner. The duty already paid was not directed to be refunded.

Final Conclusion: The writ petition succeeded to the extent that the authority was restrained from levying excise duty prospectively on the petitioner's cough syrups containing Codeine Phosphate within the notified limits, but no refund was granted for duty already paid.

Ratio Decidendi: A medicinal preparation containing a notified narcotic ingredient is outside the levy where the ingredient remains within the specific exemption thresholds prescribed by the governing notification, but refund of duty already collected may still be denied to prevent unjust enrichment.

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