Industrial Alcohol and its Uses, Regulation of Alcohol in India

Industrial alcohol, also known as denatured alcohol, is a type of alcohol that is not intended for human consumption. Check here Industrial Alcohol and its Uses and also Regulation of Alcohol in India

Table of Contents

Context: The Supreme Court questioned the Centre’s exclusive control over industrial alcohol without giving States even the opportunity to regulate its inflow to prevent misuse for drinking.

About Industrial Alcohol

Industrial alcohol, also called denatured alcohol or ethanol.
Uses:
- Chemical Industry: Ethanol is a key ingredient in the production of various chemicals and solvents such as acetic acid, ethyl acetate, and other derivatives.
- Pharmaceuticals: It’s used as a solvent and preservative in the pharmaceutical industry and is also employed in the manufacture of medicines.
- Manufacturing: Industrial alcohol is used in the production of rubber, paints, varnishes, and inks.
- Fuel: Ethanol is blended with petrol to produce Ethanol Blended Petrol (EBP), which helps in reducing pollution and conserving fossil fuels.
- Cleaning: Due to its solvent properties, it is used in cleaning agents for domestic and industrial purposes.
- Cosmetics: It acts as an astringent in cosmetics and personal care products like perfumes and aftershaves.
- Food Industry: It’s used in the food industry as a flavouring agent and in the extraction of flavours.
- Agriculture: Industrial alcohol is used in the formulation of herbicides and insecticides.

Regulation of Alcohol in India

State Power (Intoxicating Liquors)

Entry 8 of the State List grants states authority over:
- Production
- Manufacture
- Possession
- Transport
- Purchase
- Sale
This applies specifically to “intoxicating liquors,” meaning drinks fit for human consumption.

Central Power (Industries)

Entry 52 of the Union List gives the central government control over industries deemed important for public interest by Parliament.
This includes industrial alcohol, regulated by the Industries (Development and Regulation) Act, 1951 (IDRA).

Concurrent Power (Regulation)

Entry 33 of the Concurrent List allows both states and the central government to regulate certain industries.
However, if a central law exists (like the IDRA for industrial alcohol), state laws cannot contradict it.

Excise Duty

Excise duty is an indirect tax charged on the production, licensing, and sale of goods, collected by the Government of India from goods producers.
This tax is specific to goods manufactured within the country, distinguishing it from Customs duty which applies to imported goods.
Pre-GST System: Before the implementation of the Goods and Services Tax (GST) in July 2017, excise duty was categorised into several types including Central Excise Duty, Additional Excise Duty, among others.
Post-GST Application: The launch of GST consolidated many forms of excise duties. Presently, excise duty is exclusively applied to petroleum products and alcoholic beverages.
Taxation Basis: While excise duty was charged at the time goods were removed from manufacturing, GST applies to the supply of goods and services.
Revenue for States: Excise duty on alcohol is a crucial source of revenue for state governments, which often increase excise duty on alcohol to boost their finances.
In 2023, Karnataka implemented a 20% increase in Additional Excise Duty (AED) on Indian Made Liquor (IML).