Excess excise rebate beyond duty paid remains recoverable where the exemption notification does not authorise payment above statutory duty.

Rebate under Notification No. 257/76 could not lawfully exceed the duty actually paid on sugar, because Rule 8(1) of the Central Excise Rules, 1944 authorised exemption from duty but did not permit an incentive rebate beyond the statutory duty liability. Granting the rebate in advance did not expand the scope of the notification, and any excess amount paid remained recoverable under the Central Excise Rules. The plea of discrimination was not made out.

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Issues: Whether rebate granted under Notification No. 257/76 could exceed the amount of duty actually paid on the sugar and whether the excess could be recovered under the Central Excise Rules.

Analysis: The rebate had been sanctioned as an incentive under the exemption notification, but the amount of rebate could not lawfully be greater than the duty paid on the goods. Rule 8(1) of the Central Excise Rules, 1944 empowered exemption from the whole or part of the duty leviable and did not authorise payment of an incentive rebate in excess of the duty payable. The procedure by which rebate was given in advance did not enlarge the scope of the notification, and any excess granted beyond the statutory limit remained recoverable. The plea of discrimination was not established.

Conclusion: The excess rebate was recoverable and the challenge failed against the assessee.

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