( 1 ) THE petitioner is a company manufacturing textile goods in Mysore city. Under the Central Excise and Salt Act (hereinafter referred to as the Act), excise duty was leviable by virtue of Entry 19 in Sch. I of the act on some of the cotton fabrics manufactured by the petitioner. By a notification issued by the Central Govt on March 1, 1969, as amended by notifications d/. 6-6-1976, 29-3-1971 and 38-6-1971, cotton fabrics-medium a Grey (unprocessed), cotton fabries-medium-B Grey (unprocessed) and bleached or and dyed but not printed were exempted from payment of excise duty levied under the Act. Under the Khadi and other Handloom industries Development (Additional Excise Duty on Cloth) Act (No. 12 of 1953) (her emafter reforred to as Act 12 of 1953) additional excise duty was leviable on cloth. Under a Notification issued by the Govt of India dated 2s-7-1953 ail varieties of cloth which were for the time being exempted from the payment of excise duty levied under the Act were exempted from the additional excise duty leviable under Act 12 of 1953. By a Notification d. 1-10-1966, the Notification d. 25-7-1953 was amended by the addition of a proviso stating that the said exemption was not applicable to certain kinds of cloth. The above proviso was substituted by another Notification of the Govt of India d. 7-7-1970. After the said substitution, the Notification issued on 25-7-1953 read as follows :" DRO. 1479-In exercise of the powers conferred by Cl (3) of sub- sec (2) of S. 5 of the Khadi and other Handloom Industries Development (Addl Excise Duty on Cloth) Act, 1953 (XII of 1953), the Central Govt hereby makes the follow ng rule- all varieties of cloth which are for time being exempted from the duty of excise levied thereon under the Central Excise and Salt Act, 1944 (1 of 1944), shal be exempt from the additional excise duty leviable thereon under the Khadi and other Handloom Industeis development (Additional Excise Duty on Cloth) Act, 1953: provided that nothing contained in these rules shall apply to the following description of cotton fabrics manufactured in a composite mill, namely:- (i) Medium-A, if unprocessed; and (A) Medium-B and Coarse, it unprocessed or if bleached or dyed, or if bleached and dyed but not printed or which answer the description of Dhoti, Saree, Longcloth Shirting or Drill as defined from time to time by the Textile Commissioner under the cotton Textile (Control) Order, 1948 and for which maximum exfactory price have been specified by the Textile Commr under the said Order: explanation: For, the purposes of these rules 'composite Mill' means a manufacturer who is engaged in spinning of cotton twist, yarn or thread or weaving or processing of cotton twist, yarn or thread or weavig of processing of cotton fabrics with the aid of power and has proprietary interest in at least two of such manufacturing activities it is therefore, clear from the Notification d. 25-7-1953 as amended by the Notification d. 7-7-1970 that the exemption given was not applicable to cloth of the description of Medium-A (unprocessed) and Medium-B and coarse, if unprocessed, or if bleached or dyed, or if bleached and dyed but not printed which answered the description of dhoti, saree, etc as defined by the Textile Commr under the Cotton Textile (Control) Order, 1948 it is not disputed that the petitioner-Mill is a composite mill and the goods with which we are concerned are those which are referred to in c1and (i) and (ii) of the proviso as it stood after the amendment of 7-7-1970. After the above amendment was made, unfortunately, the Superintendent of Central Excise, Mysore, on a wrong interpretation of the Notification d. 7-7-1970 wrote to the petitioner on 26-9-1970 that all varieties of cloth which were for the time being exempted from the duty of excise under the Act ware also exempted from the additional duty levied under Act 12 of 1953 He omitted to notice the effect of the proviso to the Notification d. 25-7-1953 subs

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