There are two possible times when this achievement can be triggered:
1) when you're about to "reload" your slingshot and you're still in possession of the potion (before heading to the castle gate) or
2) after you've been stripped off all your belongings and regained them, but before entering the fight with the goblin:
when standing in front of Gandarfs house (the screen with the cauldron): go north into the forest where you saved the cat / talked to the owl and give the potion to the owl (= pick the appropriate chat-option). That's it.