Excise rebate is confined to marketable sugar; waste sugar lost in reprocessing does not qualify for exemption relief.

Rebate under Rule 8(1) and the exemption notification is confined to sugar that is excisable and marketable. Dirty or waste sugar lost during reprocessing did not attract excise duty because duty under the charging scheme applies only to excisable goods, and manufacture requires a distinct marketable product. On that basis, the expression "sugar produced by a manufacturer" was read as covering only marketable sugar within the charge of duty, not material outside excise levy. The claim for rebate on the quantity lost in reprocessing was therefore unsustainable.

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Issues: Whether rebate under Rule 8(1) and the exemption notification could be claimed in respect of dirty or waste sugar lost during reprocessing, when no excise duty had been levied on such sugar.

Analysis: The expression "sugar produced by a manufacturer" in the notification was construed in light of the charging scheme under the Central Excises and Salt Act, 1944 and the definition of excisable goods. Duty under Section 3 attaches only to excisable goods, and manufacture under Section 2(f) contemplates a process resulting in a distinct marketable product. Dirty sugar or waste sugar was not marketable and no duty was leviable on it before reprocessing. The Court held that the notification contemplated rebate only on sugar that had been produced as excisable, marketable sugar, and not on material that was itself outside the charge of duty.

Conclusion: The claim for rebate on the quantity of dirty sugar lost in reprocessing was not sustainable. The interpretation adopted by the single Judge was rejected and the appeal succeeded.

Ratio Decidendi: Rebate under an exemption notification cannot be claimed in respect of goods on which no excise duty is leviable, and the expression "sugar produced" in such notification is confined to marketable sugar that is excisable goods.

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