Judgment:
1. The common issue involved in these 4 appeals arising out of 2 Orders-in-Appeal is whether M/s. Buns & Cones Pvt. Ltd. and Sunny Deserts Pvt. Ltd. are engaged in the manufacturing of Ice-cream falling under Heading 21.05 of the Schedule to the Central Excise Tariff Act.
2. Shri B.L. Narasimhan, learned Advocate, mentioned that M/s. Buns & Cones Pvt. Ltd. are engaged in the business of selling ice-cream of the brand "Baskin Robbins" purchased from M/s. Maharashtra Dairy Products manufacturing Co. Ltd., Pune; that from 1-4-99 the second Appellants M/s. Sunny Deserts Pvt. Ltd. have taken over the operation from Buns & Cones; that the icecream manufactured by M/s. Maharashtra Dairy Products Manufacturing Co. are packed in 4 litres capacity cardboard cartons; that the Appellants sold these ice-cream to their customers in cups in the required quantity and also sold Sundae, Shakes and Blasts made out of these ice-creams and blending it in a mixture; that show cause notices were issued to the Appellants for demanding Central Excise duty on the ground that the process undertaken by them amounts to manufacture in terms of Note 7 to Chapter 21; that in the case of Buns & Cones the Additional Commissioner under Order-in-Original No.51/2000 dated 3-5-2000 has held that scooping and selling of ice-cream in cups from bulk packing does not amount to labeling or re-labeling to bring it under Note 7 to Chapter 21 and accordingly he dropped the demand in respect of sale of ice-cream; that however, he has confirmed the duty in respect of Sundae, Shakes and Blasts holding that the activity of making these products is squarely covered under the definition of manufacture within the meaning of Note 7; that the appeal filed by them was also rejected by the Commissioner (Appeals) vide Order-in-Appeal Nos. 331-332/2003 dated 29-12-2003. Similar orders have been passed by the Additional Commissioner vide Order-in-Original No.49/2002 in the case of Sunny Deserts Pvt. Ltd. These appeals have been rejected by the Commissioner (Appeals) vide Order-in-Appeal Nos.
329-330/2003 dated 29-12-2003.
3.1 The learned Advocate submitted that Note 7 to Chapter 21 reads as under :- "In relation to products of this Chapter, labeling or re-labeling of containers and re-packing 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." 3.2 The learned Advocate mentioned that blending of ice-cream in a mixture with various flavours does not amount to manufacture within the meaning of Note 7 to Chapter 21; that the impugned orders have proceeded on the basis that 4 litres pack of bought out ice-cream were not marketable as ice-cream preparation like Sundae, Shakes, etc. and it was only after process like blending in a mixture with various flavours as per the requirement of the Customers undertaken by the Appellants that the ice-cream comes in existence in a marketable condition; that Note 7 refers to "adoption of any other treatment to render the product marketable to the consumer"; that in order to invoke this particular clause it has to be proved by the Department that the product prior to giving such treatment was in a non-marketable condition; that admittedly ice-cream is marketable when it is bought in packs of 4 litres capacity inasmuch as they themselves bought sufficient quantity from the manufacturer of ice-cream; that therefore, the fundamental requirement of being a non-marketable condition is not satisfied and accordingly Note 7 is not attracted. He relied upon the decision in the cases of Lupin Laboratories Ltd. v. CC & CE, Aurangabad - 2002 (139) E.L.T. 366 (T) and Lakme Lever Ltd. v. CCE, Bombay-III - 2001 (127) E.L.T. 790 (T).
4. Countering the arguments Shri O.P. Arora, learned SDR, reiterated the findings as contained in the impugned orders and emphasised that the words marketable to the consumer in Note 7 are unambiguous in their meaning; that the product should not only be marketable, but it should be marketable to the consumer; that if the consumer wants a Sundae or Shake, then ice-cream would not be marketable to him, the two being different in taste; that the process of blending and mixing of flavour is implied to make it marketable to the consumer; that the marketability in Note 7 to Chapter 21 is in relation to the requirement of the consumer.
5. We have considered the submissions of both the sides. The issue in these appeals revolves round the words of Note 7 to Chapter 21 "adoption of any other treatment to render the product marketable to the consumer." We find force in the submissions of the learned Advocate that the ice-cream which are procured by them from the manufacturer of ice-cream are in a marketable condition. It cannot be claimed by the Revenue that the ice-cream which have been obtained by them were not marketable without the process undertaken by them. They are merely mixing more than one flavour in the mixture and serving it to the consumer as per their taste. As the ice-cream undoubtedly obtained by them from the manufacturer is in marketable condition it cannot be said they are adopting any treatment to render, the product marketable to the consumer. The ice-cream as procured by them can be served to the consumer without adopting any process by them. This was the view expressed by the Appellate Tribunal in the case of Lakme Lever Ltd. (supra). In this case the Appellants were selling their product cosmetics/lipsticks to Canteen Stores Deptt. of India which purchases goods for sale through their retail outlets for persons of the Armed Forces and their families. Canteen Stores Deptt. asked the Appellants to sort and pack the goods in the manner that would attract their customers, for example, a carton of lipsticks would ordinarily sold containing 12 lipsticks of one colour whereas in the case of Canteen Stores Deptt. a carton would contain 12 assorted colours of lipstick.
The Department applies Note 4 to Chapter 33, which provided inter alia that the adoption of any other treatment to render the product marketable to the consumer shall amount to manufacture. The Tribunal has held that the process to fall within the scope of "any other treatment", it must be one which confers upon a product the attributes of marketability which it did not possess earlier. We must note here the significance of the word "consumer" in the Note. Thus the product must be rendered marketable to the consumer.... Therefore, for any treatment to fall within the scope of the Note to the Chapter it must be one that confers upon a product a quality as a result of which the product which was otherwise not marketable as now rendered marketable.
If the products were already marketable any amount of treatment to enhance its marketability would not amount to manufacture within the meaning of this Note. The treatment does render it marketable when it earlier was not. In the present matter also the same phrase, which was subject matter of interpretation in Lakme Lever case, is involved. In these matters also as observed by us earlier ice-cream procured by the appellants from the manufacturer is in marketable condition. The appellants have only blended more than one flavour in mixer to enhance its marketability. Enhancement of marketability is not covered by the deemed definition of manufacture given in Note 7 to Chapter 21. Thus following the decision relied upon by the learned Advocate we hold that Note 7 to Chapter 21 is not attracted in the present matters. We, therefore, set aside the impugned order and allow all the appeals.