1980 (1) TMI 94 - CGOVT - Central Excise

Summary

Issues:
1. Sanction of sugar incentive rebate under notification 257/76.
2. Demand for recovery of excess rebate granted.
3. Interpretation of Central Excise Law regarding rebate exceeding duty paid.
4. Application of exemption notification and calculation of rebate at the time of clearance.

Analysis:
1. The case involves the sanction of a sugar incentive rebate to the petitioners under notification 257/76. The rebate was granted based on the duty rates prevailing at the time of sanction. However, a demand for recovery of the excess rebate was issued when it was discovered that the duty paid on the sugar at the time of clearance was less than the rebate granted earlier. The Appellate Collector upheld the demand citing the principle of "no payment no refund."

2. During a personal hearing, the petitioners argued that the rebate was correctly sanctioned based on the duty leviable at the time of rebate sanction, in accordance with Notification No. 257/76. The petitioners referenced judgments from the Delhi High Court and Bombay High Court to support their case. They also highlighted instances where other factories were not asked to refund rebates due to clearing goods before a duty rate reduction. However, the Appellate Collector rejected these arguments.

3. The Government of India considered the submissions and emphasized that the amount of rebate granted cannot exceed the duty paid, as per the Central Excise Law. The judgment clarified that the purpose of the law is to levy Central Excise duty, not to provide incentives exceeding the duty paid. The rule under which the notification was issued does not empower granting rebates exceeding the duty payable. The judgment also dismissed claims of discrimination in similar cases where no refund was demanded.

4. The judgment addressed confusion regarding the scope of the exemption notification due to the method of granting rebates in advance. It explained that the rebate should be calculated at the time of clearance to avoid issues of duty rate reductions. Criticizing the procedure of advance credit for rebates, the judgment stated that it does not justify avoiding adjustments for excess refunds granted. The petitioners' situation would have been different if the sugar had been cleared at the duty rates applicable when the rebate was sanctioned. Ultimately, the revision application was rejected, emphasizing that the petitioners were liable to refund the excess rebate granted.