Mere physical change in waste rubber is not manufacture; crumbed rubber powder was held not dutiable.

Crushing, grinding and sieving waste rubber into crumbed rubber powder, without adding chemicals, oil or fillers, was held to be only a physical change and not a manufacturing process. The product was found to retain the basic characteristics of the input waste rubber, so it was not treated as a new excisable commodity under Chapter 40. Relying on its earlier view in the assessee's own case, the Tribunal stated that mere change in physical form does not amount to manufacture under Section 2(f) of the Central Excise Act, 1944, and the Revenue's duty demand on the crumbed rubber powder was set aside.

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Issues: Whether converting waste rubber into crumbed rubber powder by cracking, grinding and sieving without adding chemicals or fillers amounts to manufacture, and whether such product is classifiable and dutiable under Chapter 40 of the Central Excise Tariff Act, 1985.

Analysis: The process involved only crushing and grinding of waste rubber into smaller particles, without any addition of oil, chemicals or fillers. The product obtained retained the same basic properties and characteristics as the input waste rubber. The issue was treated as no longer res integra in view of the Tribunal's earlier decision in the appellant's own case, which held that a mere change in physical form does not amount to manufacture and that the resulting crumbed rubber powder is not dutiable on that basis.

Conclusion: The process does not amount to manufacture under Section 2(f) of the Central Excise Act, 1944, and the crumbed rubber powder is not liable to duty on the basis proposed by the Revenue. The demand and the impugned orders were set aside in favour of the assessee.

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