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Commissioner Of Customs Central Excise v. M/S. Hongo India (P) Ltd. Another
Factual and Procedural Background
The Commissioner of Central Excise filed a Reference Application under Section 35H(1) of the Central Excise Act, 1944 before the High Court with a delay of sixteen days. The High Court held that it lacked power to condone this delay. Aggrieved, the Revenue approached the Supreme Court by way of a Special Leave Petition challenging the High Court’s refusal to entertain the delayed application.
Legal Issues Presented
- Whether the High Court possesses jurisdiction to condone a delay of sixteen days in filing a Reference Application under Section 35H(1) of the Central Excise Act, 1944.
Arguments of the Parties
Revenue’s Arguments
- The Reference Application is made directly to the High Court; therefore, the High Court has inherent power to condone delay.
- An analogy drawn by the High Court to Section 35 (which governs appeals before the Commissioner) is misplaced because the High Court’s jurisdiction is distinct from, and cannot be equated with, that of a statutory authority.
No specific arguments of the assessee/respondent were recorded in the opinion.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Commissioner of Central Excise, Mumbai v. Punjab Fibres Ltd., 2008 (223) E.L.T. 337 | Held that the High Court has no power to condone delay in filing a Reference Application under Section 35H(1); Section 5 of the Limitation Act does not apply; strict limitation principles govern. | The present Bench expressed doubt about the correctness of this ruling and considered it necessary to place the matter before a larger Bench for re-examination. |
Court's Reasoning and Analysis
The Supreme Court questioned the soundness of the earlier Punjab Fibres precedent for two principal reasons:
- Nature of the High Court’s Jurisdiction: The power to entertain a Reference Application under Section 35H resides in the High Court, not in a statutory authority like the Commissioner. Consequently, the High Court’s ability to condone delay should not be restricted by provisions governing the Commissioner’s appellate powers under Section 35.
- Advisory Role and Absence of Vested Rights: When acting under Section 35H, the High Court exercises an advisory jurisdiction to decide substantial questions of law of public importance. In such circumstances, no vested right accrues in favour of either party that would mandate a rigid application of limitation.
Owing to these doubts, the Bench considered the issue of condonation of delay under Section 35H to be significant enough to warrant reconsideration by a larger Bench.
Holding and Implications
REFERRED TO A LARGER BENCH
The Supreme Court directed that the matter be placed before the Hon’ble Chief Justice of India for appropriate orders constituting a larger Bench. As a result, the question of the High Court’s power to condone delay under Section 35H(1) remains unsettled until a larger Bench delivers an authoritative ruling. The decision carries no immediate precedent-setting effect but signals potential reconsideration of the strict limitation approach adopted in Punjab Fibres.
A short question which arises for determination in this Special Leave Petition is: whether the High Court was entitled to condone the delay of 16 days in filing the Reference Application by the Commissioner under Section 35H(1) of the Central Excise Act, 1944?
The High Court came to the conclusion, vide its impugned judgment, that it has no power to condone the delay as there is no provision in the 1944 Act to exclude impliedly or expressly the application of Section 29(2) of the Limitation Act.
Learned counsel appearing on behalf of the Revenue contended that in this case there was a delay in making the Reference Application under Section 35H(1) of the 1944 Act. He further contended that under Section 35H, since the Reference Application lay to the High Court, the said Court had inherent jurisdiction to condone the delay and the analogy drawn by the impugned judgment to Section 35, which refers to the power of the Commissioner under the Act, would not be proper particularly when the jurisdiction of the High Court cannot be compared with the statutory authority of the Commissioner under section 35 of the 1944 act.
At the very outset, it may be stated that in the case of Commissioner of Central Excise, Mumbai Vs. Punjab Fibres Ltd., reported in 2008 (223) E.L.T. 337, a Division Bench of this Court has opined in a similar case that the High Court has no power to condone the delay in the presentation of the Reference Application under section 35h(1) of the 1944 act. In coming to the said conclusion, it has been held that Section 5 of the Limitation Act would not apply. In this connection, reliance was placed on the provisions of section 35 (which refers to Appeals to the Commissioner under the 1944 Act). Further, it has been held that vested rights accrue in favour of the assessee and, consequently, a strict view of the period of limitation prescribed under the 1944 Act should be applied. Consequently, it has been held that the High Court had no authority to condone the delay in the filing of the Reference Application under Section 35H(1) of the 1944 Act.
With respect, we have doubts about the correctness of the judgment in the case of Punjab Fibres Ltd. (supra). Firstly, it may be noted that we are concerned with the jurisdiction of the High Court and not the authority of the Commissioner to condone the delay. The Reference Application was required to be made by the Commissioner to the High Court. It was not required to be made to the authority under the Act. The powers of the High Court were not circumscribed by the statutory provisions. The power of the High Court to condone the delay cannot be circumscribed by the provisions of section 35. Secondly, in this case, we are concerned with the scope of Section 35H and not with Section 35 of the 1944 Act. Under Section 35H, on an application for reference, the High Court exercises its advisory jurisdiction in a case where it is of the opinion that the substantial question of law of public importance arises. Therefore, in such a case, there is no question of a vested right accruing in favour of either parties.
For the afore-stated reasons, we direct the Office to keep this matter before the Hon'ble the Chief Justice for appropriate directions referring this matter to a larger Bench of this Court.
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