Judgment

VAIDIALINGAM, J.: This appeal by certificate is directed against the judgment and order of the Division Bench of the Bombay High Court dated July 1/2, 1965 confirming the decision dated August 6/7, 1963 of the learned Single Judge in Misellaneous petition No. 20 of 1962 quashing the two notices of demand dated November 3, 1961 issued by the second appellant as also the notice dated December 2, 1961 issued by the first appellant for payment of the amount covered by the said two notices.

2. The circumstances leading up to the filing of the writ petition may be mentioned: The respondents own a textile mill at Elphinstone Road, Parel, Bombay where they, manufacture, inter alia, grey cloth. They also have a factory situated at Tulsi Pipe Lane Road, Bombay for processing grey cloth into various other goods like leather cloth, book binding cloth and other coated fabrics. Under Section 3 of the Central Excises and Salt Act 1944 (hereinafter to be referred as the Act) duty is imposed on all excisable goods produced or manufactured in India at the rates set forth in the First Schedule to the Act. Item 19 of the First Schedule includes cotton fabrics. Section 3 of the Act provides that