Judgment

SHINGHAL, J. :- This appeal by special leave is directed against the judgment of the High Court of Mysore dated September 4/5, 1967. The High Court was moved by the State of Mysore under Article 226 of the Constitution for quashing the demand notice dated July 21, 1962 issued by the Inspector of Central Excise for the payment of Rs. 2,465.91 as excise duty on the products despatched by the States Implements Factory. The demand was made with reference to the newly inserted item 26AA in the First Schedule to the Central Excises and Salt Act, 1944, hereinafter referred to as the Act. That item was added to the Schedule by the Finance Act of 1962, and it was claimed by the Central Excise Department that, on the date of the amendment, the State Government was in possession of some stock of iron and steel product, namely, flats, squares and rods in its factory, which had been obtained from their manufacturers when they were not excisable articles. The precise claim of the Excise authorities was that the duty became payable on those articles by virtue of the newly inserted item 26AA because the aforesaid stock of iron and steel products was used for the manufacture of agricultural