ORDER
V.K. Agrawal, Member (T)
1. In these three appeals arising out of a common Order-in-Appeal No. 213-214/2003 dated 28.10.2003–two appeals filed by M/s. Cool Desserts and Shri Neeraj Jain, Partner, and one appeal filed by the Revenue–the issue involved is whether the activities undertaken by them amounts to manufacture and whether the price is to be regarded as cum-duty price.
2. We heard Shri Abhishek Jain, learned Advocate for M/s. Cool Desserts, and another, and Shri S.C. Pushkarna, learned D.R. for Revenue. M/s. Cool Desserts have an Ice Cream Parlour where they serve ice-creams to their customers. They purchase ice-cream in bulk from M/s. Maharashtra Dairy Products Manufacturing Co. (P) Ltd. The demand of Central Excise duty has been confirmed against them and penalties have been imposed on them on the ground that they were preparing the various ice-cream preparations such as Sundaes, Shakes, Blast and cakes out of the ice-cream purchased by them after adding ingredients such as nuts, wafers, sharbats, whipped cream, toppings, sugar syrup, etc. and that such admixture brings into existence a distinct commodity. Reliance has also been placed by the Commissioner (Appeals) on the judgment of the Supreme Court in the case of UOI v. Delhi Cloth & General Mills Co. 1977 (1) ELT J 199 and Empire Industries Ltd. v. UOI .
3. The learned Advocate has contended that the activities undertaken by them does not amount to manufacture as the products sold by them are not separate and distinct from the ice cream from which they are made. He relied on the decision in the case of Deputy Commissioner Sales Tax (Law) v. PIO Food Packers wherein the Supreme Court has held that, although a degree of processing is involved in preparing pineapple slices from the original pineapple yet the commodity continues to possess its original identity, notwithstanding the removal of inedible portions, the slicing and thereafter canning it or adding sugar to preserve it, it cannot be said to be “manufacture”. Reliance has also been placed on the decision in the case of CCE, Kanpur v. Supersoft Productions (P) Ltd. 1997 (107) ELT 378 (Tri) wherein it has been held by the Tribunal that the activity of adding flavours in softy shake mix and by repacking in small containers in 200 ml. cannot be considered to be an activity of manufacture.
4. We have considered the submissions of both the sides. For the purpose of levying Central Excise duty on any product, the first requirement is that it should be manufactured. The Apex Court has laid down a two fold test for determining as to whether the processes is that, of “manufacture”, in the case of UOI v. J.G. Glass Industries Ltd . The two-fold test is as follows. “First, whether by the said process a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist; secondly, whether the commodity which was already in existence will serve no purpose but for the said process. In other words, whether the commodity already in existence will be of no commercial use but for the said process.” In the present matter the processes undertaken by M/s. Cool Desserts, as mentioned in the impugned Order are adding of ice cream with different toppings, nuts, sauce, cream fruit milk and sugar syrup/water and syrup/cake with topping. Merely adding of these items do not bring into existence a new commercial commodity different in name, character or use. The ice cream remains ice cream and it is served in different form by adding different ingredients. The test laid down by the Supreme Court in J.G. Glass case is not satisfied in the present matter as the end product remains the same. It is settled law that every type of variation of the goods or finishing of goods would not amount to manufacture unless it results in emergence of new commercial commodity–State of Maharashtra v. Mahalaxmi Stores . Thus we hold that the processes undertaken by M/s. Cool Desserts do not amount to manufacture in terms of Section 2(f) of the Central Excise Act as these processes do not lead to emergence of a new commercial product, different from the one with which the process started. Accordingly, we set aside the demand of duty and penalties imposed on M/s. Cool Desserts and Shri Neeraj Jain and allow both the appeals No. E/727-28/04-NB(A).
5. Revenue has filed appeal as the Commissioner (Appeals) has considered the price charged by M/s. Cool Desserts as cum-duty price relying on the decision on the Larger Bench of the Tribunal in the case of Shri Chakra Tyres Ltd. v. CCE 1999 (83) ECR 690 (Tri). The Revenue has relied upon the decision in the case of Bata India 1996 (84) ELT 164 (SC). The Revenue’s appeal becomes infructuous as no duty is payable by M/s. Cool Desserts and the question of determination of assessable value does not survive. Further the appeal filed by revenue against Shri Chakra Tyre’s decision has been dismissed by the Supreme Court. Moreover it has been held by the Supreme Court in the case of CCE, Delhi v. Maruti Udyog Ltd. 2002 (141) ELT 3 (SC) that the amount realized by the assessee from the sale of goods has to be regarded as a normal wholesale price and “in determining the value on which excise duty is payable, the element of excise duty which must be regarded as having been incorporated in the sale price must be excluded.” Thus, Appeal No. E/431/04-NB(A) filed by Revenue is rejected.