How to fix iPhone cellular issue detected?

Before you do anything you must resolve the low storage issue by deleting a lot of stuff from your phone. Any troubleshooting will require at least 2 GB of free storage.

After that, see if this resolves the problem→If your iPhone or iPad shows No Service or Searching - Apple Support

And, as you have an iPhone 7, also this→iPhone 7 Repair Program for "No Service" Issues - Apple Support

The last resort:

Go to Settings/General/About and look at Modem Firmware. Is the entry blank? If it is you need to reinstall it by restoring the phone to factory settings, then restoring a backup. Back up the phone first, of course:

1. How to back up your iPhone, iPad, and iPod touch - Apple Support
2. Restore your iPhone, iPad, or iPod to factory settings - Apple Support - follow the instructions to restore using your computer, do not using Settings/General/Reset (which is not included in those instructions)
3. Restore your iPhone, iPad, or iPod touch from a backup - Apple Support

If the modem firmware DOES have a value you have a hardware problem. The first step is what I just posted, but after that you need to contact Apple support using the Get Support link at the top of this page.

What happened when you tapped on it?

It may help us to know what the issue is

"...But my device is already updated to latest version ..."

It refers to a cellular update not ios update. Lawrence's post includes the remedy