Referable question of law on Tribunal's power to reduce penalty under Section 11AC was held to arise.

A referable question of law arose on whether the Tribunal had discretion to reduce a penalty imposed under Section 11AC of the Central Excise Act, 1944. In proceedings under Section 35H(1), the High Court treated the controversy as a legal issue emerging from the Tribunal's order and noted the absence of direct binding precedent from the High Court or Supreme Court on the point. Reference was therefore warranted, and the Tribunal was directed to formulate and refer the question on its power to reduce penalty under Section 11AC for the Court's opinion.

---

---

Issues: Whether a referable question of law arose for directing the Tribunal to make a reference on the Tribunal's power to reduce penalty under Section 11AC of the Central Excise Act, 1944.

Analysis: The application was under Section 35H(1) of the Central Excise Act, 1944, seeking a direction to the Tribunal to refer the question whether it had discretion to reduce the penalty imposed under Section 11AC. The Court found that the controversy concerned a legal question arising from the Tribunal's order and noted the absence of a direct decision of the High Court or the Supreme Court on the point.

Conclusion: A referable question of law was held to arise, and the application for reference was allowed.

Final Conclusion: The Tribunal was directed to refer the formulated question on its power to reduce penalty under Section 11AC for the opinion of the Court.

Ratio Decidendi: Where a legal controversy arising from a Tribunal's order is not directly settled by binding precedent, and a referable question of law is shown, a reference under Section 35H(1) is warranted.

---