Manufacture and marketability tests required fresh scrutiny for vitamin intermixture; extended limitation was rejected for lack of suppression.

Mixing vitamins into an intermixture required fresh examination on whether the process amounted to manufacture under Section 2(f) and Note 11 to Chapter 29, because the Tribunal had not fully addressed the twin tests of manufacture and marketability or the meaning of "consumer" in the deeming provision. That excisability issue was remitted to the Tribunal for de novo determination. On limitation, the extended period could not be invoked because the Department did not establish conscious or deliberate suppression of facts; mere inaction was insufficient. The limitation challenge therefore failed, while the assessee succeeded on that point.

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Issues: (i) Whether the process of mixing vitamins into an intermixture of vitamins amounted to manufacture under Section 2(f) of the Central Excise Act, 1944 and Note 11 to Chapter 29 of the Central Excise Tariff Act, 1985. (ii) Whether the extended period of limitation could be invoked in the facts of the case.

Issue (i): Whether the process of mixing vitamins into an intermixture of vitamins amounted to manufacture under Section 2(f) of the Central Excise Act, 1944 and Note 11 to Chapter 29 of the Central Excise Tariff Act, 1985.

Analysis: The question turned on whether the mixed product had undergone a process amounting to manufacture in law and whether the deeming provision in Note 11 applied. The Tribunal had not examined the controversy on the twin tests of manufacture and marketability in a complete manner, nor had it recorded findings on whether the resulting product was marketable and on the meaning of the word "consumer" in Note 11. As these aspects were material to the applicability of the charging provisions and the deeming note, the matter required fresh consideration.

Conclusion: The issue was not finally decided on merits and was remitted to the Tribunal for de novo determination; the assessee succeeded to that extent.

Issue (ii): Whether the extended period of limitation could be invoked in the facts of the case.

Analysis: The assessee had been clearing the product for a long period before issuance of the show-cause notice, and the Department had not established conscious or deliberate suppression of facts. The settled principle governing the extended period requires positive conduct beyond mere inaction or failure to disclose, and that threshold was not met.

Conclusion: The extended period of limitation was not invokable and this part of the Tribunal's view was upheld in favour of the assessee.

Final Conclusion: The demand for the period prior to 1.3.1997 remained concluded against the Department, the challenge on limitation failed, and the central excisability issue was sent back for fresh adjudication by the Tribunal.

Ratio Decidendi: For invoking the extended period of limitation, the Department must establish conscious or deliberate suppression or other positive conduct beyond mere inaction; where the core excisability issue has not been properly examined on the twin tests of manufacture and marketability, remand for de novo consideration is warranted.

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