( 1 ) M/s. The Mysore Acetate and Chemical Co. Ltd. , a Public Limited Company incorporated under the Companies Act, which is the petitioner before this Court, is inter alia engaged in the business of manufacturing a Chemical called "acetic anhydride" in its factory situated near mandya City of District Mandya, which is used as a drug intermediate by the drug manufacturers of the country. "acetic anhydride" as a Chemical is eligible to excise duty under tariff Item No. 68 of the Central Excises and Salt Act, 1944 (Central Act 1 of 1944 ).

( 2 ) IN exercise of the powers conferred on it by sub-rule (1) of rule 8 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules) the Government of India in its Notification No. 62/78-C. E. , dated 1st March, 1978 (annexure B), has exempted all drugs, medicines, pharmaceuticals and drug intermediates not elsewhere specified from payment of excise duty under the Act. Ever since then, acetic anhydride manufactured by the petitioner and supplied to the drug manufacturers as a drug intermediate had been treated by the excise authorities as exempted from payment of excise duty under the Act.

( 3 ) NOTWITHSTANDING the above, the Super

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