JUDGMENT

K. N. SAIKIA, J. :— This appeal by Special Leave is from the judgment and Order of the High Court of Judicature at Madras, dated 19th July, 1972 in Writ Petition No. 1864 of 1967, allowing the petition and quashing the demand made by the appellant under R. 10-A of the Central Excise Rules, hereinafter referred to as the Rules, payable by the respondent under the Central Excises and Salt Act, 1944, hereinafter referred to as the Act.

2. M/s. Ramakrishnan Kulwant Rai, the respondent firm, owned the Steel Rolling Mill, located at No. 4-B, 4-C, North Railway Terminus Road, Rayapuram, Madras-13. The said Mill was leased out to a partnership firm known as M/s. Steel Industries. After termination of the lease the respondent firm took back possession of the said Mill on 1-8-1962 and informed the Central Excise Authorities about this by their letter dated 16-11-1962 and resumed manufacture of Steel from scraps and was advised to take out a licence for which it applied on 30-11-1962. Though the respondent firm had ultimately sold away the Rolling Mill on 8-4-1963, the Superintendent of Central Excise, by his letter dated 13-10-1965 demanded a sum of Rs. 31,018.20p as excise duty. On information furnished by the firm about its manufacture of only 775.455 metric tonnes of Steel, the Deputy Superintendent of Central Excise reduced the demand to a sum of Rs. 6,419.38p only, and the demand was reiterated by notice dated 13-4-1967, pursuant where to the respondent firm showed cause on 15th May, 1967 but the Assistant Collector of Customs, by his order dated l4th June, 1967, confirmed the demand.

3. The respondent firm challenged the demand by moving writ petition No. 1864 of 1967 in the High Court of Judicature at Madras contending, inter alia, that it was manufacturing steel products prior to 13-6-1962, only suspending manufacture during the period of lease and resuming thereafter, and as such, was entitled to exemption from payment of duty; that the demand for payment of duty was time barred; that Rr. 10 & 10-A invoked in support of the demand were ultra vires inasmuch as there was no provision in the Act to enable the Government to frame rules for the recovery of duty short-levied.

4. The High Court by the impugned order following its earlier judgment in writ petition Nos. 265 & 266 of 1967, which relied upon its earlier decision in writ petition No. 1055 of 1968, upheld the contention of the respondent firm holding that R. 10-A did not apply to cases where there had been no prior levy of excise duty in respect of the articles manufactured during the relevant period and that the duty was sought to be recovered only by the issue of demand under R. 10-A of the Rules. The High Court having rejected leave to appeal, the appellant obtained special leave on 23-7-1974.

5. Mr. Anil Dev Singh, learned counsel for the appellant submits that it is necessary to decide the substantial question of law of general importance, namely, whether R. 10 A of the Rules, as it stood at the relevant time, was valid or not as conflicting decisions have been creating difficulties for the department in collecting short-levies or escaped excise duties. Counsel refers us to (1972) 2 Mad LJ 476. The learned counsel states that R. 10-A was in force up to 6-8-1977 where after it was amended with effect from that date and the amended rule continued till 16-11-1980 whereafter it was enacted as S. 11 A of the Act by the Amendment Act 25 of 1978 and that Section came into force with effect from 17-11-1980.

6. Mr. Ambrish Kumar, the learned counsel for the respondent submits that the learned standing counsel for the Central Government having conceded that the rationale of the decision in Haji. A. Kareern Sait v. Dy. Commercial Tax Officer, Mettupalayam: 18 STC 370, which held that sub-rule (7) of R. 5 of the Central Sales Tax (Madras) Rules 1957, providing for limitation and determination of escaped turnover by best judgment was in excess of the rule-making power and the s