ORDER
G.A. Brahma Deva, Member (J)
1. This appeal arises out of and is directed against the Order-in-Appeal No. 666/2002, dated 31-1-2002 passed by the Commissioner of Central Excise, Bangalore. The appeal is also accompanied with the stay application for the waiver of pre-deposit of penalty of Rs. 1,54,499/- under Rule 57U(6) read with 173Q and interest under Rule 57U(8).
2. After hearing for some time with reference to the stay petition filed by the party, I felt that the matter itself can be disposed of. Accordingly appeal was taken up for regular hearing with the consent of both sides.
3. Smt. Vijaya Prakash appearing for the appellants submitted that Modvat credit which has been unutilized has been reversed much before the issue of show cause notice and accordingly, the authorities below are not just right in imposing penalty and to levy interest. In support of her contention she drew my attention to the decision of this Tribunal in the case of Rashtriya Ispat Nigam Ltd., v. CCE, Visakhapatnam – 2003 (54) RLT 317 (CEGAT-Bang.) wherein it was held that interest and penalty under Section 11AB and 11AC read with Rule 173Q of Central Excise Rules, 1944 not leviable as duty has been paid even before issue of show cause notice.
4. On the other hand Smt. Radha Arun learned DR appearing for the Revenue drew my attention to the observation made by the adjudicating authority that on being pointed out by the Department, the assessee had reversed the credit on 5-9-2000. She said that though the credit was lying in the relevant registers it was reversed only after being pointed out by the Department and accordingly she justified the action of the department in imposition of penalty as well as interest.
5. On a careful consideration of the submissions made by both sides, and on perusal of respective orders passed by the authorities below and in the facts and circumstances of the case, the penalty under Rule 57U(6) is not justified since the amount in question has been paid even before issue of show cause notices and further the amount in question has not been utilized by the assessee as can be seen from the records. However, there is some force in the argument of the SDR that interest is to be levied till the date of payment. Accordingly the adjudicating authority is directed to calculate the interest up to the date of reversal and to pass an order accordingly. The impugned order is modified accordingly. Thus this appeal is disposed of in the above terms.