ORDER

S. Ranganathan, J.

1. The first petitioner J.K. Cotton Spinning & Weaving Mills Co. Ltd., as its name indicates, is carrying on the business of spinning yarn and also manufacturing fabrics. The second petitioner is a Director-Shareholder of the company. By this writ petition the petitioners pray for a writ of ceritorari quashing the directive of the Central Board of Excise and Customs (Respondent No. 2) dated 6th October, 1976 as well as the orders dated 26th April, 1979, 30th April, 1979 and 5th May, 1979 issued by the Superintendent of Central Excise (Respondent No. 5). There is also a prayer in the alternative for a writ of mandamus which will be adverted to later. The controversy arises in the following way.

2. The petitioner company has a composite mill where it manufactures blended non-cellulosic spun yarn on which excise duty is payable under Tariff item 18E of the First Schedule to the Central Excises & Salt Act, 1944, ("the Act," in brief) and uitlises the yarn within its own factory for the purposes of making man-made fabric. The yarn spun in the factory of the petitioner is wound on the bobbins and thereafter transferred to cones for the purpose of preparing a larger package. There is no dispute that the yarn as wound on cones in the petitioner's factory is a commodity that is ordinarily bought and sold in the market as yarn which is an item of goods excisable under item 18E aforesaid.

3. However, instead of selling the cones in the market the petitioner company uses the yarn for the manufacture of fabric within the same composite mill for this purpose the yarn is subjected to various processes which are preparatory to the actual weaving process and which facilitate the weaving of the yarn into fabrics, for the purpose of weaving yarn into fabric about 500 cones of yarn are taken and the yarn therefrom is transferred to a warp beam, which has the same number of ends. The fabric to be made consists of a warp and a weft. The warp is taken from the warp beams to which the cones of yarn have been transferred. After the yarn is transferred to the beam, about eight, such beams are put On a creel of a sizing machine in order to give about 4000 ends. Sizing is a process in which the yarn on creel is passed through a liquid sizing compound consisting of starch and other chemicals. This sizing parts strength' to `the ` warp. The warp after sizing is dried on the cylinders of the sizing machine and then wrapped on what is known as the sized warp beam. The yarn ends are thereafter passed through reeds and healds. Thereafter the process of weaving commences and the weft is passed through the warp. After the weaving is completed the fabric is desized, that is to say that the starchy material into which it was dipped is completely washed off. The fabric is then bleached and dried according to the requirements.

4. Having regard to the above process of manufacture employed in its mill two points of controversy arose between the petitioner company and the Central Excise Authorities. The petitioner company claimed that though, yarn was a dutiable item since 17-3-1972 under item 18E of the Central Excise Tariff and though the petitioner has been paying excise duty on the blended non-cellulosic spun yarn manufactured by it between 1972 and some time in 1979, the-petitioner company was really not liable to pay excise duty on the yarn inasmuch as it was only an in product in the course of manufacture of fabric carried out by the petitioner; and inasmuch as the yarn obtained in the factory of the petitioner company was not removed and cleared from the factory which is a condition precedent for the collection of duty. This plea raised after several years during which the assessee petitioner had been paying the excise duty on yarn was apparently inspired by a judgment of a Division' Bench of this court dated 16th February, 1978 in the case of the Delhi Cloth & General Mills Co. Ltd. & Another v. The Joint Secretary, Govt. of In