Drugs Enquiry Committee was appointed by the Government in 1931 under the chairmanship of Colonel R.N.Copra to have control over the import, manufacture and sale of drugs. Thus Finally, to control the import, manufacture, distribution and sale of drugs and cosmetics, the Drugs and Cosmetics Act was passed on 10th April 1940 by the Indian Legislature.

The drug is an essential commodity and is required to be regulated in terms of its import, manufacture, sale and distribution. The Central Government and State Government are charged with the responsibility of providing the drugs of desired quality to needy patients and in order to ensure this primary obligation of the Government, the network is required to be developed to
root out adulterated misbranded and spurious drugs from society.

Objective

1. For preventing substandard drugs, probably for treatment and preserving high medical standards.
2. For controlling the import, manufacture, distribution, and sale of drugs and cosmetics by licensing.
3. Ensuring that the manufacture, distribution, and sale of drugs and cosmetics are done by qualified persons only.
4. For controlling the manufacture, and sale of Ayurvedic, Siddha, and Unani drugs.
5. Establishment of Drugs Technical Advisory Board (DTAB) and Drugs Consultive Committees (DCC) for Allopathic and Allied drugs and 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.

Definitions

1. Drug( Sec.3)

(i) All medicines for internal or external use of human beings or animals and substances used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals including, preparations applied on human body for the purpose of repelling insects like mosquitoes.
(ii) The substances other than food which may affect the structure or any function of the human body or used for the destruction of insects or vermin which cause disease in human beings or animals as specified from time to time by the Central Government by notification in the Official Gazette.
(iii) The substances used as components of a drug including, empty gelatin capsules.
(iv) The devices used for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette after consultation with the Drugs Technical Advisory Board (DTAB).

Cosmetic

It means any article intended to be sprayed, poured, rubbed or sprinkled on, introduced into, or applied to the human body or any part for cleansing, beautifying, promoting attractiveness or altering the appearance. It also includes any articles intended for use as a component of cosmetics.

Ayurvedic, Siddha or Unani Drugs

These include all medicines used for internal or external purposes or used in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals and manufactured exclusively in accordance with the formulae described in the authoritative books of Ayurvedic, Siddha and Unani Tibby Systems of Medicines specified in the First Schedule to the Drugs and Cosmetics Act, 1940.

Gudakhu

It is a tobacco product used for rubbing against human teeth. It contains tobacco powder, lime and molasses along with red mineral matter. It is a cosmetic within the provisions of the Act.

Patent or Proprietary Medicine

It means:
(i) In relation to Ayurvedic, Siddha or Unani System of Medicine, all formulations containing only such ingredients mentioned in the formulae described in the authoritative books of Ayurvedic, Siddha or Unani System of Medicine specified in First Schedule to the Act but do not include the medicine .administered by parenteral route.
(ii) In relation to any other system of medicine including, allopathic, a drug presented in a form ready for internal or external administration of human beings or animals and which is not included for the time being in the editions of Indian Pharmacopoeia or any other Pharmacopoeia.

Misbranded Drug (Sec. 9)

A drug is considered a misbranded drug:
(i) if it is not labelled in the prescribed manner,
or
(ii) if it is so coloured, coated, powdered or polished that damage is concealed or it is made to appear of better or greater therapeutic value than it really is, or
(iii) if the label or container or anything accompanying the drug bears any statement, design or device which makes any false claim for the drug or gives misleading information.

Adulterated Drug (Sec.9A)

A drug is considered to be adulterated:
(i) if it consists in whole or in part of any filthy, putrid, or decomposed substance, or
(ii) if it has been prepared, packed or stored under poor sanitary conditions whereby, it may have been contaminated with filth and rendered injurious to health, or
(iii) if the container of the drug is composed in whole or in part of any poisonous substance which may render the contents injurious to health, or
(iv) if it contains a colour other than the one which is prescribed, or
(v) if the drug contains any harmful or toxic substance which may render it injurious to health, or
(vi) if the drug is admixed with any substance so as to reduce its quality or strength.

Manufacture in relation to Drugs or cosmetics.

Any process fully or partly used for making, altering, ornamenting, finishing packing, labelling, breaking up or otherwise treating or adopting any drug/cosmetic with a view to its sale or distribution but, does not include the compounding or dispensing of any drug or the packing of any drug or cosmetic in the ordinary course of retail business.

Spurious Drug (SEC.9B)

A drug is deemed to be a spurious drug:
(i) if it is imported under a name which belongs to another drug, or
(ii) if it is an imitation of or a substitute for another drug or if it resembles another drug in a manner likely to deceive or bears upon it or its label or container the name of another drug, or
(iii) if it has been substituted wholly or in part by another drug substance, or
(iv) if it claims to be the product of a manufacturer or company of whom it is not truly a product.

Misbranded Cosmetic(Sec.9C)

A cosmetic shall be deemed to be misbranded:
(i) if it contains a colour which is not prescribed, or
(ii) if it is not labelled in the prescribed manner, or
(iii) if the label or container or anything accompanying the cosmetic bears any statement which is false or misleading.

Spurious Cosmetic(Sec.9D)

A cosmetic shall be deemed to be spurious:
(i) if it is imported under a name which belongs to another cosmetic, or
(ii) if it is an imitation of or a substitute for another cosmetic; resembles another cosmetic in a manner likely to deceive, or bears upon it or upon its label or container the name of another cosmetic, or
(iii) if the label or container bears the name of an individual or a company purporting to be the manufacturer of the cosmetic which individual or company is fictitious or does not exist, or
(iv) if it purports to be the product of a manufacturer of whom it is not truly a product. Schedules to the Act and Rules [2]
There are two Schedules to the Act and 35 Schedules to the Rules.

The Schedules to the Act

First Schedule: It comprises the list of books of references for Ayurvedic, Siddha and Unani medicines. There are 57 books of Ayurveda, 30 books of Siddha and 13 Unani Tibb systems listed in the Schedule which are used for different formulations in accordance with the provisions of the Act.

Second Schedule: It comprises the standards to be complied with for imported drugs, manufacture of drugs, their sale, stocking and storage etc.

Drug Technical Advisory Board (DTAB) :

Drugs Technical Advisory Board is constituted by Central Government and its works to advise the Central Government and State Government on technical matters(Advise technical bases) 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.

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 the 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.

Drug Inspector :

In relation to any drug or cosmetic, Drug Inspector appointed by Central Government or State Government under section 21; or
In relation to Ayurvedic, Siddha or Unani systems of Medicine, a Drug Inspector appointed by the Central Government or State Government

Inspection of drugs and cosmetics:

The central and state governments are empowered to nominate inspectors for the purposes of inspection of drugs and cosmetics, having the necessary qualifications, in various areas with such powers and obligations as may be prescribed. However, it is not possible to nominate any person who has any financial interest in importing, producing or selling drugs or cosmetics as an inspector.

Role of an Inspector, powers and the procedure of Inspection:

Here, every Inspector is deemed to be a public servant within the meaning of section 21 IPC and is officially subordinate to the authority, specified by the appointing government. According to section 22 of the act, which defines the powers of inspectors, they have multifarious powers including the power to inspect, conduct searches, examine samples, call records etc. They can, therefore, inspect any premises wherein any drug or cosmetic is being manufactured, sold, stocked or exhibited or offered for sale or distribution or where any other related activity is being taken with respect to them. Further, an inspector can, on a reasonable belief, search any person who may have secreted any drug or cosmetic or enter and search any place on a similar belief. Moreover, the provisions of Cr.P.C. apply to any such search or seizure as they apply to any search or seizure made under the authority of a warrant issued under section 94 of the Code.
 

The Procedure of Inspection has been defined under section 23 of the act, it explains the different courses of inspection for different scenarios. Such as the procedure for taking a sample of a drug or cosmetic for the purpose of test or analysis, where the sample is taken from manufacturing premises and where an Inspector conducts a search of a person, place or vehicle regarding any secreted drugs or cosmetics. After all the aforementioned prerequisites are covered under the procedure of Inspection, Section 25 requires a government analyst to whom a sample of any drug or cosmetic has to be submitted. And, the same shall be received by any person or any recognized consumer association.

Penalties under the Drugs and Cosmetics Act, of 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 10 A is punished by up to three years in prison or a fine of Rs. 5000.00

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 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.