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Ramachandran Nair, J.

These connected Sales Tax Revision cases arise from common order of the Sales Tax Appellate Tribunal partly allowing the claim of the assessee and partly rejecting the same. The assessee is engaged in blending,compounding, bottling and selling of Indian Made Foreign Liquor like Brandy, Rum etc. under various brand names. The entire sales are to Kerala State Beverages Corporation Limited, a Government of Kerala Company engaged in monopoly distribution of Indian Made Foreign Liquor in Kerala. Sales tax on Indian Made Foreign Liquor at the rate prescribed in the First Schedule to the KGST Act is payable at the point of sale by Beverages Corporation Ltd. to the retail dealers and to consumers. Similarly under the Foreign Liquor Rules, Beverages Corporation is liable to pay excise duty at the point of removal of the goods from the warehouses of the distilleries and blending units to their warehouses. Obviously point of levy of sales tax at the scheduled rate is fixed at the hands of the Beverages Corporation only to ensure that incidence of tax falls on price of liquor including excise duty. Even though distilleries and other suppliers of liquor to the Beverages Corporation are not liable to pay sales tax at the rate provided in the First Schedule to the Act, such dealers in foreign liquor are liable to pay turnover tax at all points of sale as provided under Section 5(2C) of the KGST Act, 1963. The assessee's case is that under Section 5(2C) they are not liable to pay turnover tax which is payable on the sales turnover only by "distillery, brewery, winery or other manufactury" which they are not. Their specific case is that liability is cast upon them only by virtue of an amendment to Section 3 (19) of the Abkari Act with effect from 1.4.2003 wherein compounding is also brought within the meaning of manufacture. Therefore, according to the assessee, they have no turnover tax liability under Section 5(2C) for the assessment years 1999-2000 to 2002-2003. Even though the Tribunal in principle upheld the contention of the assessee, they upheld the liability of the assessee for turnover tax under Section 5(2C) but declared that they are not liable to pay turnover tax on the excise duty paid by Beverages Corporation for the goods sold by the assessee to the Corporation. The revisions filed by the assessee are for a declaration that they not being manufacturers are not liable to pay turnover tax for the assessment years 1999-2000 to 2002-2003. On the other hand, the main issue raised in the revisions filed by the State is against the order of the Tribunal holding that assessee is not liable to pay turnover tax on excise duty, which decision of the Tribunal according to the State, is exactly contrary to the decision of the Supreme Court in STATE OF KERALA & OTHERS V. MAHARASHTRA DISTILLERIES LTD. & OTHERS (141 STC 358). We have heard Senior Counsel Sri.R.Venkitaramani appearing for the assessee and Special Government Pleader Sri.Vinod Chandran appearing for the State.

"The activity undertaken by the petitioner is compounding of ENA into Brandy and Rum. The process involved is that the ENA stored in stainless steel tanks is pumped into tanks fitted with stirrers, diluted with de- mineralised water to bring the strength of ENA to 42.8 volume/volume followed by stirring to make it homogeneous, adding selected caramel and flavour, again stirring well, filtering to remove any particles and bottling."

Admittedly assessee among other things is engaged in manufacture of Brandy, one of the important ingredients of which is spirit obtained from fruits mainly, grape. The Excise Inspector after conducting inspection of assessee's blending and bottling unit has reported the process of preparing Brandy as follows:

"Imported ENA is mixed up with Grape-Spirit, adds DM Water and Caramel. This liquor can be bottled for consumption."

It is common knowledge that ENA or Extra Neutral Alcohol is obtained from rectified spirit by redistillation to remove all impurities to make the alcohol absolutely potable and safe. Brandy cannot be made without spirit obtained from fruits and like any other manufacturer of Brandy, assessee is purchasing fruit spirit and blending the same along with ENA to make it Brandy. The other ingredients used in blending and compounding are caramel for the purpose of colouring and flavour, if any, for the purpose of flavouring the liquor. The assessee suppressed the use of Grape spirit in the making of Brandy only to mislead the lower authorities including the Tribunal. The effort was made in this court also by filing revision petitions suppressing this fact and only when we doubted the making process of Brandy, we called for a report from the Excise authorities who have confirmed that grape spirit is used as an ingredient in the manufacture of Brandy. The position is not different so far as Rum is concerned, which is also made by mixing ENA with HBS (High Bouquet Spirit) the details of which are not furnished by the assessee to this court. In view of the correct information furnished by the Excise Department, we have to consider the case with reference to the true facts pertaining to production, bottling and sale of liquor by the assessee through blending and compounding of various ingredients stated above. Section 5(2C) pertaining to levy of TOT on liquor, both Indian Made and Foreign Made, underwent several changes. Since the assessments involved pertain to 1999-2000, we extract hereunder the provision that stood in the statute prior to it's amendment by Act 8 of 2000 with effect from 1.1.2000.

68) and TEEJAN BEVERAGES LTD. V. STATE OF KERALA (131 STC 538) and contended that until the term manufacture contained in Section 3(19) of the Abkari Act, 1977 was amended to include compounding therein with effect from 1.4.2003, assessee could not be treated as a manufactory for the purpose of levy of turnover tax under Section 5(2C) of the Act. We are unable to accept the argument of the assessee for various reasons. In the first place, as already held by us, assessee is engaged in manufacture of products like Brandy, Rum etc. by blending various items of liquor, compounding for colouring, flavouring and bottling the same under brand names for the purpose of marketing. Assessee has no case that after blending and making of the liquor, it retains the identity of the original items used in the manufacture namely, grape spirit, Bouquet Spirit, ENA, Caramel, Flavours etc. In fact in the course of blending and compounding, assessee produces an entirely new product different from the ingredients used and the products made admittedly cannot be restored to it's constituents. In other words, blending is an irreversible process by which an entirely new commodity with new identity emerges. In fact, prior to the amendment of 2004, Section 5(2C) provided for turnover tax on dealers of Indian Made Foreign Liquor, whether they are distilleries, manufacturers or even mere traders. In fact, the purpose of introduction of sub-clause (C) in Finance Act, 2004 with retrospective effect was to neutralise the decision of this court in KERALA DISTILLERIES AND ALLIED PRODUCTS LTD. V. ASST. COMMISSIONER, SPECIAL CIRCLE, PALAKKAD [(2000) 117 STC 553)] wherein this court held that turnover tax is not payable on excise duty paid by Beverages Corporation. The purpose of amendment is not to exclude blending and compounding units from the scope of "manufactory", but to ensure that turnover tax is paid on sale price including excise duty. In other words, we are of the view that a blending and compounding unit is a manufactory because in the process of blending and compounding, new liquor products namely, Brandy and Rum are manufactured. In fact, it is pertinent to note that even prior to the introduction of compounding under the definition of "manufacture" in Section 3(19) of the Abkari Act, blending and compounding were defined under the Kerala Foreign Liquor (Compounding, Blending and Bottling) Rules, 1975. Under these Rules blending means mixing of two different spirits of the same or different strength and compounding is preparation of foreign liquor by addition of flavouring or colouring matter or both; to imported or Indian made spirit. Admittedly the assessee is engaged in both these activities and the net result is manufacture of new products namely, Brandy and Rum under brand names. The blending and compounding process is irreversible in as much as the original items used in blending and compounding lose their identity and new and different products such as Brandy, Rum etc. are produced. If the process involved is not a manufacturing activity, we do not know what else leads to the ultimate production of Brandy and Rum by the assessee. Therefore, we find no merit in the contention of the assessee that it is not engaged in manufacture of any product. The findings of the Tribunal are therefore, vacated holding that the assessee is liable to pay turnover tax on the entire products manufactured through blending and compounding and sold by them for all the years involved. The S.T. Revisions filed by the assessee are consequently dismissed.