Manufacture and marketability test applied to vitamin premix; industrial consumers fall within Chapter 29 Note 11.

Mixing vitamins into a vitamin premix was treated as manufacture because it produced a distinct commercially identifiable intermediate product with separate name, character and use. The process satisfied the twin tests of manufacture and marketability, even though the premix was captively consumed. Section 2(f) of the Central Excise Act, read with Chapter 29 Note 11, was applied as an expansive deeming provision covering mixing, storing, labelling and use of the premix within the statutory scheme. The term "consumer" in Note 11 was construed in its ordinary sense to include industrial consumers and was not confined to retail consumers.

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Issues: (i) whether the process of mixing vitamins into a vitamin premix constituted manufacture on the conceptual or first-principles test and the twin test of manufacture and marketability; (ii) whether the activity was covered by Section 2(f) of the Central Excise Act, 1944 read with Note 11 of Chapter 29 of the Central Excise Tariff Act, 1985; and (iii) whether the word "consumer" in Note 11 of Chapter 29 meant only a retail consumer or included an industrial consumer.

Issue (i): whether the process of mixing vitamins into a vitamin premix constituted manufacture on the conceptual or first-principles test and the twin test of manufacture and marketability?

Analysis: The mixed product emerged as a distinct commodity with a separate identity, character and use from the individual vitamins. The process was not a mere change in form but resulted in a commercially different product used as an intermediate input. The product was also found to be commercially identifiable and capable of being bought and sold, even if it was captively consumed.

Conclusion: The process constituted manufacture and satisfied the test of marketability.

Issue (ii): whether the activity was covered by Section 2(f) of the Central Excise Act, 1944 read with Note 11 of Chapter 29 of the Central Excise Tariff Act, 1985?

Analysis: Section 2(f) was treated as an expansive definition, and Chapter Note 11 was held to create a deeming fiction widening the meaning of manufacture for Chapter 29 products. The process of mixing, storing, labelling and using the vitamin premix as an intermediate product fell within that statutory scheme. The note was not confined to cases where a non-marketable product is converted into a marketable one; it also covered treatment that confers or enhances marketability attributes.

Conclusion: The activity was covered by Section 2(f) of the Central Excise Act, 1944 read with Note 11 of Chapter 29 of the Central Excise Tariff Act, 1985.

Issue (iii): whether the word "consumer" in Note 11 of Chapter 29 meant only a retail consumer or included an industrial consumer?

Analysis: The expression "consumer" was given its ordinary meaning and was not read down to mean only a retail consumer. The note did not impose any such restriction, and the manufacturer itself could be the consumer of the product. The reference to retail packs was held to describe the manner of availability of the product, not to limit the class of consumers.

Conclusion: The word "consumer" included an industrial consumer and was not confined to a retail consumer.

Final Conclusion: The remanded issues were answered against the assessee, the vitamin premix was held to be excisable manufacture, and the appeals stood disposed of accordingly.

Ratio Decidendi: For Chapter 29 products, a process that yields a distinct commercially identifiable intermediate product with separate name, character and use constitutes manufacture, and a deeming chapter note covering treatment that renders a product marketable applies to industrial as well as retail consumers.

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