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SAEEDUZZAMAN SIDDIOUI, J.---The petitioner has challenged in the above petition the demand of central excise duty amounting to Rs.66,47,041.03 which is alleged to be due against the petitioner as well as their predecessor M/s. Valika Textile Mills Limited since 1969. In order to understand the present controversy it is necessary to state here the background of the dispute.

The predecessor of the petitioner M/s. Valika Textile Mills Limited (hereinafter to be referred as "Valika Textile" only) were assessed to excise duty on the basis of production capacity in the year 1969. Valika Textile challenged the assessment of excise duty on them on the basis of production capacity as well as vires of Production Capacity Rules, 1969 in Writ Petition No. 446/69. On 26-11-1969 an interim order was passed in the above petition whereby Valika Textile was allowed one month's time to pay 75% of the arrears of excise duty upto date demanded by the Government and future clearance of goods was allowed upon payment of excise duty under the first Schedule to Act until disposal of the petition. Petition No. 446/69 alongwith several other similar petitions were dismissed by the High Court of Sindh and Balochistan, Karachi on 6-5-1971. Leave to appeal against the above order of High Court of Sindh and Balochistan was granted by the Supreme Court on 17-8-1971 but as an interim measure during pendency of their appeal, Valika Textile and other petitioners were directed to comply with the direction of High Court dated 26-11-1969 until disposal of their appeals. The appeal before the Supreme Court was ultimately dismissed in May, 1983. The present petitioner in the meantime took over the assets and liabilities of Valika Textile and a change over took place on 25-10-1973 as stated in paragraph 1 of the Petition. Accordingly, after dismissal of the appeal of Valika Textile by the Supreme Court, a demand notice dated 26th August, 1983, was issued by the Superintendent, Central Excise and Land Customs, Karachi, against the petitioner calling upon them to pay a sum of Rs. 73,99,977.49 as outstanding dues of central excise duty against Valika Textile. The petitioner in reply denied their liability to pay the above amount on the ground that assessment of excise duty on the basis of production capacity was not applicable to them in view of Explanation to subsection (7) of section 3 of the Central Excises and Salt Tax Act (hereinafter to be referred as the Act only) which was inserted with effect from 28th June, 1969. No proper reply was apparently given to the above representation of the petitioner by the Superintendent, Central Excise and Land Customs, whereupon the petitioner approached the Collector, Central Excise and Land Customs. The latter by his letter dated 30th June, 1987, conveyed to the petitioner that their representation was being examined by the authorities concerned but at the same time advised the petitioner to deposit a sum of Rs. 5 lacs on 4th July, 1987, and a further sum of Rs. 2 lacs every month beginning from August, 1987 in order to avoid action being taken by the Department under section 11 of the Act. It appears that the above direction of respondent No. 2 was partly complied by the petitioner as they deposited the sum of Rs. 5 lacs and some instalments of tax. In the meantime, by letter dated 3rd November, 1987, Respondent No. 1 informed the petitioner that respondent No.9 has not accepted the contentions of petitioner and accordingly called upon. the petitioner to deposit the balance of the excise duty amounting to Rs. 66,47,041.03 in the Government treasury within seven days of the receipt of the letter. Some further correspondence on the subject took place between the petitioner and respondents and finally the above petition was filed on 28-12-1987 challenging the aforesaid demand by the respondents. To complete narration of facts, it may also be mentioned here that the petitioner in