Statutory reference on Modvat credit was allowed where the legal issue was not fully covered by binding precedent.

A substantial question arising from a Tribunal order may be referred to the High Court under Section 35H(1) of the Central Excise Act, 1944 where it is a question of law and is not shown to be fully covered by binding precedent of the Supreme Court or jurisdictional High Court. The dispute concerned entitlement to Modvat credit under Rule 57Q for specified equipment, and the Court held that the issue was fit for statutory reference. The reference application was therefore allowed and the Tribunal was directed to state the case and refer the formulated question of law.

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Issues: Whether a referable question of law arose from the Tribunal's order so as to justify directing the Tribunal to draw up a statement of case and refer the question to the High Court.

Analysis: The application was made under Section 35H(1) of the Central Excise Act, 1944. The question centred on the assessee's entitlement to Modvat credit under Rule 57Q in respect of Spectrophotometer and Teflon Spacer. The Court found that the issue arising from the Tribunal's order was a question of law fit for reference and was not shown to be fully covered by binding precedent of the Supreme Court or the jurisdictional High Court.

Conclusion: The reference application was allowed and the Tribunal was directed to refer the formulated question of law to the High Court.

Final Conclusion: The Court concluded that the dispute raised a referable legal question warranting statutory reference for adjudication by the High Court.

Ratio Decidendi: Where a substantial question arising from a Tribunal's order is not conclusively covered by binding precedent, the High Court may direct a statutory reference under Section 35H(1) of the Central Excise Act, 1944.

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