Drugs and Cosmetics Act, 1940

Introduction

India is pacing toward technological developments in every field, medical science being one of them. Since the
COVID times, India has shown great innovation and participation in every step of the process of protection of
health and advancement towards safety measures. But all these processes need to be backed up by the law,
and the law needs to constantly evolve in order to accommodate all the new changes we are witnessing in the
field of medical science.

The Drugs and Cosmetics Act, 1940 (DCA), is one such law that governs the manufacture, import, and
distribution of medicines in the country. It was followed by the Drug and Cosmetics Rules, 1945, which
categorised the drugs into schedules and provided regulations for the sale, storage, and prescription of each
category. The article seeks to discuss its provisions, as set out in 1940, and how the legislation has been
enhanced in the past two decades and what new rules and legal provisions have been introduced into the Act.

Objectives of the Drugs and Cosmetics Act

The Drugs and Cosmetics Act aims to hold medical technology and pharmaceutical companies liable for
negligence and sub-standard services provided by them. A major objective of enacting this legislation was to
prevent adulteration in medicines. Some other objectives have also been discussed below:

1. Regulation of the sale, import, and distribution of drugs and cosmetics by means of licensing.

2. Ensuring that only qualified individuals are involved in the import, distribution, and sale of drugs and
cosmetics.

3. Preventing substandard drug quality, presumably in order to maintain high medical treatment
standards.

4. Regulation of the production and sale of Ayurvedic, Siddha, and Unani drugs.

5. To form a Drugs Technical Advisory Board (DTAB) and Drugs Consultative Committees (DCC) for
allopathic and allied drugs, as well as cosmetics.

Salient features of the Drugs and Cosmetics Act

The Act has made a significant effort toward regulating the pharmaceutical industry in India and hence
ensuring the protection of the health and safety of the public. Some of the salient features of the Act can be
summed up as follows:

1. The maximum penalty is life imprisonment and a fine of Rs. 10 lakhs or three times the confiscated
goods’ value, whichever is greater.

2. Other gazette officers, in addition to officers from the Drug Controller’s Office, are authorised to
initiate prosecution under the Act; some of the offences are cognizable and non-bailable;

3. Specialised courts for the trial of offences covered by the Act;

4. Provision for the aggregation of minor offences.

Relevant definitions in the Drugs and Cosmetics Act

In order to obtain a better understanding of the provisions of the Act, we need to first familiarise ourselves
with certain terms that have been defined within it. Some of the terms used throughout the Act have been
defined hereunder.

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Drug

Under the Act, ‘drug’ has been defined in Section 3 by categorising the term to include 4 categories, which are
as follows:

1. All the medicines which are meant for internal or external use on humans or animals, and the
“substances used for or in the diagnosis, treatment, mitigation or prevention of any disease in human
beings or animals.” This also includes preparations that are applied to the human body as repellents
for insects like mosquitoes.

2. Substances other than food that may affect the structure or function of the human body or that are
used to destroy insects or vermin that cause disease in humans or animals, as the Central Government
specifies through a notification in the Official Gazette from time to time.

3. It also includes the substances that are used as components of a drug, including empty gelatin
capsules.

4. The devices that are used internally or externally on the human body or on animals for the purpose of
diagnosing, treating, mitigating, or preventing any disease or disorder, as may be specified by the
central government in the Official Gazette from time to time after consulting the Drugs Technical
Advisory Board (DTAB).

Cosmetic

It has also been defined under Section 3 and refers to any item that is “intended to be sprayed, poured,
rubbed, or sprinkled on, introduced into, or applied” to the human body or any part of it for cleansing,
beautifying, promoting attractiveness, or altering appearance. It also includes any items intended for use as a
cosmetic component.

Misbranded drug

A drug will be considered a misbranded drug under the following 3 conditions:

1. If the drug has not been labelled in the manner as it has been prescribed.

2. If it is coloured, coated, powdered, or polished in order to conceal any damage, or if it is made as

such, it appears to be of better or greater therapeutic value than it actually is.

3. If the label or container coming with the drug bears any statement, design, or device making a false
claim about the drug or giving any misleading information.

Ayurvedic, Siddha or Unani drugs

This term, defined under Section 3(a) encompasses all medicines which are used for internal and external
purposes in diagnosis, treatment, prevention or mitigation of disorder or disease in humans or animals. These
medicines have to be manufactured exclusively in accordance with the formulae laid down in the authoritative
texts of Ayurvedic, Siddha, and Unani Tibbi Systems of Medicines provided under the First Schedule to the
DCA.

Patent or proprietary medicine

The meaning of this term, as defined under Section 3(h), can be derived as follows:

1. In relation to the Ayurvedic, Siddha, or Unani systems of medicine, “all formulations containing only
the ingredients mentioned in the formulae described in the authoritative books of the Ayurvedic,
Siddha, or Unani systems of medicine specified in the First Schedule to the Act,” but excluding the
medicine in which parenteral administration is used.

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 2. In relation to any other system of medicine, including allopathy, a drug is introduced in a form “ready
for internal or external administration” of humans or animals that is not currently included within the
editions of the Indian Pharmacopoeia or any other Pharmacopoeia.

Adulterated drug

According to Section 9A, a drug will be treated as adulterated if it falls into one of the below categories:

1. Whole or part of it consists of “any filthy, putrid, or decomposed substance”, or

2. It has been “prepared, packed, or stored under poor sanitary conditions” due to which it may have
been exposed to contamination and hence rendered injurious to health, or

3. The whole or part of the composition of the container of the drug was “of any poisonous substance
which may render the contents injurious to health,” or

4. The drug contains a colour that is not prescribed, or

5. The drug contains a harmful or toxic substance that renders it injurious to health, or

6. It is mixed with a substance that may reduce the drug’s quality or strength.

Manufacture in relation to drugs or cosmetics

Although the term ‘manufacture’ has not been explicitly mentioned in the Act, it refers to any process that is
fully or partially used for “making, altering, ornamenting, finishing, packing, labelling, breaking up, or
otherwise treating or adopting any drug/cosmetic with a view to its distribution or sale, but does not include
the compounding or dispensing of any drug or cosmetic in the ordinary course of retail business.”

Spurious drug

As per Section 17B of the Act, a drug will be treated as spurious under the following situations:

1. If the drug has been imported under a name that belongs to another drug, or

2. If it is an imitation or substitute for another drug or it has a resemblance with some other drug in a
way that it will likely deceive or happens to bear on itself or its label the name of another drug, or

3. If the name of a person or business claiming to be the drug’s producer appears on the label or
container but that person or business is fictional or nonexistent, or

4. If the drug has been substituted in whole or in part by another drug substance, or

5. If it claims to be the product of a manufacturer or company by which it isn’t actually produced.

Misbranded cosmetic

A cosmetic will be deemed misbranded, according to Section 17C, if it falls under one of the following
categories:

1. When it contains an unprescribed colour, or

2. When the cosmetic is not labelled as it was prescribed to be, or

3. When the label or container of the cosmetic or anything that accompanies the cosmetic happens to
bear any statement that is false or misleading in nature.

Spurious cosmetic

According to Section 17D, a cosmetic will be termed a spurious cosmetic:

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 1. If it has been imported under a name belonging to some other cosmetic, or

2. If the cosmetic is an imitation of or a substitute for another cosmetic, or happens to resemble another
cosmetic in a “manner likely to deceive”, or bears on it or on its label or container the name of some
other cosmetic, or

3. If the label or container of the cosmetic bears the name of any fictitious person or company claiming
to be the manufacturer of the cosmetic, or

4. If the cosmetic claims to be the product of a manufacturer who hasn’t really produced the cosmetic.

Wings under the Drugs and Cosmetics Act, 1940

The Drugs and Cosmetics Act established 3 wings with proper authorities to ensure proper regulation and
administration of the Indian pharmaceutical industry. These wings are:

Advisory wing

This wing consists of two bodies.:

1. Drugs Technical Advisory Board (DTAB)

2. Drugs Consultative Committee (DCC)

Analytical wing

This wing consists of the following bodies and individuals

1. Central Drug Laboratory

2. Government analysts

3. Drug Testing Laboratories for the states

Administrative wing

The following individuals are responsible for the administration of drugs and cosmetics regulations:

1. Drugs Controller General of lndia

2. Drugs Control and Licensing Authorities of States

3. Drug Inspectors of central and state governments

The functions and features of the significant authorities have been discussed in the following sections of the
article.

Drugs Technical Advisory Board (DTAB)

It is a statutory board established by the Central Government under the provisions of this Act to advise the
Central Government and State Governments on all technical matters pertaining to the Act, as well as to
establish guidelines for types of formulations as and when requested by the Central Government. It is a
technical advisory body composed of members who are ex-officio, nominated, and elected. The DTAB has a
total of 18 members who represent various aspects of the pharmacy and medical professions in the country.
The Chairman of the DTAB is the Director General of Medical and Health Services, Government of India, and
the Member Secretary is the Drugs Controller General of India. The DTAB’s headquarters are located at
the Ministry of Health and Family Welfare, Government of India, Nirman Bhavan, New Delhi.

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Composition of DTAB

The DTAB comprises ex-officio, nominated, and elected members. The following are the members under each
head:

Ex-officio members

There are 8 ex-officio members, namely:

1. “Director General of Medical and Health Services, Government of India (Chairman)

2. Drugs-Controller General of India (Member Secretary)
3. Director, Central Drug Research Institute (CDRI), Lucknow, U.P.
4. Director, Central Drug Laboratory (CDL), Kolkata
5. Director, Indian Veterinary Research Institute (IVRI), Izzatnagar, U.P.
6. Director, Central Research Institute (CRI), Kasauli, H.P.
7. President, Pharmacy Council of India (PCI)
8. President, Medical Council of India (MCI)”

Elected members

There are five positions where members have to be elected:

1. One professor in pharmaceutics or pharmaceutical chemistry or pharmacognosy is elected by the

Executive Committee of the Pharmacy Council of India (PCI) from any university or affiliated pharmacy
college.

2. One professor in medicine or therapeutics in any of the government or affiliated medical colleges is
elected by the Executive Committee of the Medical Executive Committee of Medical Council of India.

3. One professor in pharmacology and toxicology is to be elected by the governing body of the Indian
Council of Medical Research (ICMR).

4. One member is to be elected by the Central Council of the Indian Pharmaceutical Association (IPA).

5. One member is to be elected by the Indian Medical Association (IMA).

Nominated members

The remaining 5 members will be nominated by different bodies. They are:

1. Two members will be nominated by the central government who are in charge of the Drugs Control
Department of the state or union territory.

2. Two government analysts will be nominated by the central government anywhere from the country.

3. One industrialist representing the pharmaceutical industry is to be nominated by the central

government.

Term of office

The term of office for elected and nominated members is three years. Ex-officio members hold office so long
as they are in that specific position. Even if they are not members of the DTAB, they can form sub-committees
and co-opt member experts for specific assignments. The DTAB makes policy decisions on technical aspects of
the Drugs and Cosmetics Act and Rules and forwards its recommendations to the Ministry of Health and
Family Welfare for approval. DTAB meets twice a year. DTAB can be summoned with one week’s notice for
certain urgent matters. The Ministry of Health and Family Welfare may decide on very urgent matters on a
priority basis at times. However, such government decisions must be ratified by DTAB within 6 months.

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Drugs Consultative Committee (DCC)
It is the Advisory Body appointed by the central government under Section 7 to advise the central and state
governments, as well as the DTAB, on matters pertaining to the uniform implementation of DCA and Rules
provisions. The DCC is made up of two representatives nominated by the central government and one
representative each from the state government and the union territory. The state government or union
territory usually appoints the Director of Drug Control Administration or Drug Controller of State to this
Council.

Central Drug Laboratory (CDL)

The Act directed the establishment of a Central Drug Laboratory (CDL) under Section 6 in Kolkata, and it will be
headed by a director appointed by the central government. It is the “Statutory Analytical Laboratory for drugs
and cosmetics under DCA whose decision with regards to analysis is final in the court of law.”

Functions of the Central Drug Laboratory

The CDL is responsible for performing various functions, which are:

1. It analyses drug and cosmetic samples sent by customs collectors and different courts.

2. As directed by the central government, it advises the central government, state governments, and
union territories on drug and cosmetic analysis aspects, and it also undertakes analytical work of a
particular nature for samples sent by the central government and state governments.

3. It may accept samples for analysis in exchange for a fee from private parties, consumer organisations,
and so on.

4. It is involved in research for the development of newer drug and cosmetic analysis techniques.

Powers of the Director of the Central Drug Laboratory

In order to carry out an effective analysis of the items, the director of the concerned laboratory is vested with
the powers of the Director of the CDL as per the Act. The following are the powers:

“1. Director, Central Research Institute (CRI), Kasauli, H.P: for biological preparations such as vaccines, sera,
toxins, toxoids, etc., and also bacteriophages, surgical sutures, and ligatures.

2. Director, Indian Venterinary Research Institute (IVRI), Izzatnagar, U.P: for all biological products and other
veterinary products meant for animals.

3. Director, Central Indian Pharmacopoeia Laboratory (CIPL), Ghaziabad, U.P: for all homeopathic medicines
and condoms.

4. Director, National Institute of Communicable Diseases: Oral Polio Vaccine”

The sample for analysis must be sent under sealed cover via registered mail to the Director of the relevant
laboratory. A memorandum filled out by the person posting the sample for analysis in accordance with the
procedure should be accompanied separately on the same registered post. A separate copy of this
memorandum with the impression of the seal must be sent to the Director via registered mail. The officer
delegated on behalf of the Director or the Director himself receives the registered post of sample and
memorandum. The impression of the seal in both cases is compared, and its authenticity is confirmed before
the seal is opened. The sample must be kept in the custody of the Director or an officer designated by him
until the analysis is completed and then for a period of one year. Following the completion of the analysis, the
protocol used for the analysis, analytical results, and other pertinent information are sent to the appropriate
party via registered mail. Priority for analysis is determined by the importance of the matter. The analysis
decision made by CDL is final and cannot be challenged in court.
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Drug inspectors
Drug inspectors are appointed under Section 3(e) by both the state and federal governments for specific areas
or categories of activity. A separate set of inspectors could be assigned to the manufacturing of drug
formulations. Drug Inspectors work for the Drug Controlling Authority of the state or central government,
depending on the circumstances. An inspector has been tasked with ensuring that the Drugs and Cosmetics
Act is strictly enforced in his or her jurisdiction.

Qualifications necessary for the position of drug inspector

In order to hold the position of drug inspector, one must meet the following criteria:

 The individual should not have a direct or indirect financial interest in any of the activities related to
drug import and export, manufacturing, sale, or distribution.

 A graduate in pharmacy, pharmaceutical sciences, or medicine with a specialty in clinical

pharmacology or microbiology from an Indian university is eligible for the position of Inspector.

 For the purpose of “Schedules C and C (1) drugs”,

(i) a drug inspector with at least 18 months of experience manufacturing at least one substance specified in
Schedules C and C(1) or

(ii) a drug inspector with at least 3 years of experience inspecting firms manufacturing Schedules C and C(1)
drugs or

(iii) a drug inspector with at least 18 months of experience testing at least one of the substances in Schedules
C and C (1) in a laboratory approved for the purpose.

However, these qualifications may not be needed for those who were appointed as an inspector on or before
October 18, 1993. Every drug inspector will be deemed to be a public servant as per the definition provided
under Section 21 of the Indian Penal Code, 1860.

Duties of inspectors of premises licensed for sale

Subject to instructions issued by the controlling authority, an inspector authorised to inspect premises
licensed for the sale of drugs has the following duties under Section 51 of the Drugs and Cosmetics Rules of
1945:

 To inspect all establishments for sale at least once a year.

 To ensure that licensing conditions are being followed.

 To obtain and send the drug for testing or analysis if he has reason to suspect that the drug is being
sold or stocked in violation of the Act or Rules.

 To conduct a worded investigation into the complaint.

 To keep a record of inspections.

 To conduct the necessary research.

 To initiate prosecutions for violations of the Act and Rules.

 When authorised by the State Government, detain imported packages containing drugs, the import of
which is prohibited.

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Duties of inspectors specially authorised to inspect the manufacture of drugs or cosmetics

The duties to be performed by an inspector are mentioned below. These duties are subject to the instructions
issued by the Controlling Authority.

 To inspect, at least once a year, all premises licenced for the manufacture of drugs or cosmetics.

 To ensure that licence conditions are met.

 To inspect the plant, manufacturing process and standardisation, storage, technical qualifications, and
other details for Schedules C and C (1) drugs.

 To submit a thorough inspection report to the Controlling Authority.

 To collect samples for testing or analysis in accordance with the rules.

The inspector is restricted from disclosing any information that he acquires except for official purposes or
when the law requires him to do so. He also has the authority to seize records or to prevent the manufacturer
from selling the drugs for a period of 20 days if he has reason to believe that they are violating provisions of
the Drugs and Cosmetics Act. If needed, he may take xerox copies of the seized documents signed by the
owner of the documents.

A drug inspector is required to conduct a routine inspection of a shop or manufacturing unit within his
jurisdiction at least once a year. In general, the inspection should be performed at a reasonable time,
preferably during working hours. However, if he or she has reasonable grounds to believe that a violation of
the DCA is happening, he or she may raid the premises and seize the documents, records, or medicines, as the
case may be.

The sample taken from the drug store should be divided into four parts. The seizure of medicine should be
done according to the provisions of the Code of Criminal Procedure, 1973, and in the presence of witnesses.
The samples must be sealed, and the drug store owner’s seal should be permitted. In the case of injectables,
four different ampoules from the same batch are confiscated. The drug inspector pays the drug store owner
the fair price of the seized material, or if the owner refuses to accept money, the receipt is prepared
separately and the form is filled out. Any seizure or raid must be immediately reported to the Judicial
Magistrate of that area. One of the four samples confiscated is kept by the inspector; one is sent to a
government analyst; one is returned to the drug store owner; and the fourth is sent to the manufacturer.

An inspector shall send the sample to the government analyst by registered mail or hand in a sealed packet
enclosed with a memorandum on Form 18 in an outer cover addressed to the government analyst. A copy of
the memorandum and a specimen impression of the seal are sent separately by registered mail to the
government analyst.

In the event of a raid or seizure of medicine at a manufacturing facility, three seized samples are prepared
using the same procedure. The Inspector keeps one sample to present in court. The second sample is given to
the manufacturer, and the third sample is sent to the government analyst for analysis.

Following receipt of the analysis report, appropriate action is taken. Regular sales are permitted if the report is
satisfactory. If it is not satisfactory, legal action will be taken.

Any physical assault or threat made in writing or over the phone to an inspector while he is performing his
duties is considered an offence punishable by imprisonment for up to three years, a fine, or both.

Government analyst

Government analysts are appointed under Section 3(c) by the central government and state governments to
test or analyse drugs and cosmetics. They work in Central Drugs Laboratories and the state and Union
Territory’s drug testing laboratories.
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Duties of a government analyst

A government analyst has to perform the following duties:

 To analyse samples sent by the Inspector, Custom Officer, or other person in accordance with the
provisions of Chapter IV of the Act and to prepare a detailed analysis report in triplicate. The entire
protocol of the analysis test should be provided. The report should be sent in a sealed envelope to the
Customs Department or the Drug Inspector, depending on the situation.

 Send reports to the government about work done, research done, publications, if any, and keeping
drug and pharmaceutical information up to date.

Before beginning analysis, the government analyst should verify the seal and ensure proper custody of the
sample sent for analysis. The analytical report should be submitted in triplicate to the inspector or the
appropriate person on Form 13. Form 14-A is used for a purchaser’s request for testing or analysis, and Form
14-B is used for the analysis report.

Licensing authority

This authority is concerned with the issuance of licences for the sale and import of drugs and cosmetics within
a particular jurisdiction. Each member of such an authority must be a graduate in pharmacy or pharmaceutical
chemistry or in medicine with a specialisation in clinical pharmacology or microbiology. They also must have
five years of experience in the manufacturing or testing of drugs.

The duties to be performed by the licensing authority are as follows:

 To inspect all drug-selling establishments within the area assigned to him.

 To ensure that the licence conditions are followed.

 To obtain and, if necessary, send imported packages for testing or analysis.

 To look into any complaints.

 To keep a record of all inspections performed and actions taken in the performance of his duties.

 To conduct such inquiries and inspections as may be necessary to detect drug sales in violation of the
Act.

Regulating the import of drugs

In order to regulate the import of drugs, certain conditions must be met for all types of drugs. The following
sections deal with the conditions for each type.

Import of drugs for personal use

1. If the drugs are a part of the passenger’s luggage, up to 100 doses of the drug may be imported
without any permit.

2. If the number of doses exceeds 100, a licence has to be issued for import, the application for which
can be filled out on Forms 12-A and 12-B.

3. The drugs must be for bona fide personal use.

4. If the custom collector directs, the drugs must be declared to them.

Import of drugs for examination, test, or analysis

1. In order to import drugs for the purpose of examination, test, or analysis, license is needed under
Form-11.
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 2. The imported drugs must be used only for the purpose stated and at the specific place mentioned in
the licence.

3. The record with respect to quantities, the name of the manufacturer, and the date of import must
accompany the drugs.

4. An inspector must be allowed to inspect the premises and check records.

Import of drugs without licence

Some drugs are eligible to be imported without a licence. These are:

1. Those substances which are not used for medicinal purposes.

2. Drugs under Schedule C, which are required for manufacturing purposes.

3. Substances like powdered milk and cereal oats, which are both drugs and foods.

4. Pre-digested foods.

Prohibition on the import of certain drugs

A number of drugs are completely prohibited from being imported. Given below is a list of the same:

1. Substandard drugs or cosmetics.

2. Misbranded, counterfeit, or adulterated drugs or cosmetics.

3. Importing those drugs or cosmetics which require a licence.

4. Any patent or proprietary medicine that does not have a true formula or a list of active ingredients
and their amounts.

5. Any drug or formulation which claims to prevent or cure diseases mentioned in Schedule J.

6. Any drug or cosmetic whose manufacture, sale, or distribution is illegal in the country of origin.

7. Any drug that is not packed or labelled in accordance with the provisions of the Act.

8. Any cosmetic that contains an ingredient that may make it unsafe or harmful.

9. Any drug or cosmetic whose import is prohibited by the Act.

Penalties under the Drugs and Cosmetics Act, 1940

The offences and penalties under the Act can be summed up as follows:

 Any adulterated or counterfeit drug or cosmetic imported into the nation in contravention of the Act’s
requirements is punishable by up to three years in prison and a fine of up to 5,000 rupees.

 Any medicine or cosmetic other than the one mentioned in the above point that is illegally imported is
subject to a six-month prison sentence, a fine of Rs. 500.00, or both.

 Any medication or cosmetic imported in violation of the terms of a notification issued under Section
10A is punished by up to three years in prison or a fine of Rs. 5000.00.

Drugs and Cosmetics Rules

In order to supplement the Drugs and Cosmetics Act, 1940, subsequent sets of rules have also been
introduced to accommodate the changes in the pharmaceutical industry due to technological advancements
and other changes in the field.

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Drugs and Cosmetics Rules, 1945

The Drugs and Cosmetics Rules, 1945 are Indian government regulations enacted in order to complement the
Drugs and Cosmetics Act, 1940. These rules categorise medicines according to timetables and provide storage,
sale, display, and prescription guidelines for each timetable.

The Drugs and Cosmetics Rules of 1945 include provisions for categorising drugs into schedules, as well as
guidelines for storing, selling, displaying, and prescribing drugs within each schedule. Rule 67G specifies the
terms of licences. Rule 97 specifies the labelling requirements. It also established that the Drugs Technical
Advisory Board is the highest decision-making authority when it comes to drug technical specifications.

The New Drugs and Clinical Trial Rules, 2019

The Government of India published the New Drugs and Clinical Trials Rules 2019 (New Rules) in the Gazette of
India on March 19, 2019. The new rules are designed with the intention of promoting clinical research in the
country and will alter the regulatory landscape for new drug authorization and clinical trial conduct in the
country. The new regulations include provisions for encouraging clinical research as well as more complex
topics like orphan drugs, post-trial access, and pre and post-submission meetings. The new rules are organised
into 13 Chapters (with 107 Rules) and eight Schedules. Except for stem cell and cell-based products and
veterinary vaccines, the new rules will apply to all biological products (human vaccines and r-DNA products).

Case laws

Sri G Ramesh Reddy vs The State By Drugs Inspector SC held that The judge, reaffirmed rulings in earlier cases
of a similar kind, holding that a director may not be involved in a company’s daily operations. As a result, the
director cannot be immediately implicated simply because of his position unless there is prima facie evidence
that the director performed a specific act that led to the commission of the crime.

Court held in Commissioner of Central Excise, Calcutta v. Sharma Chemical Works reported in 2003 (5)
SCC 60 has also disapproved the approach of the Department in holding that the product was a cosmetic only
because it was not sold by chemists or under doctors prescription. This, according to the decision, does not by
itself lead to the conclusion that it is not a medicament. The Court reaffirmed the test as categorically laid
down in Shree Baidyanath, namely, that the burden of proof that a product is classifiable under a particular
tariff head is on the revenue and must be discharged by proving that it is so understood by consumers of the
product or in common parlance. See also Meghdoot v. Commisisoner of Central Excise : 2004 (174) ELT 14
(S.C.).”

In the case of Commissioner of C. Ex., Calcutta-IV vs. Pandit D.P. Sharma reported in 2003 (154) ELT 324
(SC), the question was whether ‘Himtaj Oil‘ is a Ayurvedic medicament or not classifiable under sub-heading
3003.30 or a ‘perfumed hair oil’ classifiable under sub-heading 3305.10. Even though reliance had been placed
upon the authority of this Court in Shree Baidyanath Ayurved Bhavan’ case (supra), this Court negatived an
argument that the product would not be considered to be a drug because it was not prescribed by a medical
practitioner and was one which could be used for a long period of time. It was held that the test was to see
what persons using the product understand it to be. On the basis of evidence produced by the manufacturer
that the common man understood the product as a medicine it was held that the product was a medicament.

The basis of the show cause notices was the decision of this Court in Shree Baidyanath Ayurved Bhavan Ltd.
vs. Collector of Central Excise, Indore reported in 1996 (9) SCC 402 and the tests allegedly laid down in that
decision for determining whether a product should be classified under Chapter 33 or Chapter 30.

The two tests according to the show cause notice for determining whether a product was classifiable as a
pharmaceutical product under Chapter 30 of the Central Excise Tariff were (1) Whether the products are being
used daily and are sold without prescription by a medical practitioner; and (2) whether the products are
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available in General Store Department / Grocery shops. The department’s case in the show cause notice is that
as these two tests were not fulfilled the product failed to come within the prescription of pharmaceutical
products in Chapter 30.

Conclusion

In recent years, a lot of new players have emerged in the pharmaceutical market looking to make a profit in
the health industry. Hence, it is important to ensure that they do not capitalise by putting the health of the
people at risk. The Drugs and Cosmetics Act of 1940 is comprehensive legislation to ensure that there is
efficient regulation of the pharmaceutical industry in India. It has sufficiently evolved and developed to
accommodate changes with changing times, and the Act has negligible lacunae within itself. The definitions
within the Act are very conclusive and have left no scope for further interpretation, which is good considering
that any space left for abuse of the law in this respect could seriously harm the health and safety of the public.
Hence, it is important to ensure that regulations under the Act are being complied with in the interest of
public safety. The step taken by the government of formulating new legislation that will regulate medical
devices as well is also highly applaudable.

Frequently Asked Questions (FAQs)

What kinds of cosmetics are prohibited from being manufactured?

There are certain kinds of cosmetics that are prohibited from being sold. These include:

1. Misbranded or spurious cosmetics which are of substandard quality.

2. Cosmetics that contain hexachlorophene or mercury compounds.

3. Cosmetics that contain colour with more than 2 ppm of arsenic, 20 ppm of lead, or 100 ppm of heavy
metals.

What are the classes of drugs that are prohibited from being sold?

The classes of drugs prohibited from sale are:

 Misbranded drugs

 Spurious drugs

 Adulterated drugs that are not up to the quality standard

 Patent or proprietary drugs which have not disclosed the formula

 Schedule J drugs

 Drugs that have expired

 Drugs that are used for government schemes

 Samples made for physicians

What does the Third Schedule of the Act deal with?

The Third Schedule categorises the drugs for which the Licensing Authority can issue a licence and
permission.

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