1985 (9) TMI 169 - AT - Central Excise

Excess production rebate on sugar - Recovery of rebate, paid erroneously, on sugar exported without payment of duty

Summary

Issues: Time-barred demand for excess rebate payment

The judgment pertains to a case where the department issued a show cause notice to recover an excess rebate of Rs. 25,472.48 from the respondents, which was credited into their account in August 1976. The rebate was granted under a notification for higher sugar production during a specific period. The department alleged that the excess rebate was paid for sugar exported without duty payment, which was not eligible for the rebate. The Collector (Appeals) initially set aside the demand, leading the department to appeal for restoration of the demand.

The Tribunal acknowledged that the notification granting the rebate was an exemption from duty, which should not have been applied to exports without duty payment. However, the Tribunal noted that the department failed to adhere to the time frame specified by the Central Excise Rule for recovering the excess rebate. The department was aware of the exports as they are documented in statutory records, and the excess sugar had been cleared for export well before the rebate was paid to the respondents. The Tribunal considered the payment of rebate for the exported quantity as an erroneous refund under rule 10 of the Central Excise Rules, which had a time limit of six months for recovery.

The department argued that the rebate payment was provisional due to the absence of statutory rules supporting it. The Tribunal dismissed this argument, stating that the rebate for the exported quantity could not be deemed provisional as the department was aware of the export details when making the payment. The Tribunal emphasized that it must adhere to statutory provisions and that any challenge to the legality of the department's actions should be pursued through other avenues.

Ultimately, the Tribunal held that the demand issued by the department was time-barred under rule 10, leading to the rejection of the department's appeal for the restoration of the demand. The Tribunal concluded that the demand should be set aside due to being time-barred, based on the facts presented in the case.