ORDER :

S.H. Kapadia, J.

Leave granted in S.L.P.(C) No.20726/2004. A short question which arises in this batch of Civil Appeals is:

whether the process undertaken by the appellant (Assessee) resulting in emergence of "intermixture of vitamins" comes under the definition of the word "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 dealing with Organic Chemicals?

2. To answer the above question, we quote herein-below Section 2(f) of the said 1944 Act, which reads as follows:

"2(f) "manufacture" includes any process -

(i) incidental or ancillary to the completion of a manufactured product;

(ii) which is specified in relation to any goods in the section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or

(iii) which in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer;

and the word "manufacture" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;"

3. We also quote herein-below Note 11 to Chapter 29, which deals with Organic Chemicals:

"11. In relation to products of this Chapter, labelling or relabelling of containers and repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer shall amount to manufacture."

4. The assessee is engaged in the manufacture of various food products in their factory at Moga. One of the food products manufactured in their factory is infant foods which are sold under brand names such as Lactogen and Cerelac. The infant foods are chargeable to nil rate of duty.

5. For the purpose of manufacture of infant products, assessee buys various vitamins like Vitamin A, Vitamin D and Vitamin E etc. on payment of excise duty from the manufacturers of the vitamins. Thereafter, depending upon the requirement ofthe particular vitamin content to be present in the finished product, various vitamins are mixed in a pre-determined ratio with the help of electro mechanical devices by effecting a uniform dispersion of liquid, semi solid or solid ingredients of a mixture by means of mechanical agitation.

6. After the bought out vitamins are mixed in the above mentioned manner, the item so obtained is called "intermixture of vitamins". According to the assessee, the item so obtained is stored by them in plastic drums/aluminium bottles in their factory. In order to identify the particular intermixture of vitamins, which are used in particular grade of the finished product, a sticker is also affixed on the drum/aluminium bottle containing the "intermixture of vitamins" giving details regarding the content of the drum/aluminium bottle. These intermixtures of vitamins are used in the manufacture of infant foods.

7. According to the assessee, the said intermixtures of vitamins are not saleable in the market as such and it is of no use to any other infant food manufacturer whosoever.

8. After investigations, a show cause notice was issued by the Department on 7th August, 2001 making demand for duty for the period July, 1996 to December, 2000. It was alleged that the activity of mixing the various bought out vitamins and making the intermixure of vitamins constituted 'manufacture' and, therefore, excise duty was required to be paid on the said intermixture of vitamins manufactured and captively consumed by the assessee. In the show cause notice, it was, inter lia, alleged that when different vitamins are mixed in certain proportion, then, the original property of particular ingre