worn rear axle bearing

Hello chaps

The seal has gone on the passenger side rear axle of my newly purchased 280GE LWB, this has caused the bearing to wear, caked my brake pads in oil and has let in water/humidity as certain bits have rust on them. I purchased a new seal & bearing kit from merc to sort this all out but I have one question. There is a stationary rubber seal on the end of the axle and I think through wear it has worn a lip around the circumference of the half shaft about a millimetre max, is this lip meant to be there or not? I'm thinking not, as the lip will cause the seal at certain points in time to sit half below the lip and half on top, causing the seal to be broken and oil to leak out slowly etc. If the is the case, suggestions on how to remove the lip or build it back up? A bit of emery paper to rub it down smooth may be best, or spray welding the axle and re-turning it in a lathe??

Thanks all.