Balakrishna Eradi, J. - (1.) This appeal has been preferred against the judgment of the High Court of Andhra Pradesh dated November, 5. 1970 on the strength of a certificate of fitness granted by the High Court.
(2.) The appellant is a firm carrying on business of 're-rolling' having its factory at Moosapet near Sanatnagar, Hyderabad. A contract was entered into between the appellant and the 5th respondent, whereby the appellant undertook to convert 3000 metric tonnes of second class untested rails into M. S. Rounds of different specifications by the process of re-rolling. Accordingly, the quantity of 3000 metric tonnes of second class untested rails was supplied to the appellant by the 5th respondent during the period between 29-4-1964 to 23-2-1966 and the appellant duly executed the work and delivered the M. S. Rounds and received the re-rolling charges in accordance with the terms of the agreement, The last delivery of the finished products was effected by the appellant on 23-2-1966.
(3.) Nearly eight months thereafter, on October 17, 1966 the Inspector of Central Excise, Ameerpet issued notices to the appellant dated October 17, 1966 demanding payment of excise duty on the rounds rerolled by the petitioner from untested rails. The demand notices were purported to have been issued under Rule 10-A of the Central Excise Rules, 1944. The appellant filed a written representation to the Assistant Collector, Central Excise, Hyderabad, contending that the demand for payment of excise duty on the M. S. Rounds was illegal since they had been re-rolled from rails which were exempt from levy of excise duty.;