Satyeshwar Roy, J.

1. By this application under Articles 226 and 227 of the Constitution of India, the petitioners have prayed for quashing order dated 24-11-1979 passed by Respondent No. 1 imposing duty and penalty on the petitioners under the Central Excises and Salt Act, 1944 (the Act), Annexure-1 to this application, notices dated 5-12-1979 issued by Respondent No. 2 demanding payment of the said amount and to submit revised classification list under Tariff Item 68, Annexure 2 and 2/1 respectively, and notice dated 2-7-1979 issued by Respondent No. 2 for paying duty on goods before machining and/or polishing under Tariff Item No. 26AA(V) Annexure-2/2 Originally in the writ petition prayers were confined with regard to the aforesaid annexures only. While the writ petition was pending the petitioner, according to it, by way of abundant precaution filed an appeal against Annexure 1 and prayed for stay of the same till the disposal of the writ petition. However, the appellate authority refused the prayer and disposed of the appeal by rejecting it. The petitioners filed amendment of the writ petition praying for quashing the appellate order and the same was allowed. In this writ petition, therefore, prayer has been made also for quashing the appellate order dated 24-2-1981 passed by Respondent No. 5 confirming the order of Respondent No. 1, Annexure-1/A to the writ petition.

2. The petitioners carry on business, inter alia, of manufacture and sale of diverse iron and steel castings popularly known as Cast Rolls at its Adityapur factory. All the Cast Rolls manufactured by the petitioners are tailor-made items for individual customers as per the customers specifications, designs and drawings and against their specific orders. The process of manufacturing Cast Rolls have been described in paragraph-4 of the writ petition. We will refer the details at appropriate stage. The duty payable on the Cast Rolls, manufactured by the petitioners, was under Item 26AA(V) of the First Schedule of the Act. The goods were being removed by the petitioners under the procedure laid down in Chapter VII-A of the Central Excise Rules, 1944 (the Rules) commonly known as Self-Removal Procedure. The petitioners started manufacturing Cast Rolls in the year 1969-70 and from the beginning were removing the goods under the Self-Removal Procedure on paying duty under Item 26AA(V). The respondents at all material times upto May, 1979, accepted that on the Cast Rolls, manufactured by the petitioners, duty was payable under that Tariff Item. Some time in May, 1979, the respondent No. 2 issued a notice whereby the petitioners were called upon to show cause why a penalty should not be imposed on it for contravening Rule 173 PP read with Rule 173Q and why a duty of Rs. 3,98,860.80 (Rupees Three lakhs ninety eight thousand eight hundred sixty and paise eighty) evaded from 1st of March, 1975 to 31st of March, 1979 should not be realised from them under Rule 10 of the Rules. It may be mentioned here that Item 68 was introduced in the First Schedule of the Act on 1-3-1975. In response to the notice, the petitioners filed their show cause and refuted that they remained engaged in manufacturing of steel Rolls from 1-3-1975 without obtaining any licence under the Act. It contended that on the Cast Rolls duty was payable under Item 26AA(V) and no duty was payable under Item 68. Respondent No. 1 did not accept the contention of the petitioners and by Annexure-1 it held that the Steel Castings which came out from moulds fell under Item 26AA(V) and thereafter when the same were machined/polished it fell under Item 68. Therefore duty was demanded and penalty was imposed by respondent No. 1 as noticed above. In pursuance of this order three notices were issued to the petitioners by respondent No. 2. By Annexure-2 duty and penalty were directed to be deposited by the petitioners. By this Annexure, the petitioners were further directed to keep stock account in respect of