Alcohol in medicinal preparations can attract excise duty even when present through manufacturing ingredients, not only as direct residue.

A medicinal preparation is liable to central excise duty if it contains alcohol, even where the alcohol is present through one of its ingredients rather than as a directly detectable constituent in the final product. The governing excise principle applied is that direct physical presence of alcohol in the finished goods is not a necessary condition if the preparation otherwise contains alcohol within the statutory sense. On that basis, the demand could not be sustained and the impugned order was set aside; the appeal succeeded and the duty demand was quashed.

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Issues: Whether the impugned goods were liable to central excise duty on the ground that they contained alcohol, and whether the physical presence of alcohol in the final product was necessary to attract duty.

Analysis: The goods were manufactured using alcohol, and a test report also indicated the presence of alcohol in the final product. The settled position, as applied by the Court, is that for a medicinal preparation to attract duty, it is sufficient if it contains alcohol; the alcohol may be present directly or may come into the preparation through one of its components. Physical presence of alcohol in the final product is therefore not a necessary condition where the preparation otherwise contains alcohol within the meaning of the governing excise law.

Conclusion: The demand of central excise duty could not be sustained, and the impugned order was liable to be set aside.

Final Conclusion: The appeal succeeded and the duty demand was set aside.

Ratio Decidendi: A medicinal preparation attracts duty if it contains alcohol, and direct physical presence of alcohol in the final product is not where alcohol forms part of the preparation through the manufacturing ingredients.

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