Rebate on exempt goods denied where debit was only a deposit, not duty paid under law, and Modvat credit was barred.

Rebate under Rule 12 was confined to duty lawfully paid on exported goods, so amounts debited through R.G. 23A Part-II or PLA for goods wholly exempt from duty did not qualify as excise duty paid. Where the final product was fully exempt, the debit was treated only as a deposit and not a levy authorised by law, consistent with Article 265. The Modvat scheme could not be used to indirectly obtain credit or rebate that Rule 57C barred for exempt goods. Reliance on trade notices and promissory estoppel also failed because administrative instructions could not override the statutory position.

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Issues: Whether rebate under Rule 12 was admissible on amounts debited through R.G. 23A Part-II or PLA in respect of goods wholly exempted from duty, and whether the assessee could rely on Modvat credit and administrative trade notices to claim such rebate.

Analysis: Rebate under Rule 12 is confined to duty lawfully paid on exported goods. Where the goods are wholly exempted, any amount debited as excise duty contrary to the exemption is not a levy authorised by law but only a deposit with the Government. Article 265 prohibits collection of tax except by authority of law. Rule 57C also bars credit where the final product is fully exempt or chargeable at nil rate, so the assessee cannot indirectly achieve through Modvat credit and rebate what the scheme itself prohibits. The plea based on prior trade notice and promissory estoppel was not accepted because an administrative instruction cannot override the statutory position.

Conclusion: Rebate was not admissible on such payments, and the amounts debited against exempt goods were not treated as duty of excise.

Final Conclusion: The legal position was decided against the assessees on entitlement to rebate for purported duty paid on fully exempt goods, while the contrary appellate order was set aside and the other revision was rejected.

Ratio Decidendi: Payment made as excise duty on goods wholly exempt from duty, contrary to the exemption and the Modvat restriction, is not duty paid under authority of law and therefore does not qualify for rebate under the rebate rule.

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