( 1. ) THE petitioner No. 1, Madhumilan Syntex Private Ltd. which is a company registered under the Companies Act, 1956 and of whom petitioner No. 2 is the Managing Director owns a factory at Biora wherein they manufacture spun yarn. This product is covered by Item 18, Schedule 1 of the Central Excises and Salt Act, 1944.

( 2. ) ACCORDING to the petitioners in the manufacture of their product, they use as raw material cellulosic fibre and non-cellulosic waste. By blending and processing of these raw materials, the final products spun yarn is produced.

Therefore, the product falls in para (i) of Item 18-III of the First Schedule of the Central Excises and Salt Act. Further according to the petitioners their product does not contain any man-made fibre of non cellulosic origin and, therefore, they have been classifying the product by paying the duty in accordance with the Tariff Item 18-III (i) of the said Act.

( 3. ) THAT respondent No. 4 by a demand notice dated 7th February, 1984 (Annexure A) without any prior notice or hearing, raised a demand asking the petitioners to pay within 10 days a sum of Rs. 26,47,749. 39 on the assumption that the product cleared by the petitioner