TMI Blog2003 (1) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, shakes, soft-serve, etc. through its fast foods restaurants, known as McDonalds Family Restaurants; that they procure soft serve mix and milk shake mix in the liquid form from M/s. Amrit Foods; that at Amrit Foods, raw milk is pasteurized, skimmed milk powder is added, thereafter the sweetening matter in the form of sugar or glucose syrup and permitted stablizers are added and then the mix is homogenized and stored at 0° to 4°C in the liquid form and packed in polyethylene pouches which is transported to their factory under the same temperature control; that M/s. Amrit Foods ware classifying the soft serve mix under Heading 04.04 which was changed by the Department to Sub-Heading 1901.90 of the Tariff which has been upheld by the Appellate Tribunal vide Final Order No. 262/2000-D, dated 13-11-2002 [2003 (153) E.L.T. 190 (Tribunal)]; that M/s. Amrit Foods have filed appeal against the said decision in the Supreme Court. The learned Counsel also mentioned that the milk fat content in the soft serve mix is 4.9% which at no point of time exceeds 6%; that a vending machine of Taylor make Model 8664 has been installed in each of the restaurants; that this vending machine can simultan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y customer visiting a hotel would ask to be supplied with the food and beverages that are for sale and if the waiter is to tell the customer that his order is 'being manufactured', it is likely that the customer would feel something strange about it." He also mentioned that similar views have been taken by various High Courts; that the Kerala High Court has referred to the decision of the Punjab High Court in Raghbir Chand Som Chand v. Excise Taxation Officer, (1960) 11 STC 149 wherein the scope of the term "manufacture" as given by the Supreme Court in DCM case was referred to. The learned Advocate, thus, contended that activity undertaken by them does not amount to manufacture. 3.2 He, further, submitted that Heading 21.05 covers 'Ice cream and other edible ice, whether or not containing cocoa'; that the Commissioner has classified the product 'soft serve' under the category of 'ice cream' on the basis of statements of two customers who had understood the product as ice cream and that the composition, process of manufacture and ingredients of the product exactly conform to the essential ingredients of ice cream described in the Authoritative Works like "Outline of Dairy Tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ice Cream" by Robert T. Marshall W.S. Arbuckle, Ice Cream is "a product containing at least 10% milk fat, 20% total milk solids, safe and suitable sweeteners, and defined optional "stabilizing, flavouring, and dairy derived ingredients"; that as per Kirk-Othmer Encyclopaedia of Chemical Technology, Third Edition, Volume 15 "Ice cream is a frozen food dessert prepared from a mixture of dairy ingredients (16-35%) sweetners (13-20%), stabilizers, emulsifiers, flavouring, and fruits and nuts. Ice cream has 8-20% milk fat and 8-15% non fat. solids with a total of 38.3% (36.43%) total solids: that in Table 25 of Chapter "Milk and Milk Products", composition of different frozen desserts have been given according to which Ice cream and soft serve are two different frozen desserts and the milk fat content is mentioned as under - (1) Ice cream - Premium 16.0% Average 10.5% (2) Soft serve 6.0% 3.4 The learned Advocate submitted that soft serve is not ice cream and as such is not classifiable under Heading 21.05; that soft serve is a dairy product and, therefore it has to be classified unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is point of time, the learned Advocate for M/s. Connaught Plaza, mentioned that he is not pressing the plea of manufacture. 4.2 The learned SDR, further, submitted that Shri Vikram Bakshi, Managing Director, in his statement dated 17-12-97 has deposed that one of the items prepared by them is ice cream with the help of Taylor Vending Machine; that again Shri Pradeep Jain, counsel of Shri Bakshi, submitted, under letter dated 22-12-97, documents including sale figures of ice cream prepared and sold from their restaurants; that it was also mentioned in the said letter that the process undertaken in their restaurants for making ice cream did not amount to manufacture; that in his letter dated 23-12-97, Shri Bakshi only retracted his statement to the extent that preparation of soft serve softy ice cream did not amount to manufacture; that it was only under letter dated 14-9-98 and 30-3-98 that Shri Bakshi mentioned that the item manufactured in their restaurants was 'soft-serve', distinct from ice cream. The learned SDR also mentioned that enquiries revealed that the product was known as ice cream in the common trade parlance; that composition of ice cream varies in different localit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The first issue to be decided in this appeal is whether the process undertaken by M/s. Connaught Plaza amounts to manufacture. They get soft serve mix from M/s. Amrit Foods which is pumped into Taylor Model Machine where freezing takes place along with the incorporation of air and thereafter semi-solid soft serve is drawn from nozzle into wafer cone or a plastic cup and served to the customer on the spot. In both the impugned orders, the Adjudicating Authorities have held that the process amounts to manufacture as new commercial commodity comes into existence. As per Section 3 of Central Excise Act, the duty is leviable on the excisable goods which are produced or manufactured in India. The Supreme Court in the landmark decision in the case of Union of India v. Delhi Cloth General Mills Co. Limited. - 1977 (1) E.L.T. J-199 has held that "the word 'manufacture' used as a verb is generally understood to mean as 'bringing into existence a new substance,' and does not mean merely 'to produce some change in a substance,' however, minor in consequence the change may be." The Supreme Court, further, observed that "Something more is necessary and there must be transformation; that a new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o consumers who understood the product as ice cream and also on the basis of statement of the Managing Director of the assessee company. On the other hand, the learned Advocate for the assessee has referred to many books including ISI Specifications to show that the 'soft serve' manufactured by them and ice cream are two different products. We find substance in the submission of the learned Advocate as various Authorities have mentioned that the ice cream should contain 8-20% milk fat whereas the impugned product contain not more than 5% and this fact has not been controverted by the Revenue. According to Kirk-Othmer Encyclopaedia of Chemical Technology, there are a number of frozen desserts of which ice cream is most important frozen dessert. The other frozen desserts are 'ice milk' 'sherbet', mellorine. "About half of the ice milk is made as a soft-serve dessert." The said Encyclopaedia has also given the composition of frozen dessert according to which the soft serve contains milk fat 6% whereas premium ice cream contains 16% and average ice cream contains 10.5%. The learned Advocate has also referred to the specifications of ice cream as given in the ISI as also Prevention of F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular product is not ice cream it can be classified as ice cream because some consumers treated it as ice cream. Accordingly, the product in question is not classifiable under Heading 21.05 of the Central Excise Tariff. 7. We, however, do not find any substance in the submission of the learned Advocate that the product is classifiable under Heading 04.04 of the Tariff as other dairy products. Heading 04.04 covers other dairy products; edible product of animal origin not elsewhere specified or included. Chapter 19 of the Central Excise Tariff covers preparation of Cereals, Flour, Starch, Milk, Pastry Cooks Products and Chapter 21 of the Tariff covers Miscellaneous Edible Preparations. According to the HSN Explanatory Notes, Chapter 19 covers a number of preparations, generally used for food, which are made either directly from the cereals of Chapter 10, from the products of Chapter 11 or from food flour, meal and powder of vegetable origin of other Chapters or from the goods of headings 04.01 to 04.04. According to the Kirk-Othmer Encyclopaedia, the soft serve is one of the frozen desserts. Ice cream and other edible ice which are also frozen desserts have been classified under Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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