A commitment or reservation fee is what we call it. It is required when you go to a dealership, identify a car of your liking, do not have the full cash and want to ensure that you get some little time to organize your finances so that you come to pay and collect it. Usually, it lapses after some time within which you are unable to bring the full payment. A dealer might forfeit part of the commitment fee to cushion himself from the effect of withholding the car from other prospective buyers he had turned away because of you. Even if that were the case, it has to have been clearly specified in the contract. Anything short of a reduction of this on paper is illegal.
It may be a case of "Terms and Conditions Apply". Was this articulated clearly in the contract you signed while reserving the car? If it was and you appended your signature to it as a way of confirming that you had read and understood that you were to forfeit your downpayment in case you were to back out of the deal, then I think it is legal. However, if the dealer kept his terms and conditions silent and only sprung them up on you when you found a reason to cancel the deal, it would be illegal.