EntityManager merge method generate insert call rather than update even though id exist

I am facing an issue with entitymanger that it inserts data instead of updating. Here is my entity and all code snippet that we are using. I have checked hibernate logs as well I see it creates an insert operation rather than an update.

Maven dependencies

		<dependency>
			<groupId>org.hibernate</groupId>
			<artifactId>hibernate-core</artifactId>
			<version>4.2.7.SP1-redhat-3</version>
		</dependency>
		<dependency>
			<groupId>antlr</groupId>
			<artifactId>antlr</artifactId>
			<version>2.7.7.redhat-4</version>
			<scope>test</scope>
		</dependency>
		<dependency>
			<groupId>org.hibernate</groupId>
			<artifactId>hibernate-entitymanager</artifactId>
			<version>4.2.7.SP1-redhat-3</version>
			<scope>test</scope>
		</dependency>

Code Snippet.

jpaTableDao.update(jpaTable1) // calling abstract update method

public interface ITable extends Src {
	public String getPrefix();
	public void setPrefix(String channelPrefix);
	.......

}


public interface Src extends Entity, TimeStamp {

	String getName();

	void setName(String name);
	..........
	public String getType();

	public void setType(String type);
}

public interface Entity {

	Serializable getId();

	void setId(Serializable id);

}

@Entity(name = "Src")
@IdClass(JpaSrcKey.class)
@Inheritance(strategy = InheritanceType.TABLE_PER_CLASS)
public abstract class JpaSrc extends JpaTimeStamp implements Src {

	@Id
	@GenericGenerator(name = "src_id_generator", strategy = "com.demo.id.generator.SrcIdGenerator")
	@GeneratedValue(generator = "src_id_generator")
	protected Integer id;

	@Id
	@Column(length = 14)
	protected String type;
	
}


@Entity(name = "Table1")
@org.hibernate.annotations.Table(appliesTo = "Table1", indexes = {
		@Index(name = "A_dobject_Idx", columnNames = { "dobject_id" }) })
public class JpaTable1 extends JpaSrc implements ITable {

	{
		type = "Table1";
	}
	@Column(length = 14)
	private String code;
	
}
public interface SrcKey extends Serializable {

}
public class JpaSrcKey implements Serializable, SrcKey {

	private static final long serialVersionUID = 5844060606871925217L;

	private Serializable id;

	private String type;

	public JpaSrcKey() {
	}

	public JpaSrcKey(Serializable id, String type) {
		this.type = type;
		Validate.notNull(id);
		this.id = id;
	}
 ...
}

public class JpaTableDao extends AbstractIamDao<ITable, SrcKey> implements ITableDao<SrcKey> {

	protected JpaTableDao() {
		super(JpaTable1.class);
	}
}

public abstract class AbstractJpaDao<T extends Entity, Id extends Serializable> implements Dao<T, Id> {
	private EntityManager entityManager;
	.........
	public T update(final T entity) {
		final T result;

		if (entityManager.contains(entity)) {
			result = entity;
		} else {
			result = entityManager.merge(entity);
		}

		return result;
	}
}

This is a duplicate of 7150.