2003 (1) TMI 160 - AT - Central Excise

Summary

Issues Involved:
1. Whether the process of conversion of 'soft serve mix' to 'soft serve' amounts to manufacture.
2. Classification of the product 'soft serve' under the Central Excise Tariff Act.
3. Eligibility for Small Scale Exemption for the product 'soft serve'.

Issue-wise Detailed Analysis:

1. Whether the process of conversion of 'soft serve mix' to 'soft serve' amounts to manufacture:

The Tribunal examined if the process undertaken by M/s. Connaught Plaza Restaurants Pvt. Ltd. (Connaught Plaza) amounts to manufacture. Connaught Plaza procures 'soft serve mix' from M/s. Amrit Foods, which is then processed in a Taylor vending machine to produce 'soft serve'. The Tribunal referenced the Supreme Court's definition of manufacture in the case of Union of India v. Delhi Cloth & General Mills Co. Limited, stating that manufacture involves bringing into existence a new substance with a distinctive name, character, or use. The Tribunal concluded that the process undertaken by Connaught Plaza results in a new product and thus amounts to manufacture.

2. Classification of the product 'soft serve' under the Central Excise Tariff Act:

The Tribunal had to determine if 'soft serve' should be classified under Heading 04.04, Sub-Heading 2108.91, or Heading 21.05 as ice cream. The Tribunal noted that various authoritative sources, including the ISI Specifications and the Prevention of Food Adulteration Act, 1954, indicate that ice cream should contain 8-20% milk fat, whereas 'soft serve' contains not more than 5% milk fat. The Tribunal found that 'soft serve' and ice cream are distinct products, and 'soft serve' cannot be classified as ice cream under Heading 21.05. Consequently, the Tribunal rejected the classification under Heading 04.04, which covers other dairy products, and determined that 'soft serve' should be classified under Sub-Heading 2108.91 as an edible preparation not elsewhere specified or included.

3. Eligibility for Small Scale Exemption for the product 'soft serve':

The Tribunal addressed whether 'soft serve' is eligible for Small Scale Exemption. The Commissioner had denied the exemption, arguing that the product was sold from McDonald's outlets and thus bore the McDonald's brand name. However, the Tribunal found that the product itself did not bear any brand name. The Tribunal emphasized that for denying the benefit of the small-scale exemption notification, the product must bear the brand name of another person, which was not the case here. Therefore, the Tribunal concluded that 'soft serve' is eligible for the Small Scale Exemption.

Conclusion:

The Tribunal held that the process of converting 'soft serve mix' to 'soft serve' amounts to manufacture, classified the product under Sub-Heading 2108.91, and determined that the product is eligible for Small Scale Exemption as it does not bear any brand name. Both appeals were disposed of in these terms.