2009 (3) TMI 336 - AT - Central Excise

Crumbed rubber in powder form - contention of the appellants that since the powder is manufactured only by crushing the rubber waste and no other chemicals are added the process is not a process of manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 and, therefore, Crumbed rubber in powder form is not classifiable under Chapter heading No. 40.04 of CETA, 1985. Contention of appellant t is acceptable - The appeals filed by the appellants are allowed.

Summary

Issues: Classification of crumbed rubber under Central Excise Tariff Act, 1985

Analysis:
1. The appellants are engaged in the manufacture of reclaimed rubber falling under Chapter 40 of the Central Excise Tariff Act, 1985. They are involved in making crumbed rubber from waste rubber pieces of tyres and tubes without adding any chemicals. The appellants argue that since no additional chemicals are used, the process does not qualify as manufacturing under Section 2(f) of the Central Excise Act, 1944, and thus crumbed rubber in powder form should not be classified under Chapter heading No. 40.04 of CETA, 1985. The duty demand for the period from January 1999 to December 2001 is Rs. 4,24,293.

2. The Tribunal referred to its previous decision in the appellants' case (CCE and C, Surat-I v. Gujarat Reclaim and Rubber Products Ltd.) where it was held that crumbed rubber powder obtained by crushing rubber cuttings without changing the properties of the input waste is not dutiable as it does not amount to manufacturing. This decision was based on earlier Tribunal and Supreme Court judgments. The Tribunal upheld that changing the physical form alone does not constitute manufacturing. Relying on this precedent, the impugned orders by the Commissioner (Appeals) were deemed unsustainable, and the appeals by the appellants were allowed.

3. The Tribunal's judgment in the previous case established the principle that the process of making crumbed rubber from waste rubber pieces without adding chemicals does not amount to manufacturing under the Central Excise Act. This decision was based on the interpretation of Section 2(f) of the Act and supported by earlier legal precedents. The Tribunal's ruling emphasized that the key factor in determining manufacturing is the substantial change in the essential characteristics of the product, which was not present in the case of crumbed rubber production. Consequently, the classification of crumbed rubber under Chapter heading No. 40.04 of CETA, 1985 was not justified, leading to the setting aside of the Commissioner (Appeals) orders and allowing the appellants' appeals.