The effect of annealing at 1400 °C in argon on the bond structure of graphite ball milled for 100 h at 400 rpm in polar (water) and in non-polar (n-dodecane) liquids was investigated primarily by near-edge X-ray absorption fine structure spectroscopy (NEXAFS) and transmission electron microscopy (TEM). Carbon K-edge NEXAFS allows the distortion of bonds in the hexagonal lattice to be investigated. It is shown that in-plane sp2 bonds are strained and distorted after ball milling because sp3 bonds are introduced. Not surprisingly, annealing of the milled product restores sp2 bonds but at the same time, coiling and formation of tube-like structures takes place. It is well established that graphite is not formed on annealing, and hence the results shown here demonstrate that the loss of sp3 carbons on annealing must proceed via a different mechanism by which they are formed by milling.