Re-quantification of interest on reversed MODVAT credit required after later refund sanction reduced the relevant balance amount.

Interest on reversed MODVAT credit had to be re-quantified because part of the amount later stood refunded as relating to Education Cess and Secondary & Higher Education Cess. The later sanction meant only the balance credit reversal could remain relevant for computing interest, rather than the full amount originally worked out. The matter was therefore remanded to the original adjudicating authority for fresh quantification of interest on that reduced basis.

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Issues: Whether the interest payable on excess modvat credit reversed by the appellant required re-quantification in light of the subsequent sanction of refund relating to Education Cess and Secondary & Higher Education Cess.

Analysis: The appellant had reversed credit on the basis of the audit objection, but later obtained sanction of refund for the component relatable to Education Cess and Secondary & Higher Education Cess. In view of that subsequent development, only the balance amount could remain relevant for computing interest. The respondent agreed that the matter required re-quantification rather than final affirmation of the amount earlier worked out.

Conclusion: The impugned order was set aside and the matter was remanded to the original adjudicating authority for re-quantification of the interest amount.

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