( 1 ) ON a reference made by Venkatachaliah, J. this case was posted before us for disposal.

( 2 ) THE Davangere Cotton Mills Limited, Davangere Chitradurga District ('dcm') with its registered office at Davangere, a public limited company incorporated under the Companies Act, is the petitioner before us. The petitioner is operating a composite textile mill at its factory situated on Chitradurga Road, Davangere City, inter alia manufacturing different kinds of yarn which is ultimately consumed in its own factory for the manufacture of different kinds of textile or fabrics. For the manufacture of different kinds of yarn and textiles or fabrics the petitioner had obtained separate licences from the competent licensing authority under the Central Excises and salt Act of 1944 (Central Act No. 1 of 1944) and the Central Excise Rules of 1944 framed there under ('the Act and the Rules' ). The different kinds of yarn manufactured at the factory are dutiable to excise duty under tariff item Nos. 18 III, 18a and 18e of the First Schedule to the act and we are concerned with the levy of duty on such yarn manufactured at its factory.

( 3 ) EVER since the Act was extended to the area viz. from 1-4-1950 by the Finance Act of 1950, the petitioner was paying excise duty on yarn manufactured and consumed in its mill, without demur, till the end of August, 1981. But, like a Rip Van winkle the petitioner inspired by a ruling of the Delhi High Court rendered on 16-10-1980 to which we will make a detailed reference at a later stage woke up in the later part of 1981 and approached this Court on 8-9-1981 under Article 226 of the Constitution for a declaration that the yarn manufactured without removing the same from its factory premises was not dutiable to duty under the Act. The petitioner after obtaining the leave of this Court has also challenged the amendments made to Rules 9 and 49 of the Rules and Section 51 of the Finance Act of 1982 (1982 Act ). The challenge to these provisions are based on a large number of grounds which will be noticed and dealt by us in due course.

( 4 ) IN their return, the respondents have justified the levy, the amendments made to the Rules and the 1982 Act. The respondents have urged that the yarn manufactured under separate and distinct licences within the factory but removed and utilised for the manufacture of end products whether removed from the factory premises or otherwise, was separately dutiable to excise duty under the act.

( 5 ) SRI K. Srinivasan, learned Advocate has appeared for the petitioner. Sri K. Shivashankar Bhat, learned senior standing Counsel for the Central Government has appeared for the respondents, both sides in their full and elaborate arguments have relied on a large number of rulings and we will refer to them at the appropriate places.

( 6 ) SRI Srinivasan has urged that yarn manufactured by the petitioner at its factory, without removing the same from the factory premises but exclusively consumed within the very factory for the manufacture of textiles was not dutiable to excise duty under the Act as rule by the High court of Delhi in Delhi Cloth and General Mills Company Limited and Anr. v. Joint Secretary, government of India and Anr. (DCM's case), 1978 ELT (J 121) and J. K. Cotton Spinning and weaving Mills Co. Ltd and Anr. v. Union of India (J. K. case), 1981 ELT 887.

( 7 ) SRI Bhat has urged that yarn manufactured and consumed within the factory was separately dutiable to excise duty under the Act as ruled by the High Court of Gujarat in Maneklal Harilal spg. and MFG. Co. Ltd. Ahmedabad and Ors. v. Union of India and Ors. (Maneklal's case), 1978 elt (J 618) and the enunciation made by the High Court of Delhi in the cases relied on by Sri srinivasan was unsound.

( 8 ) IN order to ascertain the true scope and ambit of the charging Section, the rules, in particular rules 9 and 49, it is first useful to notice some of the important rules of construction that bear on