2009 (2) TMI 22 - SC - Central Excise

Whether the process undertaken by the appellant resulting in emergence of intermixture of vitamins comes under the definition of the word manufacture in Section 2(f) of the CEA, 1944 r.w. Note 11 to Chapter 29 of the CET 1997-98 dealing with Organic Chemicals - Since the above questions have not been decided by the Tribunal in proper perspective, we set aside the impugned judgment of the Tribunal and we remit the matter to the Tribunal for de novo disposal in accordance with law

Summary

Issues involved:
1. Whether the process of creating "intermixture of vitamins" constitutes "manufacture" under the Central Excise Act, 1944.
2. Whether the activity undertaken by the assessee falls under the definition of "manufacture" in Section 2(f) of the Central Excise Act, 1944 read with Note 11 to Chapter 29 of the Central Excise Tariff 1997-98.

Analysis:
Issue 1:
The Supreme Court considered whether the process of creating "intermixture of vitamins" by the assessee qualified as "manufacture" under the Central Excise Act, 1944. The Department alleged that mixing various vitamins to create the intermixture constituted 'manufacture' and attracted excise duty. The Department argued that a new product with distinct properties emerged, meeting the definition of 'manufacture.' The assessee contended that the individual vitamins did not undergo any change in properties after mixing and thus did not constitute 'manufacture.' The Court examined whether the activity satisfied the criteria of 'manufacture' conceptually and under Section 2(f) of the Act.

Issue 2:
The Court also analyzed whether the activity of the assessee fell under the provisions of Section 2(f) of the Central Excise Act, 1944, read with Note 11 to Chapter 29. The Tribunal's decision was found to be lacking in addressing specific points raised by the assessee. The Court highlighted the importance of considering the twin tests of 'manufacture' and marketability. It emphasized that the treatment rendering a product marketable to consumers would amount to 'manufacture.' The Court noted that the Tribunal failed to determine whether the intermixture of vitamins was marketable and remitted the matter for a fresh decision. The Court also upheld the Tribunal's decision on the extended period of limitation, dismissing the Department's appeal.

In conclusion, the Supreme Court allowed the assessee's Civil Appeals, remitting the matter to the Tribunal for reconsideration in accordance with the law. The Court dismissed the Department's appeal on the extended period of limitation. The decision highlighted the importance of analyzing the concept of 'manufacture' and marketability in excise matters, ensuring a thorough examination of all relevant aspects before reaching a conclusion.