Tribunal upholds duty demand, imposes penalties on company and director. Decision pronounced in open court.

The tribunal confirmed the demand of duty with interest, imposed a 25% penalty on the appellant company, and confirmed a penalty of Rs. 2 Lakhs on the director. The appeals were disposed of accordingly, with the tribunal's decision pronounced in the open court.

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Issues:
- Challenge against penalties imposed on the appellants for non-installation of capital goods in their factory and diversion of inputs to sister units.

Analysis:
1. Cenvat Credit Eligibility: The appellants imported capital goods not installed in their factory but in the sister unit, along with diverting inputs to sister units. The investigation revealed the absence of capital goods and inputs in the appellants' factory for manufacturing, leading to a show cause notice denying cenvat credit. The appellants paid/reversed the cenvat credit with interest. The tribunal found that under the Cenvat Credit Rules, credit is available if goods are used in the factory of manufacturing, which was not the case here. Thus, the appellants rightly reversed the credit with interest.

2. Penalties Imposition: The appellants argued that the diversion was due to insufficient space in their factory, and goods were sent to the sister unit for job work. However, the tribunal noted the lack of proper procedure, as no challans were issued for the transfer, and the department was not informed. This non-disclosure constituted suppression of facts, justifying the penalty. The tribunal upheld the 25% duty penalty on the appellant company, rejecting the appellant's reliance on a previous case. Regarding the director's penalty, the tribunal acknowledged the awareness of the director about the non-disclosed transfers, leading to the penalty imposition. However, the tribunal deemed the penalty amount excessive and reduced it to Rs. 2 Lakhs.

3. Final Orders: The tribunal confirmed the demand of duty with interest, imposed a 25% penalty on the appellant company, and confirmed a penalty of Rs. 2 Lakhs on the director. The appeals were disposed of accordingly, with the tribunal's decision pronounced in the open court.

This detailed analysis covers the issues raised in the judgment, focusing on the eligibility of cenvat credit, the justification for penalties imposed, and the final orders pronounced by the tribunal.

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