1983 (9) TMI 284 - AT - Central Excise

Summary

Issues involved: Determination of whether crushing waste rubber into powder amounts to manufacture for the purpose of duty imposition under Central Excise & Customs regulations.

In the present case, the factory cleared quantities of hard rubber obtained by crushing waste rubber into powder. The appellant argued that this process did not constitute manufacture as there was no chemical change or reaction, and the resulting product was essentially the same as the original rubber but in powder form. On the other hand, the department contended that the creation of the powder form made the product marketable, as evidenced by its sale. The Tribunal noted that while a buyer was found initially, the factory ceased selling the rubber powder and started manufacturing its own rubber from the crushed rubber. The Tribunal disagreed with the department's argument, stating that the qualities of the substance remained unchanged, and there was no chemical reaction or reformation through the crushing process. They opined that mere crushing and powdering did not amount to creating a new product, as the original characteristics, molecular structure, and chemical identity of the substance were retained. Although physical form changed, the fundamental nature of the product remained the same. Consequently, the Tribunal held that the demand for duty was not sustainable and set it aside, thereby allowing the appeal without delving into other arguments raised.