Retrospective Modvat credit reversal on HSD oil attracted statutory interest after the 30-day repayment period expired.

Retrospective withdrawal of Modvat credit on high speed diesel oil under the Finance Act, 2000 required repayment within 30 days of the President's assent. Where the assessee reversed the credit only after that statutory period, interest became payable under Section 112(2)(b) from the day after expiry of the 30-day window until payment. Pending adjudication proceedings and a High Court stay did not suspend this statutory obligation, and the assessee was required to reverse the credit suo motu within time.

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Issues: Whether interest was payable on Modvat credit taken on high speed diesel oil under Section 112(2)(b) of the Finance Act, 2000 when the assessee reversed the credit only after the statutory period and relied on pending adjudication and a High Court stay.

Analysis: Section 112(1) of the Finance Act, 2000 retrospectively negatived admissibility of credit on HSD oil for the relevant period, and Section 112(2)(b) required repayment within 30 days of the President's assent, failing which interest at the prescribed rate became payable from the day after expiry of that period till payment. The existence of pending show cause proceedings did not suspend this statutory obligation. The Court followed the view that the assessee had to reverse the credit suo motu within the stipulated period and that delay beyond 30 days attracted interest liability.

Conclusion: Interest under Section 112(2)(b) of the Finance Act, 2000 was payable, and the challenge to the demand failed.

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