Rebate on exported exempt goods cannot be denied unless the rebate rules expressly permit refusal.

An exemption notification does not extinguish the statutory levy, and duty paid on exported excisable goods may still support a rebate claim where the rebate rules do not expressly bar it. Rule 12 of the Central Excise Rules, 1944 governs grant and denial of rebate, and rebate cannot be refused on grounds not contemplated by that rule. The revenue's view that duty paid on exempt goods is merely a deposit was rejected as unsupported by the Act or Rules. On that basis, the refusal of rebate solely because the goods were covered by an exemption notification was unsustainable, and the assessee's rebate claim was entitled to succeed.

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Issues: Whether an assessee exporting excisable goods is entitled to rebate of duty paid when the goods were covered by an exemption notification and no specific provision under the rebate rules permitted denial of such claim.

Analysis: Rule 12 of the Central Excise Rules, 1944 governs the grant and denial of rebate. The rule specifies the grounds on which rebate may be refused, and no other statutory basis was shown to deny the claim. The fact that an exemption notification exists does not obliterate the levy itself, nor does it create a bar against payment of duty and consequent rebate where the statutory conditions are otherwise satisfied. The revenue's theory that duty paid on exempted goods is merely a deposit was found to have no support in the Act or the Rules. The Court held that, in the absence of an overriding provision, rebate cannot be denied on a ground not contemplated by the governing law.

Conclusion: The assessee was entitled to the rebate claim, and the petition challenging the revisional order failed.

Final Conclusion: The refusal of rebate on the ground of full exemption was unsustainable, and the revisional authority's order was upheld while the revenue's challenge was rejected.

Ratio Decidendi: An exemption notification does not extinguish the statutory levy, and a rebate claim for duty paid on exported goods cannot be denied except on grounds expressly provided by the governing rebate rule.

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