Medicine kit assembly for State supply was not manufacture because the goods were not rendered marketable to consumers.

Placing different medicaments, including bought-out medicines, together in a medicine kit for supply to a State agency did not amount to manufacture under Note 5 to Chapter 30 of the Central Excise Tariff Act, 1985. The provision applies to conversion, relabelling, repacking, or other treatment that renders goods marketable to consumers, but the kit was not intended for sale in the market and the finding that neither the kit nor its contents were further sold was unrebutted. As the goods were not rendered marketable to a consumer, the residual limb of Note 5 did not apply, and the activity was only a mode of supply.

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Issues: Whether placing different medicaments, including bought-out medicines, together in a medicine kit for supply to the State agency amounted to manufacture under Note 5 to Chapter 30 of the Schedule to the Central Excise Tariff Act, 1985.

Analysis: Note 5 to Chapter 30 applies where there is conversion of powder into tablet or capsule, labelling or relabelling of containers intended for consumers, repacking from bulk packs to retail packs, or any other treatment to render the product marketable to the consumer. The medicine kit in question was supplied to the State agency and was not for sale in the market. The finding that neither the kit nor the medicines contained in it were further sold was not rebutted. Since the goods were not rendered marketable to a consumer, the residual limb of Note 5 was not attracted. The activity was therefore only a mode of supply and did not amount to manufacture.

Conclusion: The process of placing the medicines together in the kit did not amount to manufacture and the Revenue's appeal failed.

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