DURING THE INITIAL CLIMB AFTER TAKE OFF SMOKE ENTERED THE CABIN UNDER THE CONTROL PANEL. BEFORE THE AIRPLANE COULD BE RETURNED TO THE RUNWAY, FLAMES WERE VISIBLE AT THE PASSENGERS FEET. AFTER LANDING ON THE OPPOSITE RUNWAY IT WAS DISCOVERED THAT EXHAUST GASES HAD IMPINGED ON THE FIREWALL. THE HEAT HAD IGNITED CABIN INSULATION. AN FAA INSPECTOR FOUND THAT THE EXHAUST STACK INSIDE THE CARBURETOR MUFF HAD SEPARATED. EXHAUST GAS HAD BEEN DIRECTED AGAINST THE FIREWALL. THE A/C WS LAST INSPECTED 11 MONTHS PRIOR TO THE ACCIDENT. THE EXHAUST SYSTEM HAD NEVER BEEN REPLACED.