1. This is an appeal against order No. 1262/79 dated nil passed by the Appellate Collector of Central Excise & Customs, Bombay.
2. The factory, Gujarat Reclaim & Rubber Products Ltd., Ankleshwar (Gujarat) cleared some quantities of goods they call hard rubber. This hard rubber is obtained by crushing waste rubber into powder. At the time of the argument on 27-9-83 the counsel for the appellant raised a number of arguments in favour of the appeal. One of the argument was that the crushing of the hard rubber did not amount to manufacture as there was no chemical change or reaction and the new product was chemically and in all other properties the same as the rubber from which it was obtained except that it was in powder form.
3. The learned counsel for the department however opposed the argument saying that the crushing operation produced a powder form for where there was no such powder form in existence before. The goods have been sold and this proves that it was a marketable product capable of being given a form in which it would find a market and a buyer, and this was proved by the fact that it did find a buyer.
4. It is of course a fact that a buyer was found but we were informed also that the factory had stopped sale of the rubber powder after the first few clearances. The factory now manufactures its own rubber out of the crushed rubber. We are not able to agree with the arguments of the learned counsel for the department that a new product was created when the old rubber was crushed into powder. The qualities of the substance remained the same and there has certainly been no chemical reaction or reformation by the crushing. A simple act of crushing and powdering like this one should not in our opinion be taken to be synonymous with creation of a new product. It is true that crushing does change the physical form as, for instances, the specific surfaces increase considerably thereby allowing intimate mixture etc, etc. but except in very rare instances, the substance remains what it was. The product keeps its original character, molecular structure, chemical identity etc. etc. We are, therefore, not satisfied that the demand for duty was sustainable.
5. We set aside the demand and allow the appeal. In view of this we need not deal with any other arguments raised by the appeal.