Interest on wrongly availed MODVAT credit arises under the rule itself, even without express notice.

Interest was recoverable on wrongly availed MODVAT credit where the determined amount was not paid within the prescribed period, because Rule 57-I(3) itself created a self-contained liability to pay interest. Section 11AA of the Central Excise Act, 1944 was relevant only for determining the rate of interest. The omission to mention interest in the show-cause notice or adjudication order did not negate the statutory liability, since the obligation arose directly from the rule. Reliance on an earlier Tribunal ruling was held inapposite because that matter involved a notice issued before the interest provision came into force.

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Issues: Whether interest was recoverable on wrongly availed MODVAT credit even though the show-cause notice and order-in-original did not specifically propose or confirm interest.

Analysis: Rule 57-I(3) made payment of interest obligatory once the determined amount of wrongly availed credit was not paid within the prescribed period. The provision operated as a self-contained recovery mechanism, and Section 11AA of the Central Excise Act, 1944 was referred to only for fixation of the rate of interest. The absence of an express reference to interest in the show-cause notice or adjudication order did not defeat the statutory liability, because the liability arose by force of the rule itself. The reliance on the earlier Tribunal decision was misplaced since that case involved a notice issued before the interest provision was brought into force.

Conclusion: Interest was payable, and the appeal failed.

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