If it looks like ice cream, tastes like ice cream, it must be ice cream
Upholding the excise department’s stand in the case of Commissioner vs Connaught Plaza Restaurant Ltd, the Supreme Court has ruled that the ‘soft serve’ sold at McDonalds India’s outlets is in fact ice cream for the purpose of determining excise duty.
It said that “the manner in which a product may be marketed by a manufacturer does not necessarily play a decisive role in affecting the commercial understanding of such a product. What matters is the way in which the consumer perceives the product at the end of the day.”
A person who walks into the restaurant to buy ice cream is not likely to know the intricacies of the manufacture of the product and its difference from soft serve, the top court said, while rejecting the argument of the assessee’s counsel V Lakshmi Kumaran that it was liable to pay less duty since the product was marketed and sold around the world as ‘soft serve’.
According to the apex court, “Mere semantics cannot change the nature of a product in terms of how it is perceived by persons in the market, when the issue at hand is one of excise classification.”
While the department had issued three show-cause notices to the fast-food restaurant chain in April 1997-March 2000, saying ‘soft serve’ would attract the 16% duty plus an additional duty levied on ice-cream, McDonalds India had opposed the classification. However, the sectoral tribunal had upheld McDonalds’ claim that ‘soft serve’ could not be classified as ice-cream since ice-cream contains 10% milk fat whereas ‘soft serve’ does not contain more than 5% milk fat.
Counsel Arijit Prasad, appearing for the revenue, submitted that in common trade parlance ‘soft serve’ is known as ‘ice-cream’; all the ingredients used and the process of manufacture adopted for preparation of ‘soft serve’ is essentially the same as is adopted for manufacture of an ‘ice-cream’; and therefore, the manufacture of ‘soft serve’ was not distinct from the manufacture of ‘ice-cream’.
Even cheques bouncing due to signature mismatch is an offense
Be ready to face prosecution in a