Modvat credit dispute: voluntary deposit and a non-contest letter did not waive the assessee's right to challenge the penalty.

Penalty tied to Modvat credit denial was set aside because the basis for the penalty disappeared once the connected proceedings against the dealers ended in their favour. The assessee's voluntary deposit of the credit did not by itself bar it from contesting the dispute, and a letter expressing an intention not to contest did not extinguish a statutory right. On that footing, the Tribunal held that no question of law arose fit for reference to the High Court and rejected the reference application.

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Issues: Whether any question of law arose for reference to the High Court in relation to denial of Modvat credit and penalty, and whether the assessee's voluntary deposit of the credit or prior conduct prevented it from contesting the matter.

Analysis: The Tribunal found that the penalty had been set aside because the foundation for imposing it no longer survived after the connected proceedings against the dealers were decided in their favour. It also considered the record showing the assessee's deposit of credit, but held that such deposit did not by itself destroy the assessee's right to contest the matter. The Tribunal further relied on the principle that a statutory right is not taken away merely because a party has written a letter expressing an intention not to contest.

Conclusion: No question of law fit for reference arose, and the reference application was rejected.

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