Dutiability of medicinal preparations depends on proof of a qualifying narcotic substance, not mere presence of Xylocaine or anaesthetics.

Medicinal preparations were held dutiable under the Act only if the Revenue proved that they contained a substance falling within the statutory definition of narcotic drug or narcotic. The definition in section 2(h) was construed disjunctively: the word "or" meant a substance need only produce one of the stated effects, namely drowsiness, sleep, stupefaction or insensibility. Mere presence of Xylocaine or another anaesthetic, or of a medicinal preparation itself, was not enough. Because the Revenue did not identify a qualifying narcotic substance within the preparations, the demand notices were liable to be quashed.

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Issues: Whether medicinal preparations containing Xylocaine or other anaesthetics were dutiable as preparations containing a narcotic drug or narcotic under the Act, and whether the definition of narcotic drug or narcotic in section 2(h) required the substance to produce drowsiness, sleep, stupefaction and insensibility cumulatively in sequence.

Analysis: The charging scheme made medicinal preparations dutiable only if they contained a narcotic drug or narcotic within the meaning of section 2(h). The expression was construed on its plain meaning, and the word "or" in the definition was held to be disjunctive, not conjunctive. A substance qualifies if it produces any one of the stated effects, namely drowsiness, sleep, stupefaction or insensibility. At the same time, a medicinal preparation does not become dutiable merely because it contains Xylocaine or another medicinal preparation; the Revenue had to identify the substance within the preparation that actually possessed the relevant narcotic effect. That was not done.

Conclusion: The medicinal preparations were not shown to contain a dutiable narcotic substance within the meaning of the Act, and the demand notices were liable to be quashed; the appeals failed.

Final Conclusion: Dutiability under the Act depends on proof that the preparation contains a qualifying narcotic substance, and not merely on the presence of an anaesthetic or another medicinal preparation.

Ratio Decidendi: For a medicinal preparation to be dutiable under the Act, the Revenue must establish that it contains a substance, other than a medicinal preparation itself, which independently produces one of the effects specified in the statutory definition of narcotic drug or narcotic.

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