Excise duty rebate is limited to duty actually paid, and pro rata apportionment is not automatically justified.

Rebate of excise duty under a notification issued under Rule 12 is confined to duty actually paid and cannot be allowed beyond that amount merely because the notification does not state an express ceiling. The note explains that Rule 173RH operates within the rebate scheme and does not create an independent entitlement divorced from duty paid. It also states that a pro rata division of duty between export clearances and home consumption is not supported by the notification or the rules; rebate may extend up to the total duty paid during the relevant period if the export claim otherwise qualifies.

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Issues: (i) Whether rebate under Notification No. 231/76-C.E. dated 23-6-76, issued under Rule 12 read with Rule 173RH of the Central Excise Rules, 1944, could exceed the amount of duty actually paid; (ii) whether the Collector (Appeals) was justified in apportioning the duty paid pro rata between goods exported and goods cleared for home consumption.

Issue (i): Whether rebate under Notification No. 231/76-C.E. dated 23-6-76, issued under Rule 12 read with Rule 173RH of the Central Excise Rules, 1944, could exceed the amount of duty actually paid.

Analysis: Rule 12 authorises rebate only of duty paid on excisable goods exported outside India, subject to the specified safeguards, conditions and limitations. Notification No. 231/76-C.E. itself was issued under Rule 12 read with Rule 173RH, and therefore had to be read in the setting of the rebate scheme under Rule 12. Rule 173RH also speaks of duty paid under Rule 173RD and regulates the conditions for rebate; it does not create an independent source of authority to grant rebate unrelated to duty paid. The concept of rebate, in its ordinary legal sense, is a reduction or repayment against a gross amount and cannot exceed that amount. The fact that duty under the Simplified Procedure is treated as a full discharge of liability does not mean that duty has actually been paid in excess of the amount available for rebate. On this construction, the absence of an express ceiling in the notification does not permit rebate beyond the duty actually paid.

Conclusion: Rebate under the notification cannot exceed the total duty actually paid.

Issue (ii): Whether the Collector (Appeals) was justified in apportioning the duty paid pro rata between goods exported and goods cleared for home consumption.

Analysis: The limitation that rebate cannot exceed duty paid does not itself require a mechanical pro rata division of duty between export clearances and home clearances. The notification contains no warrant for such apportionment. Where exports are sufficiently high, the exporter may be entitled to rebate of the entire duty paid, provided the rebate claimed does not exceed that total duty. The pro rata allocation adopted by the Collector (Appeals) was therefore not supported by the notification or the governing rules.

Conclusion: The pro rata apportionment was unjustified and the rebate was to be allowed up to the total duty paid during the relevant period.

Final Conclusion: The departmental appeal failed, while the manufacturers' appeal succeeded to the extent that rebate was confined to the duty actually paid during the two months in question and the pro rata restriction was set aside.

Ratio Decidendi: Rebate of excise duty under a notification issued pursuant to Rule 12 of the Central Excise Rules, 1944 is necessarily confined to duty actually paid and cannot exceed that amount, though it is not to be curtailed by an unwarranted pro rata apportionment unless the governing notification or rules so provide.

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